Lenders Spruce Up Communication.

New York -- In the wake of increased regulatory pressure, many servicers of nonprime mortgage loans are paying more attention to borrower communication, according to subprime servicers and rating agency analysts.

But that isn't the only reason B&C servicing is getting more attention these days. With origination volume slowing down, lenders are looking to loan servicing to drive profits as well.

In the past, the servicing shop supported a company's loan origination capacity. Now, some companies see customer service as a business growth engine.

It is estimated that there is now more than $1 trillion in subprime mortgage loans outstanding, according to panelists at the recent MBA National Mortgage Servicing Conference in Orlando, Fla. (See related story on page 2.)

In a recent commentary from Standard & Poor's, which sprung from the panel session on nonprime mortgage servicing, analysts said there has been a significant change in the mindset of servicers about how best to manage nonprime portfolios. Servicers have concluded that "simple, clear communication" with the borrower could have averted litigation or regulatory action.

As a result, servicers have become more "customer-centric" in their approach, S&P said, reflecting concern about the risk associated with being accused of "predatory lending."

What has resulted is a renewed focus on customer relations and regulatory compliance.