Avoid Common Pitfalls With These 14 Recommendations

As a technology company, Mercury Network is keenly aware of the importance of third-party oversight, vendor compliance and their implications for lenders.  Since it’s clear lenders are liable for their service providers, all technology companies are gearing up. We’ve already begun receiving questionnaires from several larger lenders performing due diligence on their service providers, so we can shed some light on what’s happening on this important front so far.

In 2013, both CFPB and The OCC issued bulletins with specific guidance on their requirements for effective Third-Party Oversight. Since over 600 lenders and AMCs use Mercury Network to power over 20,000 appraisal deliveries a day, so we’ve already been through several third-party oversight audits.

We can combine the OCC and CFPB requirements with some of the lessons we’ve seen many lenders have already learned in their audit process, and offer an industry guide to best practices when it comes to selecting partners.

To get a jumpstart, you can download our free report, “Third-party oversight: Avoid common pitfalls with solutions for compliance, efficiency, and control” at http://www.mercuryvmp.com/TPO. (NOTE:  In the online version, please make destination URL this for tracking purposes: http://www.mercuryvmp.com/landing/TPO/?ls=web&cid=701U00000006l4f) It has links to all the agency bulletins, additional resources, and a good overview of what’s expected from lenders when it comes to compliance. In addition, we’ve added fourteen recommendations so you can avoid penalties and risk when choosing service providers.

Since most lenders are busy dealing with lower originations, Qualified Mortgage (QM) and other compliance burdens, many of you may not have scrutinized appraisal service providers. But as more and more lenders make progress on streamlining operations, service providers like us know our turn under the magnifying glass is coming.

As with all compliance-driven changes, third-party oversight can be seen as a hassle —adding extra burdens to lenders and service providers. But really digging into vendors who are critical to your success is always good practice. You will undoubtedly find that some of your valuation vendors present unacceptable risk, and lining up safer and better alternates has benefits beyond just ensuring your compliance.

With better vendors, you’ll find ways to be more efficient. You can reduce overhead costs, deliver better service to your borrowers, reduce delays and hassles, make loan originators more productive, and much more. As you start this process, also consider how flexible you are in switching vendors. Make sure you have a technology platform that can give you reports and statistics on your vendor performance, and make sure the technology you use gives you the flexibility to try new vendors easily and quickly. Vendor flexibility is one of the key tenants in the OCC requirements, so it’s important for compliance and for successful operations.

Compliance may be the trigger for your scrutiny and ultimately the reason you find yourself switching up some of your valuation vendors, but unreliable vendors are negatively impacting your bottom line. Like going to the dentist, vendor evaluation is painful, but better for you in the long run.

About The Author


Jennifer Miller

Jennifer Miller is president of Mercury Network, a web-based software platform used by more than 600 lenders and AMCs to manage compliant collateral valuation workflow. Jennifer can be reached at Jennifer@MercuryVMP.com.