Banish Inefficiencies, Stay Compliant: Change the Way you Choose your Service Providers

One result of increased costs and active regulation and enforcement in recent years is a mortgage lending community that is much more hyper-focused on the production and operations side of things. Where some lenders may once have been content to handoff the title, settlement and closing functions with little thought to much more than the closing date, lenders today realize that they need to oversee the actions of their partners more closely. For larger or national lenders especially, this presents the costly challenge of keeping an eye on dozens or even hundreds of different firms in multiple regions.

One way that lenders are managing this challenge without breaking the bank is by selecting one or a few highly trusted service providers. In the “good old fashioned” days, this partner might be called a “vendor management company;” although the service providers of today do much more and go above and beyond managing service providers. However, by selecting a quality partner and keeping close tabs on that “gatekeeper,” lenders have found a workable model for staying compliant; staying cost effective and staying on top of their vendor networks.

The following are just a few things we’ve seen lenders looking for when designating these trusted service providers:

  • Is the partner automated, and seamlessly automated at that?

  • Can the partner provide most or all of the settlement functions and, if not, does it keep a tight, well-managed partner network instead?

  • Does the service provider offer centralized purchase capabilities?

  • Does the service provider demonstrate an ongoing and continuously improving strategy for data security (especially for NPI)?

  • Does the provider have clear (written) policies and procedures in place for managing vendors? Does it offer consistent, clear, and frequent reporting to that end?

We’re experiencing a period of intensive introspection in the mortgage industry. Lenders are being driven (by the market as well as by compliance) to banish inefficiencies as well as opportunities for error or malfeasance. That extends to the partners upon which they rely. As a result, “the way we’ve always done it” is no longer an acceptable explanation for anything beyond why a provider went out of business.

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