CHARLOTTE, N.C./BOSTON (Reuters) – Bank of America said on Monday it was partially lifting its nationwide freeze on foreclosures, a sign that a crisis over major banks’ mortgage practices may be easing.

The move by Bank of America (BAC.N), the largest mortgage servicer, marked one of the first positive developments for a financial sector under pressure after two weeks of damaging accusations that shoddy paperwork forced some people illegally out of their homes.

The controversy, which has drawn public outrage and sparked government probes, has threatened bank earnings and the health of the fragile housing market, battered by falling prices and foreclosures of nearly 3 million homes since January 2007.

At issue are allegations that banks failed to review foreclosure documents properly or submitted false statements when they foreclosed on properties. Banks could face fines and lawsuits, and may be forced to repurchase faulty loans.

Bank of America, which imposed moratoriums along with some other banks earlier this month as the foreclosure crisis grew, said it would resume foreclosures in state courts in 23 states on October 25, after having reviewed its procedures and decided they were sound.

Bank of America is due to release its quarterly financial results on Tuesday, and faces a likely barrage of questions from Wall Street analysts about foreclosures.

“This is a sign they’re feeling relatively confident,” said Jefferson Harralson, a Keefe, Bruyette & Woods Inc bank analyst.

Foreclosure sales will resume in states where a judge’s approval is required, when the bank begins refilling amended affidavits on 102,000 foreclosures, Bank of America said.

In the other 27 states, where a judge’s approval is not needed, the bank will continuing its reviews for an undetermined period, but expects fewer than 30,000 foreclosures sales will be delayed as part of this temporary halt.

“As was the case for our judicial state review, our initial assessment findings show the basis for our foreclosure decisions is accurate,” said BofA spokesman Dan Frahm.

There was no immediate word whether other banks that imposed foreclosure moratoriums planned to follow Bank of America’s lead.

The White House, despite congressional election-year pressures, has refrained from joining calls for a nationwide moratorium on foreclosures.

John Walsh, acting director of the Office of the Comptroller of the Currency, said earlier on Monday that interagency teams had been dispatched to U.S. banks to check on whether any homeowners had been harmed by foreclosure procedures.

He spoke as investor concerns appeared to ease over the potential exposure of the financial sector to foreclosure problems that rattled the markets last week.

Banks are accused of using “robo-signers” — to sign hundreds of foreclosure documents a day without reviewing the documents properly, reigniting public anger with an industry blamed for helping cause the 2007-2009 financial crisis and resented for getting billions of dollars in taxpayer aid.

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U.S. stocks rose on Monday, led by gains in financial shares, as Citigroup (C.N) reported stronger-than-expected profits.

Citigroup, which has declined to place a temporary moratorium on foreclosures, said it is “fairly confident” in its procedures. It saw its results boosted by slowing credit losses and reduced reserves for bad loans.

“The financials last week were getting hammered over questions over foreclosure proceedings … now it doesn’t seem to be as all-encompassing,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

OCC’s Walsh, whose office oversees large national banks, told reporters after a speech in Boston that teams from his agency, the Federal Reserve and the Federal Deposit Insurance Corp were working together.

Attorneys general in all 50 U.S. states have launched their own probe and the U.S. Justice Department and the Securities and Exchange Commission are also investigating.

Atlanta Federal Reserve Bank President Dennis Lockhart said on Monday that the U.S. central bank was examining mortgage servicers in an effort to get a better sense of the extent of foreclosure documentation problems around the nation.

“We’re doing quite a bit,” Lockhart told reporters after a speech in Savannah, Georgia. “We’re doing ad hoc exams of the major mortgage servicing institutions as well as other banks that have a significant servicing flow.”

The Obama administration says it backs the attorneys general investigation but at the same time it has signaled it is wary of doing anything that could derail any recovery in the housing market, usually a driver of economic rebounds.

Republicans are expected to make big gains in the November 2 midterm elections on the back of growing disapproval over how President Barack Obama and his Democrats are handling the economy.

(Additional reporting by Caroline Valetkevitch in New York, Pedro Nicolaci da Costa in Savannah, Corbett B. Daly in Washington; Writing by Matt Spetalnick; Editing by Tim Dobbyn and Jackie Frank)

BASEL, Switzerland – Banks will have to significantly increase their capital reserves under rules endorsed Sunday by the world’s major central banks, which are trying to prevent another financial collapse without impeding the fragile economic recovery.

