(Reuters) - The main regulator for the largest U.S. banks is preparing to break from state authorities and move first to settle with lenders over their foreclosure practices, according to a source familiar with the process.
The settlement from the Office of the Comptroller of the Currency could come in the next couple weeks, the source said and would dash hopes for a comprehensive settlement that could help heal the housing market.
About a dozen federal authorities and 50 state attorneys general have worked for months to reach a coordinated settlement over allegations banks foreclosed with improper documents and cut corners on repossessing homes.
The authorities were working to structure a settlement that would have let banks contain their litigation risk, help homeowners mistreated during foreclosures and remove a cloud of uncertainty hobbling the housing market's recovery.
"It's never great news when there's no coordinated response to the greatest challenge in the economy," said Adrian Cronje, chief investment officer at Balentine, an Atlanta-based wealth management firm.
"It's such a political minefield that I could see something like this might cause the inventory of foreclosed homes to remain high for quite a bit longer."
The source said the OCC, impatient with infighting over the structure of a coordinated settlement, is preparing to move on its own set of fines and business-practice fixes for banks.
The exact details of an OCC proposal are not yet known. OCC spokesman Bob Garsson declined to comment.
Bank of America Corp, Citigroup Inc and Wells Fargo & Co are among the banks in settlement talks.
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