Federal regulators are preparing to sanction large mortgage services for problems in their foreclosure processes.

Comptroller of the Currency John Walsh told Congress on Thursday that regulators with the OCC, Fedeal Reserve, and Federal Deposit Insurance Corp. have found "critical deficiencies and shortcomings" in the mortgage practices of big banks. Improper home seizures and "robosigners" have also prompted all 50 state attorneys general to join forces in a separate investigation.

Walsh said that a comprehensive review of the 14 largest U.S. mortgage servicers' practices found serious problems along the foreclosure chain. In testimony before the Senate Banking Committee, Walsh said the nature and severity of the problems differed from one servicer to another, but that regulators are prepared to enforce sanctions against many banks. He did not cite a figure on how much the foreclosure penalties may cost the lending institutions.

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