The Association of Mortgage Investors released a white paper Wednesday on how to improve the servicing industry and recommended capping the amount of seriously delinquent loans each employee handles at between 100 and 150. AMI represents private investors and both public and private pension funds. In its paper, AMI said that investors usually invest on behalf of these state pension funds, retirement systems, university and charitable endowments, meaning 90% of the money invested in non-agency mortgage-backed securities represents public funds. It is carefully watching the 50 state attorneys general investigation into issues that have arisen in the servicing space, and called for an overhaul of these companies' practices. "The Attorneys General are poised to develop a national solution that helps distressed consumers and prevents a repeated wave of foreclosures over the next two years," the AMI said in its report. The group first conceded that intermediaries are vital to interact between distressed borrowers and the banks, and said along with the cap of 120-plus day delinquent loans, these accounts should be handled by a single point of contact until they are either brought current or some other resolution. AMI also said special servicers' enhanced counseling and capacity should be used by more lenders to find better-fitting modifications. "This also gets around the numerous existing servicer conflicts of interest, including second lien and other consumer debt ownership, fees and representation and warranty issues," AMI said. The investor group also stressed the need for more transparency on loans backing RMBS and more lasting modification terms including an option to push payments below even the 31% debt-to-income ratio, a staple to the government's Home Affordable Modification Program. Write to Jon Prior. Follow him on Twitter: @JonAPrior