Vendorly Collaborates With Shared Assessments

Vendorly, a vendor oversight platform for financial institutions, has collaborated with Shared Assessments, a source in third-party risk management, to license the Standardized Information Gathering (SIG) Questionnaire. The SIG Questionnaire is available for Vendorly customers to access the industry-standard list of questions, based on the risk profile of their vendor engagement.

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Built on best practices by the Shared Assessments member community, the SIG Questionnaire provides standardization and efficiency in performing third-party risk assessments. Vendorly customers no longer need to rely solely on internal expertise in knowing the difference between frameworks (i.e. ISO or NIST) and instead can rely on the standardized questionnaire to help define how to mitigate risk. With over 50,000 vendors actively managed on the Vendorly platform, the addition of the SIG functionality showcases Vendorly’s commitment to raising the standards of third-party risk management (TPRM). The SIG effectively becomes the standard for all questionnaires, helping to satisfy the universe of a TPRM professional’s risk control areas.

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“Vendor management is becoming increasingly complex, covering more and more areas,” said Jim Vaca, Senior Vice President, Vendorly. “By recognizing the pain points experienced by the customers and vendors we work with, we felt a need to bring additional efficiency to both. So often our clients and prospects ask for guidance on the right questions to ask, even something as simple as how long the questionnaire should be. The standardization of questionnaires is long overdue and we are excited to be offering the Shared Assessments SIG Questionnaire to our clients.”

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“We commend Vendorly for joining the community of third-party risk practitioners working to create assurance in vendor relationships,” said Catherine A. Allen, Chairman & CEO, The Santa Fe Group | Shared Assessments. “By adopting and contributing to the Shared Assessments standard, Vendorly is working to create standard assessments that are reliable, relevant and efficient.”

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Vendorly is a SaaS vendor oversight platform designed to help financial institutions manage their vendors and meet their evolving vendor oversight obligations. The Vendorly platform can help to streamline vendor due diligence, document maintenance, monitoring and audits. Vendorly is part of the Altisource Portfolio Solutions S.A. (NASDAQ: ASPS) family of businesses.

Improve Vendor Management With Data Consolidation And Tracking Software

Lenders are constantly reviewing important pieces of data, typically from multiple vendor sources, in order to make critical lending decisions regarding borrowers or their pieces of property. This often results in miscommunication, lost files and the use of inappropriate vendors for unique scenarios.

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Luckily, there have been major advancements in the world of reporting, including the perfection of software tools that allow third-party companies to collect vendor data and display it in ways that are easy for employees to consume. Those employees are then better able to effectively guide their lender customers to the best course of action regarding the vendors they use.

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For instance, one of the biggest complaints that borrowers often have with their lender is that the appraisal process takes far too long. Especially in today’s world of instant gratification, no one is happy about waiting weeks to hear if their loan has been approved.

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So, if an appraisal from a certain vendor took an unusually long amount of time, a third-party employee can use this reporting software to determine if this is a one-off scenario that occurred due to unexpected factors, or if it is actually part of a larger trend with that particular vendor. If the vendor is performing positively the majority of the time, no changes need to be made. However, if the data indicates a larger trend of poor performance, the employee must then alert the lender and help him make an appropriate decision about using better vendors in the future.

Because of this, it is important for third-party companies to first focus on internal reporting so that they can ensure they are doing the best possible job for their lender customers. When evaluating these reports, employees may note things like a vendor consistently slacking on turn times or a lender that is lending in an increasingly wide footprint. Upon seeing things like this, the company can provide its guidance on what alternative vendor options they may have.

And, just because a vendor is flagged for one customer does not mean it is flagged for all customers. Not all vendors are great performers in all areas; one may be a top performer in California but fail miserably on the East Coast. It is up to the third-party company to ensure that each of its customers’ unique requirements are met at all times.  

Of course, a reporting solution from a third-party provider is of no use if the provider is not adamant about staying up to date on compliance expectations. As lenders know better than anyone, the home equity and refinance industry is no stranger to ever-changing rules and requirements. By partnering with a company that can easily update its software as soon as laws or industry standards change, lenders save a lot of time and greatly reduce the risk of costly mistakes.