The new banking rules are designed to strengthen bank finances and rein in excessive risk-taking, but some banks have protested that they may dampen the recovery by forcing them to reduce the lending that fuels economic growth.

Forcing banks to keep more capital on hand will restrict the amount of loans they can make, but it will make them better able to withstand the blow if many of those loans go sour. The rules also are intended to boost confidence that the banking system won’t repeat past mistakes.

Under current rules, banks must hold back at least 4 percent of their balance sheet to cover their risks. This mandatory reserve — known as tier 1 capital — would rise to 4.5 percent by 2013 under the new rules and reach 6 percent in 2019.

In addition, banks would be required to keep an emergency reserve known as a “conservation buffer” of 2.5 percent. In total, the amount of rock-solid reserves each bank is expected to have by the end of the decade will be 8.5 percent of its balance sheet.

U.S. officials including Federal Reserve chairman Ben Bernanke issued a joint statement calling the new standards a “significant step forward in reducing the incidence and severity of future financial crises.”

European Central Bank president Jean-Claude Trichet, chairman of the committee of central bankers and bank supervisors that worked on the new rules, called the agreement “a fundamental strengthening of global capital standards” that will encourage both growth and stability.

Representatives of the Fed, the ECB and other major central banks agreed to the deal Sunday at a meeting in Basel, Switzerland. It still has to be presented to leaders of the Group of 20 forum of rich and developing countries at a meeting in November and ratified by national governments before it comes into force.

The agreement, known as Basel III, is seen as a cornerstone of the global financial reforms proposed by governments stung by the experience of having to bail out some ailing banks to avoid wider economic collapse.

Fred Cannon, a banking analyst at Keefe, Bruyette & Woods, said the rules probably will reduce bank profit margins and lending from the heights they reached in 2007. But he added that before 2000 or so, many U.S. banks were already operating with enough capital reserves to meet the new minimums.

Cannon said the new standards certainly will not keep the banks from lending more than they did last year, when lending shrank mainly because businesses and consumers decided to save instead of borrow. But he expressed doubts on whether the new rules will avert another crisis.

The trouble last time, he said, was that banks were hiding the full extent of the risks they had taken. And there is no guarantee they won’t find new ways to appear more conservative than they are under the new regime, he said.

“Government regulations tend to fix the last crisis,” he said. “Whether it will prevent the next one is the question.”

Earlier this year, the Brussels-based European Banking Federation warned that the rules could keep the 16 nations that use the euro in or close to recession through 2014.

The federation, which represents more than 5,000 banks, said its analysis of proposed new Basel III banking standards shows that it would limit banks’ credit growth and profits, hurt the economy and prevent the creation of up to 5 million jobs in the eurozone.

U.S. agencies have the authority to institute tougher capital standards under the sweeping financial overhaul legislation that Congress passed and President Barack Obama signed into law in July. The new global rules are expected to be endorsed by Obama and other leaders of the Group of 20 major economies when they meet in November in Seoul, South Korea.

Treasury Secretary Timothy Geithner has been leading the effort among G-20 finance ministers to get international backing for the new capital standards. He has argued that the rules must be implemented in a coordinated manner so countries don’t try to obtain unfair advantages by allowing their banks to operate under less stringent standards.

Regulators on Sunday also agreed to a number of other measures to shore up the stability of financial institutions:

• Countries will be able to demand that banks build up a further reserve during good times amounting to up to 2.5 percent of their common equity. This “countercyclical buffer” is to help avoid excessive lending during periods of economic boom.

• Another measure aimed at preventing banks from overstretching themselves is the introduction of a leverage ratio of 3 percent. Leverage, or borrowing to invest elsewhere, boosts returns but can backfire catastrophically if an investment declines. Some European banks had objected to this, arguing that the measure unfairly penalizes small lenders with relatively safe credit portfolios.

• Regulators also agreed to continue working on additional safeguards for “systemically important banks” — those that could bring down entire economies if they collapse.

Already one bank has cited the new rules as a reason to tap the market for billions of euros in new capital.

Earlier Sunday, Germany’s biggest bank, Deutsche Bank AG, announced plans to raise at least 9.8 billion euro ($12.4 billion) in a capital increase.

The planned issue of 308.6 million new common shares is meant primarily to cover the consolidation of Postbank, “but will also support the existing capital base to accommodate regulatory changes and business growth,” Deutsche Bank said. It did not elaborate.

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Associated Press writers Andrew Vanacore in New York, Martin Crutsinger in Washington, Frank Jordans in Geneva and Geir Moulson in Berlin contributed to this report.