Fairbanks, Ocwen Cases Leave Mark on Industry.

Two regulatory agreements between subprime servicing specialists and federal regulators are having an impact on the entire loan servicing industry, according to Fitch Ratings.

While federal regulators said the agreements that Select Portfolio Servicing (formerly Fairbanks) and Ocwen Federal Bank entered into were not designed as industry guidelines, a Fitch Ratings survey of lenders found that the settlement and supervisory agreements have had a widespread impact on servicing practices.

Thomas Crowe, a director in Fitch's operational risk management group, said that because the agreements are the only published documents out there that carry the authority of the government, lenders have been reviewing their own practices in light of those agreements.

"The two settlements or agreements weren't intended to be best-practice guidelines for the industry, but I think in reality that is what they have become," he told MSN.

Most servicers surveyed by Fitch undertook some type of review of their operations in response to the Fairbanks and Ocwen cases in an effort to ensure that they are not targeted by regulators or consumer advocates.

Especially in the subprime arena, many servicers acknowledged changing certain practices as a result of those reviews.

The areas servicers most frequently said they made changes in were customer service, borrower communications, dispute resolution, fees charged, payoff practices, collections and default management (including repayment plans and foreclosure processes), force-placed insurance and compliance, Fitch Ratings said in a special report.