Reporting and analyzing data is truly the best method of vendor management. If a third-party provider has a lender customer that wants to change vendors, that provider should be able to effectively and efficiently collect data on the vendor and present it to the lender to either enforce or dispute their concern. It is vital to avoid making a vendor change based on an isolated incident that could actually make the problem worse.

An all-in-one solution to consolidate settlement services and aggregate vendor management, as opposed to the traditional model of ordering title, valuation and flood reports from different vendors, is critical for lenders to be flexible, successful, and to maintain positive relationships with their borrowers.

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Survey Finds That 59% Of Respondents Do Not Have A Fully Comprehensive Vendor Management Program

Vendorly polled banking and mortgage professionals on their organizations’ vendor management processes, challenges and technology capabilities. According to the study, there is a need for the implementation and enhancement of vendor management programs within the banking and mortgage industry. Three in five respondents (59 percent) said their organization does not have a fully comprehensive vendor management program in place. Of those respondents, one-third (33 percent) said their organization’s vendor management program needs improvement.

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Vendor Management Staffing Conditions and the Need for Improved Operations

When asked about the biggest challenge their organization faces within vendor management, more than one-third (36 percent) of respondents identified employee capacity to handle workload or vendor management as the greatest challenge. It is not surprising that the biggest vendor management challenge may depend on the size of the company’s vendor management team. Among survey respondents, 40 percent said their organization has three or more full-time employees dedicated to their vendor management program with 39 percent stating they have less than three.

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Nearly half of respondents (44 percent) said their organization is responsible for managing at least 100 vendors. With this volume of vendors to manage, it is no surprise that the second biggest challenge cited by professionals was knowing who their vendors are and tracking them (27 percent). Vendor inventory size and management may also influence reporting frequency. When asked how often their organization monitors and assesses vendor performance, 30 percent of respondents said annually.

The Growing Importance of Technology for Efficiency and Enhancing Vendor Management Processes

The need and desire for proper technology is evident among those surveyed. Nearly half (47 percent) said their organization does not have a technology solution in place to help manage vendors. A large majority (90 percent) believe technology would positively impact their vendor management program and process. Of those respondents, more than half (59 percent) said automation would help increase the efficiency of their program, 41 percent said technology would improve reporting capabilities to executive management and regulators, and 36 percent said it would improve effectiveness of vendor management by mitigating vendor risks.

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“The importance of technology to drive efficiency, increase due diligence and further improve an organization’s vendor oversight processes is becoming a realization for many,” said Jim Vaca, Senior Vice President, Vendorly. “However, as the survey results show, even though many have identified the need for a vendor management solution, a surprising number have yet to adopt or implement the technology. Our solutions allow for financial institutions to move away from historic and inefficient vendor management processes and transition toward a multifaceted vendor oversight program to help them achieve more efficient management of the process using much less human capital than otherwise would have been required without our technology.”

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The Power Of 1 In Vendor Management

The web of compliance continues to broaden and becomes more complex with each passing year. The Ability-to-Repay Rule and Quality Mortgage Standards now require lenders to work with “reasonable, reliable” third-party vendors to verify consumer information. Not only that, lenders are actually responsible for them. On top of thoroughly vetting each vendor, you must also continually monitor them to ensure they are updating procedures as required. Vendor management has become a significant part of what lenders do each day, and as such, demands a great deal of time and effort. As a result, a real trend is emerging within the industry to consolidate vendors.

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The proper way to vet

There’s much more to choosing the right third-party vendor than merely reviewing the documents and data they provide. You need to make sure that they align well with your lending operation, are in full compliance with all applicable regulations, will be available to address your questions and concerns, and are equipped to handle emergencies after hours should they arise…

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To do this properly, you must carefully review:

>>That their technology has been certified by a third-party IT-security specialist.

Manmade and natural disaster recovery plans for events such as hurricanes, floods, earthquakes, strikes, sabotage, hacks and theft.

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>>The vendor’s history, overall financial health, and organization setup.

