updated 11/16/2010 5:38:32 PM ET 2010-11-16T22:38:32

Three big U.S. banks are nearing a settlement in which they would compensate borrowers whose homes were improperly foreclosed upon, according to a CNBC report.

Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. would also agree not to start foreclosure proceedings until they have exhausted all efforts to modify a borrower's mortgage, CNBC is reporting. Many borrowers have complained of receiving foreclosure notices while they're negotiating to lower their loan payments.

CNBC attributes its report of the potential settlement to officials at the banks and among state attorneys general investigating foreclosure practices. It comes as Bank of America and JPMorgan are testifying on the topic to a hearing of the Senate Banking Committee.

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