To make matters worse, the banks had few financial incentives to invest in their servicing operations, several former executives said.
Many borrowers told the agency, for instance, that they had trouble getting their payments credited properly and obtaining accurate information about their loans from their servicing firms.
The bill would give these institutions a reasonable amount of time to divest either their servicing businesses or their interests in home mortgages, Mr. Miller said.
Investors in mortgage securities are increasingly concerned that the companies may put their own interests ahead of those of their servicing customers when they modify loans.
As new regulations prompted banks to scale back their servicing of mortgages, companies owned by private equity went on a buying spree.
Other banks that have resolved issues and are no longer subject to regulator-imposed restrictions on their servicing activities include Bank of America, Citibank, PNC, One West and EverBank.
