The housing market is clearly improving. According to the National Association of Realtors, existing home sales have risen and distressed mortgages account for a smaller part of those sales. Close to a million home loans in the United States were in some stage of the foreclosure process in early 2011. More than half a decade after the start of the housing crisis, that number has started to decline, but there were still nearly 750,000 homes in the foreclosure process as of last month.

A small number of banks serviced or acted as trustee in the vast majority of the mortgages in foreclosure — and it is the same banks that now find themselves having to deal with those mortgages and deflated property values. As of February, Bank of America was servicing more than 95,000 loans in foreclosure, followed by Wells Fargo, which was servicing 85,000 loans. Based on RealtyTrac’s February 2013 data, 24/7 Wall St. reviewed the 10 banks foreclosing the most homes.

Click here to see the banks foreclosing on the most homes

The banks foreclosing on the most homes may not directly own the bulk of the mortgages. Rather, they often service them for other entities, which means collecting payments from homeowners and foreclosing on those properties when they become delinquent. In other cases banks act as a trustee, representing a pool of mortgage loans held in a trust.

As of 2012, according to Mortgage Daily, the banks foreclosing on the most mortgages — Bank of America, Wells Fargo and Chase — were the three biggest servicers of all mortgages.

According to RealtyTrac’s Vice President Daren Blomquist, the majority of loans originated prior to the recession. The banks that actually own the loans, Blomquist explained, are now stuck with these mortgages in foreclosure. Bank of America in particular is struggling to unload the assets it absorbed through its acquisition of Countrywide Financial.

Despite not being directly on the hook for the majority of the losses incurred when a home enters foreclosure, these servicing banks still stand to lose money, both from the lost fees they would have collected with each mortgage payment and the costs they have to incur to deal with the foreclosure. “All things being equal” Blomquist explained “they would prefer to have that as a performing mortgage, rather than as a non-performing mortgage, because they’re actually generating income as opposed to not.”

According to Sam Garcia, founder and publisher of Mortgage Daily, many of these banks have had to contract companies that specialize as servicers for distressed mortgages to work with borrowers that are delinquent or going through the foreclosure process. “It doesn’t really cost anything to service a loan that’s being paid on time,” Garcia said. However, “Once you have to start talking to the customer, that loan becomes unprofitable.”

To determine the 10 banks foreclosing the most home loans, 24/7 Wall St. reviewed data provided by RealtyTrac, an online real estate marketplace and data source on distressed homes properties. All data are as of February 2013 and reflect the amount and value of both homes and mortgages serviced or held in trust by the nation’s major banks. At RealtyTrac’s suggestion, because Bank of America acquired Countrywide’s assets and liabilities in 2008, we treated loans in foreclosure that were serviced or held in trust by Countrywide as part of Bank of America’s portfolio. RealtyTrac also tracks the percentage of foreclosed properties it considers to be “seriously underwater” — defined as having a loan-to-value ratio of at least 125%. Additional data on the total amount of mortgage loans originated in 2012 and the size of the mortgage portfolio serviced or held in trust by banks as of December 31, 2012, come from Mortgage Daily.

These are the banks foreclosing on the most homes.

10. SunTrust Banks Inc.
> Loans in foreclosure: 6,001
> Avg. property value: $207,157
> Pct. seriously underwater: 64%

More than 6,000 loans serviced by SunTrust Banks Inc. (NYSE: STI) were in foreclosure as of February. Like most U.S. banks, SunTrust has been embroiled in controversy over its lending and foreclosure practices in recent years. SunTrust was one of five major lenders that in November agreed to pay a combined $162 million to settle complaints that it charged improper fees on home finance loans for veterans. Earlier in 2012, the bank agreed to pay $21 million to settle allegations that it overcharged more than 20,000 Hispanic and African American borrowers between 2005 and 2009.

9. PNC Financial Group
> Loans in foreclosure: 8,545
> Avg. property value: $185,306
> Pct. seriously underwater: 55%

PNC Financial Group Inc. (NYSE: PNC) serviced more than 8,500 loans in the foreclosure process as of last month. The average property value was just $185,306, one of the lowest of all banks, and the average debt on these mortgages was $202,286. Of the 8,545 loans in the foreclosure process, approximately 55% were considered seriously underwater. At the end of 2012, PNC was the 10th largest mortgage servicer in the country, with a portfolio size of $169.4 billion. PNC was recently required to pay $70 million in order to settle allegations of illegal foreclosure practices.

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8. HSBC Holdings
> Loans in foreclosure: 16,317
> Avg. property value: $233,670
> Pct. seriously underwater: 60%

More than 16,000 loans serviced by HSBC Holdings PLC (NYSE: HBC) were in the foreclosure process as of February 2013. Six in 10 of these mortgages were considered seriously underwater. In January, the bank agreed to pay $249 million to settle complaints that it had wrongfully foreclosed on U.S. homeowners. Under the terms of the settlement, the bank paid out $96 million to 112,000 homeowners, while the remainder of the money went to reducing mortgage balances and forgiving outstanding principal on short sales, or selling a property for less than what is owed. Earlier this month, HSBC announced it was selling $3.2 billion worth of consumer loans to trim down U.S. operations.

7. Citigroup
> Loans in foreclosure: 27,697
> Avg. property value: $202,390
> Pct. seriously underwater: 54%

Citigroup Inc. (NYSE: C) serviced $6.3 billion in outstanding mortgage debt on homes in foreclosure, the seventh highest amount of all banks. Of homes in the foreclosure process, 54% were considered seriously underwater. While this figure is high, it was better than most of the nation’s largest banks. Citigroup is still fighting court battles regarding its mortgage practices as authorities accuse it of unfairly evicting people from their homes. These legal proceedings continue to hurt the company’s bottom-line.

