U.S. banking regulators are examining whether mortgage companies cut corners on their own pro­cedures when they moved to foreclose on people’s homes, Federal Reserve chairman Ben Bernanke said yesterday.

Preliminary results of the review into the practices of the nation’s largest mortgage companies are expected next month, Bernanke said.

Dubious mortgage practices and lax lending standards were blamed for contributing to a housing bubble that eventually burst and thrust the economy from 2007-09 into the worst recession since the 1930s. Many Americans took out home loans they didn’t understand and bought homes they couldn’t afford.

As a result, foreclosures have soared to record highs. It’s one of the negative forces restraining the economy’s ability to get back on sounder footing.

Now, more than 20 per cent of borrowers owe more than their home is worth, and an additional 33 per cent have equity cushions of 10 per cent or less, putting them at risk should house prices decline much further, Bernanke said.