NEW YORK ( TheStreet) -- A coalition of large public pension funds have expressed that their $5.7 billion worth of investments in Bank of America ( BAC), Citigroup ( C), JPMorgan Chase ( JPM) and Wells Fargo ( WFC) could be hurt by mortgage servicing problems. The funds demanded on Monday that the four big banks' boards of directors undertake independent examinations of mortgage and foreclosure practices. BofA, Citi, JPMorgan and Wells are the largest mortgage servicers in the country. All of them have been named in lawsuits by private parties and investigations by regulators and state attorneys general regarding flaws in paperwork processing and alleged improper foreclosures. "There is a fundamental problem in their procedures that endangers not just homeowners, but shareholders, and local economies," said New York City Comptroller John C. Liu, who heads five pension funds that are part of the coalition demanding action. The coalition also includes the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investment, the Illinois State Universities Retirement System, the New York State Common Retirement Fund, the North Carolina Retirement Systems, and the Oregon Public Employees Retirement Fund. As of Dec. 31, the coalition's funds held 97.1 million Bank of America shares valued at $1.3 billion; 226.6 million Citigroup shares valued at $1.1 billion; 40.7 million JPMorgan Chase shares valued at $1.7 billion; and 50.6 million Wells Fargo shares valued at $1.6 billion. Mortgage concerns have been a big overhang in the stocks, particularly Bank of America's, which is the country's largest mortgage servicer. The Congressional Oversight Panel has estimated that U.S. banks' potential mortgage liability could total $52 billion, most of which pertains to the big servicers. Yet it's unclear how much the mortgage mess will really cost the banks because of how many factors are at play, in terms of litigation alone. There are homeowners who accuse the banks of improper foreclosure, who have mixed success in court. Though several lawsuits have been thrown out of state courts, depositions have elucidated the practice of so-called "robosigning," in which bank employees signed off on thousands of foreclosure affidavits without properly vetting the information. There are also investors in mortgage securities trying to push souring debt back to the banks and state and federal authorities investigating the situation with potential monetary damages.
"We don't know exactly what the banks were doing, and we don't know if they did it right," New York State Comptroller Thomas P. DiNapoli said in a statement. "Millions of families have lost their homes, and the investments of the million members of the Common Retirement System have been put at risk. As investors, we need to understand what happened." The coalition of pension funds are calling for the banks to report findings of independent examinations in their 2011 proxy statements this spring. -- Written by Lauren Tara LaCapra in New York. >To contact the writer of this article, click here: Lauren Tara LaCapra. >To follow the writer on Twitter, go to http://twitter.com/laurenlacapra. >To submit a news tip, send an email to: email@example.com.