Federal Housing Administration Commissioner David Stevens said mortgage servicers under review for improper foreclosures could face fines and potentially forced reimbursements, according to his testimony before a House subcommittee Wednesday. In September, mortgage servicing came under intense scrutiny when employees were found to be robo-signing — signing foreclosure affidavits en masse and without a proper review of documentation as required by law. Major lenders suspended foreclosures in many states and even nationwide. Federal regulators and the 50 state attorneys general launched investigations. And while many banks have said they've completed or are nearing completion of their internal reviews and refilings, those investigations could potentially cost them more than delays. Iowa AG Tom Miller, who is leading that investigation, has said a possible fund to compensate homeowners victimized by these practices is on the table. Federal Deposit Insurance Corp. Chairman Sheila Bair said at a recent mortgage servicing conference that she supported a claims fund similar to the one set up after the BP Gulf Coast oil spill to be paid for by the servicers. Stevens, too, acknowledged that those servicers found to be mishandling FHA loans will face "potential fines, penalties and claim reimbursements," according to his testimony Wednesday. In May, the FHA launched a review of its mortgage servicers. A spokesman said the review would be made public. The House Subcommittee on Insurance, Housing, and Community Opportunity held the hearing to determine if there are government barriers to the housing recovery. Stevens acknowledged the Treasury Department's proposal last week to wind down Fannie Mae and Freddie Mac, and he said the government must take steps to withdraw its share of the mortgage market. But there is more to the recovery than establishing a new finance system, he said. In fact, making sure mortgage servicing is sound is vital to making room for the private sector again. The Department of Housing and Urban Development is working the Federal Housing Finance Agency and the Treasury to develop a new mortgage servicing standard. "This crisis has also taught us that appropriate consumer protection requires immediate action to institute long overdue reforms to mortgage servicing compensation structures, servicing standards and foreclosure processing procedures," Stevens said. Write to Jon Prior. Follow him on Twitter: @JonAPrior