The 14 largest U.S. mortgage servicers must pay back homeowners for losses from foreclosures or loans that were mishandled in the wake of the housing collapse, according to a consent decree released today.

The agreement between the servicers and U.S. regulators imposes more substantial penalties than early reports of the deal indicated. It could also help the U.S. Justice Department determine the size and scope of any future fines for the flawed practices, regulators said.

The banks, including JPMorgan Chase & Co. and Wells Fargo & Co., agreed in the settlement to conduct a review of all loans that went into foreclosure in 2009 and 2010. They also agreed to improve their foreclosure, loan modification and refinancing procedures by hiring staff, upgrading document-tracking systems, assigning a single point of contact for each borrower and policing lawyers and vendors.

The Office of the Comptroller of the Currency, the Federal Reserve, Office of Thrift Supervision and the Federal Deposit Insurance Corp. released the consent decrees in Washington.

Regulators took action against the companies for “unsafe and unsound” practices, said acting Comptroller of the Currency John Walsh, who called the settlement “comprehensive.”

“Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward,” Walsh said in a written statement.

First Sanctions

The sanctions are the first to arise from state and federal investigations into mortgage servicers’ lapses in foreclosure procedures. Unprepared for the record number of loan delinquencies brought by subprime loans and the collapse of housing prices, servicers relied on inexperienced workers who failed to track paperwork or improperly signed legal documents.

Reports of robo-signing prompted several lenders to temporarily suspend foreclosures last year.

JPMorgan, the second-biggest U.S. bank by assets, today took a $1.1 billion charge and may add as many as 3,000 employees to comply with the consent agreement, Chief Executive Officer Jamie Dimon said in conference call.

The consent decree lays out detailed goals and deadlines for the companies to help homeowners who are in default or have fallen behind on mortgage payments.

It also is designed to be a tool for state and federal law enforcement agencies as they negotiate a global settlement with banks, including fines, regulators said. The Justice Department and state attorneys general led by Iowa’s Thomas J. Miller are leading talks with the companies.

The banks didn’t admit or deny regulators’ findings, according to the orders.

Outside Consultants

Under the consent decree, banks must hire outside consultants to identify borrowers who improperly lost their homes, failed to get loans rewritten or were forced into court in 2009 and 2010 because of mistakes made by mortgage servicers or their vendors.

Banks must determine the financial injury to borrowers and, within the next six months, submit a plan for reimbursing them, according to the decrees.

Regulators also targeted two companies used by banks to manage loan documents, foreclosures and bankruptcies. Mortgage Electronic Registration Systems Inc., or MERS, of Reston, Virginia, and Lender Processing Services Inc. of Jacksonville, Florida, were ordered to improve their internal controls and corporate governance.

In addition to JPMorgan and Wells Fargo, Bank of America Corp., Citigroup Inc., the GMAC unit of Ally Financial Inc., Aurora Bank FSB, EverBank Financial Corp., HSBC Holdings Plc, OneWest, MetLife Inc., PNC Financial Services Group Inc., Sovereign Bank, SunTrust Banks Inc., and US Bancorp also signed consent agreements with regulators.