Sheila Bair, the chair to the Federal Deposit Insurance Corporation, on Wednesday said the mortgage servicing business model was fundamentally flawed and in need of reform.

At an event in Washington, DC, Bair said: "Just as misaligned incentives drove the origination of trillions of dollars of unaffordable subprime and Alt-A mortgages that triggered the crisis, the process deficiencies we now see in mortgage servicing show that its basic business model and compensation structure are also