U.S. regulators led by the Office of the Comptroller of the Currency will replace a largely fruitless effort to find victims of botched foreclosures at the 14 biggest mortgage servicers by instead leveling flat penalties, five people briefed on the talks said.

Bank of America, Wells Fargo, JPMorgan Chase and Citigroup are among servicers that may make concessions totaling about $10 billion, said the people, who requested anonymity because the discussions are private.

The funds would compensate borrowers whose homes were wrongfully seized using faulty paperwork and aid homeowners in danger of default, the people said.

The penalties would supplant a system allowing borrowers who lost homes in 2009 and 2010 to seek compensation after foreclosure reviews.

The program, which housing advocates said failed to reach its intended targets, was set up under consent decrees the banks signed with regulators in 2011. It drew 356,000 applicants out of what the advocates said were 4.4  million eligible borrowers. Monday was the application deadline and no borrowers have yet received compensation, the Officer of the Comptroller of Currency (OCC) said.

“They’re trying to fix a system that was faulty from the beginning,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “The people in charge created a program that was not designed to help homeowners. They’ve been trying in fits and starts to improve it. I think at some point they threw up their hands and said, ‘This is not working.’ ”

An announcement of the new enforcement action could come as soon as this week, the people said. The New York Times reported on the $10 billion figure in Monday’s editions.

Robert Garsson, a spokesman for the OCC, declined to comment on a potential agreement with banks. He said the agency would continue working to compensate homeowners who have applied for relief under the consent decrees. Spokesmen for the other regulators involved in the process, the Federal Reserve and the Federal Deposit Insurance Corp., also declined to comment.

Dan Frahm, a spokesman for Bank of America, Amy Bonitatibus at JPMorgan, Vickee Adams at Wells Fargo and Citigroup’s Mark Rodgers declined to comment.

It’s too soon to tell whether the new agreement between banks and regulators will leave more money in consumers’ pockets than the so-called independent foreclosure reviews, housing advocates said.

If all eligible borrowers had applied for and received compensation after the reviews, banks could have paid out far more than $10 billion, the advocates said. The agreements allowed homeowners to get as much as $125,000 plus the value of lost home equity.

“All of the problems with the process that we outlined for over a year made it clear that it was unlikely that serious compensation would come out of that without changes,” said Alys Cohen, staff attorney at the National Consumer Law Center.

The 2011 enforcement actions required lenders to strengthen systems for handling foreclosure documents and communicating with borrowers who are behind on payments. Banks were forced to hire independent reviewers to probe wrongdoing in home seizures.

As consumer advocates complained about a lack of interaction with borrowers, banks were saddled with costs from hiring independent reviewers such as PricewaterhouseCoopers and Promontory Financial Group.

Under the agreement, those firms reviewed samples of 2009 and 2010 foreclosures while any borrower who felt wronged could also file a complaint. The deal with the OCC is among other efforts by federal and state governments to hold banks accountable for botched home seizures.

Separately, U.S. state attorneys general and federal authorities are continuing to press regional banks to accept a settlement over mishandled foreclosure documents similar to a deal reached with larger competitors this year, according to people briefed on the talks.