6. Bank of New York Mellon
> Loans in foreclosure: 31,821
> Avg. property value: $236,703
> Pct. seriously underwater: 67%

At the end of 2012, Bank of New York Mellon Corp. (NYSE: BK) had $1.4 trillion under management and more than $26 trillion under custody. A core focus of the company’s business is its function as a custodian, tasked with safeguarding financial assets and handling various monetary and financial transactions. During the financial crisis, the Treasury Department named the bank as custodian for its bailout fund — meaning the bank provided record keeping and cash management for the fund. Although BNY Mellon is not a loan servicer responsible for executing the foreclosure process on delinquent loans, it is listed as the plaintiff or beneficiary in nearly 32,000 foreclosure proceedings nationwide, according to RealtyTrac data. The bank is listed because it acts as trustee on certain mortgage-backed securitizations, which are created when a large number of mortgage loans are pooled and placed in a trust. Foreclosure action related to properties held in the trust must be brought in the trustee’s name even though the trustee is not involved in the day-to-day foreclosure proceedings.

5. Deutsche Bank
> Loans in foreclosure: 33,608
> Avg. property value: $228,446
> Pct. seriously underwater: 63%

In January 2007, Deutsche Bank A.G. (NYSE: DB) bought home loan provider MortgageIT for $430 million. Soon after, the U.S. housing market collapsed. In May 2012, the bank agreed to pay the U.S. federal government more than $200 million to resolve charges that MortgageIT misrepresented the quality of mortgage loans it insured on behalf of the Federal Housing Administration. Three years ago, Deutsche Bank also paid the Federal Deposit Insurance Corporation $54 million to settle allegations against MortgageIT. While Deutsche Bank does not have a servicing arm, it acted as a trustee on more than 33,000 loans in the foreclosure process across the country, twice the number of any other non-U.S. bank.

4. U.S. Bancorp
> Loans in foreclosure: 44,881
> Avg. property value: $206,754
> Pct. seriously underwater: 62%

Nearly 45,000 loans serviced by U.S. Bancorp (NYSE: USB), with a cumulative property value of just under $9.3 billion, were in default as of February. About 28,000, or 62%, of all mortgages in foreclosure were considered seriously underwater. The bank was among the 10 financial institutions that agreed to pay $8.5 billion to settle allegations of widespread mortgage abuse in the foreclosure process, with U.S. Bancorp’s share of the payments totaling $80 million. The bank was the third-largest mortgage originator in 2012, lending $84.5 billion. This was up significantly from the $49.1 billion it lent in 2011.

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3. JPMorgan Chase
> Loans in foreclosure: 54,325
> Avg. property value: $208,183
> Pct. seriously underwater: 54%

As of February 2013, J.P. Morgan Chase & Co. (NYSE: JPM) serviced nearly 55,000 mortgages that were in the foreclosure process, worth $11.4 billion. Fortunately for the bank, just 54% of those homes in foreclosure were considered seriously underwater, a significantly lower percentage than banks such as Bank of New York Mellon and Deutsche Bank. The bank was able to provide more loans in 2012 than it did in previous years. That year, the bank was responsible for 10% of all mortgage loans in the United States, worth $182.2 billion. This was up from the $146.7 billion the company had lent in 2011.

2. Wells Fargo
> Loans in foreclosure: 84,903
> Avg. property value: $205,550
> Pct. seriously underwater: 56%

Wells Fargo & Co. (NYSE: WFC) serviced $19.9 billion in total mortgage debt, a higher figure than any other bank except for Bank of America. Wells Fargo’s past lending practices received intense scrutiny in the past several years. The bank was one of the 10 servicers that participated in the $8.5 billion mortgage settlement announced in January. The bank was also required to pay $175 million in 2012 to settle accusations that it discriminated against African American and Hispanic customers between 2004 and 2009. Despite these troubles, Wells Fargo was the largest mortgage lender in the U.S. during 2012, originating 28% of all mortgages, worth $524 billion.

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1. Bank of America
> Loans in foreclosure: 96,319
> Avg. property value: $203,956
> Pct. seriously underwater: 61%

Bank of America Corp. (NYSE: BAC) serviced more loans for homes in foreclosure than any other bank in America as of February, at more than 96,000. In all, these properties had more than $23 billion in mortgage debt, and 60% of them were seriously underwater. The bank’s purchase of mortgage lender Countrywide Financial has been especially criticized. As of mid-2012, the acquisition was believed to have cost Bank of America over $40 billion. According to Mortgage Daily, the bank is taking a step back in both mortgage lending and servicing. In 2012, it cut the amount of mortgage loans it originated from $156.1 billion to $78.7 billion, while cutting its mortgage servicing operations by 21%.

Correction: An earlier version of this article incorrectly identified Bank of New York Mellon and Deutsche Bank as mortgage servicers. In fact, both are mortgage trustees. 24/7 Wall St. relied on data compiled by RealtyTrac for this article. RealtyTrac has since revised that data based on new information which was not available to it or 24/7 Wall St. at the time of publication. According to RealtyTrac, the list of entities provided by them “represent institutions that were listed on the foreclosure documents (default notice or auction notice) as the noteholder or beneficiary in non-judicial foreclosure documents or the plaintiff in judicial foreclosure documents. In some cases the noteholder/beneficiary or plaintiff are also acting as servicers of the loan, collecting payments and executing the foreclosure proceedings. In some cases the noteholder/beneficiary or plaintiff listed is a trustee for a pool of mortgage loans held in a trust.”

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