Earlier this week, Sen. Al Franken sent a letter to six federal agencies asking them to investigate foreclosure fraud at Ally Financial and other lenders, as well as provide restitution to any borrowers illegally foreclosed upon. Yesterday, the acting Comptroller of the Currency, John Walsh, acted on Franken’s request.

A top federal bank regulator said Thursday that he has directed seven of the nation’s largest lenders to review their foreclosure processes after learning about the widespread mishandling of homeowner evictions by the industry.

John Walsh, acting director of the Office of the Comptroller of the Currency, told lawmakers during a hearing on the financial regulatory overhaul enacted this summer that some lenders “clearly had deficiencies” in their system for foreclosures.

The banks contacted by regulators include J.P. Morgan Chase, which announced Wednesday that it was freezing 56,000 foreclosures after finding errors in its preparation of documents, according to OCC spokesman Kevin Mukri. Other lenders contacted include Bank of America, Citibank, HSBC, PNC Bank, U.S. Bank and Wells Fargo.

“We both want to see that they fix the processing problems but also to look to see whether there is specific harm [that has been caused] in individual cases,” Walsh said.

Now, asking for an internal review doesn’t go as far as an independent investigation. But it’s a decent start.

Sheila Bair and Ben Bernanke of the FDIC and Federal Reserve, respectively, also commented on the issue in a Senate Banking Committee hearing yesterday. Franken copied both of them on his letter.

Bair, whose agency insures deposits at thousands of U.S. banks, called the issue of document processing errors “troubling” and said “it’s just a further indication of how wrong we went with the mortgage origination process and securitization process.”

Bernanke said that “it’s been a managerial challenge to the banks to deal with these foreclosure modifications.” And, he added, “they haven’t always met that challenge.”

In potentially more explosive news, the Secretary of State of Ohio, Jennifer Brunner, has referred thousands of Ohio foreclosures from JPMorgan Chase and MERS to a federal prosecutor. That significantly amps up the pressure. MERS, which Alan Grayson explained in his short video, was the privatized system where many banks and lenders did their securitization of mortgages, often leading to a lack of proper procedures in establishing ownership of the notes.

Ohio is one of the 23 states where foreclosure evictions require a judge’s sign-off, but Franken’s home state of Minnesota is not. I asked Franken what he would recommend for the state, and his office responded. “Although Minnesota does not require judicial sign-off on all foreclosures, Minnesotans (and all homeowners) can seek an injunction in a foreclosure proceeding. Senator Franken wants to make sure that any foreclosure in every state is done according to the letter of the law, both state and federal law. He believes that foreclosures should be halted if there is potential misconduct at any point in the process.”

Franken has pushed for an Office of the Homeowner Advocate, an independent review board that would be able to help homeowners sort through their legal rights and act as a counterweight to the big banks and an impediment to wrongful treatment or fraud. “The problems with GMAC and JPMorgan Chase mortgages illustrate exactly why we need the Office of the Homeowner Advocate,” Franken’s office said in response to questions. “It’s this type of inattention to detail that has led to the complaints our office hear against the HAMP program—borrowers are being denied loans modifications without clear justification and then have nowhere to go.”