>>The vendor’s compliance with applicable regulations. You should also learn whether they are under the supervision of any regulatory body.

If all of this sounds like a lot of work, it is. And as we all know, good work takes time, and time equals money. This is at the core of why there has been steady movement toward vendor consolidation.

Less is more

More and more, lenders are moving toward using as few third-party vendors as possible. To do this, they seek out firms that offer multiple products and services that can be bundled – essentially all verifications from pre-funding to post-closing, including appraisals, credit reports, flood zone determinations, Undisclosed Debt Verifications, tax return verifications, employment and income verifications, and Social Security Number verifications.

By using fewer vendors that offer more data services, those responsible for vendor management within your organization will have fewer companies to vet and manage and less paperwork to contend with. Time savings is where the real value is. Ideally, you should move toward using one third-party vendor, not only because of the reduced amount of time needed for the proper vetting and management of a single firm, but because there are many other benefits to using one third-party vendor.

>>Assistance with compliance – Reducing risk and ensuring compliance is better accomplished if you partner with a third-party vendor that understands and is fully capable of complying with applicable regulations.

>>Efficiency – Streamlining your business dealings by working with one third-party vendor for multiple solutions simplifies and focuses the work that goes into vendor vetting and management. Efficiencies are realized in both time and money saved.

>>Better customer service/business continuity – Dealing with one customer service group for multiple products is infinitely easier than dealing with multiple customer service groups from different vendors. You receive undivided attention from one point of contact that is dedicated to meeting your business needs.

>>Greater ability to customize – Selecting only the document and data solutions that are uniquely suited for your lending operations can be done more easily if you are picking and choosing products and services from a single source with a comprehensive line.

>>Best-in-class solutions – Building an end-to-end process with the very best solutions out there is the job of third-party vendors whose aim is to be a single source. By choosing to partner with one of them, you’ll immediately benefit from having access to best-in-class verifications.

>>Cost-savings – Reducing costs is another important reason to consolidate vendors because of the economic lift realized by bundling products and services. At the same time, the man hours saved by having to perform due diligence on a single vendor translates to dollars saved as well.

What characteristics to look for, and avoid, when assessing a third-party vendor

To realize all of these benefits, you must identify a third-party vendor that’s a good fit for your organization. What should you look for? Rich Swerbinsky, Chief Operating Officer of The Mortgage Collaborative, the only independent cooperative network in the mortgage industry, has an interesting perspective.

“There’s no better way to gain insight as to the likely experience with a vendor than to speak with customers that are already doing business with them,” Swerbinsky said. “Lenders should also look closely at the experience and track record of the senior leadership team as they are the people driving the organization. In addition, it is important to evaluate what key systems they are using and how well they can be integrated into your lending business,” he added.

At the same time, there are things lenders should be concerned about when vetting a vendor. What are those read flags? Swerbinsky cites a number of them.

“You should think twice about any vendors not already integrated or working to get integrated with key industry platforms. Vendors that insist on long-term initial contracts is another red-flag to me as vendors who will allow year-to-year contracts are essentially betting on themselves. Also, there are many start-up tech vendors in the mortgage space right now. Lenders should ask how they’re funded, how many existing clients they have, what their one-, three-, and five-year plan is for the company, and pay even closer attention to the depth of experience on their senior leadership team,” Swerbinsky said.

One is a powerful number

Once you have identified a third-party vendor that aligns well with your lending organization, you can begin the process of consolidating your verifications with them. Once that is accomplished, you will begin to reap the benefits in terms of time and effort saved in the areas of vendor monitoring and management.

The power in partnering with one third-party vendor is considerable. It affords lenders the opportunity to save precious time and money, while benefiting from access to the very best verification data services available, better business continuity, improved customer service and the ability to tailor verification services to meet the specific needs of their business. More importantly, by choosing to work with a vendor that is well-versed in applicable regulatory requirements, lenders are better positioned to reduce risk. Vendor consolidation has become a popular business practice within the industry for good reason. There is much to be gained by harnessing the power of one.

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Vendor Management: A Necessity Of The Future

We already know that servicers have to balance the needs of tech savvy consumers and more tenacious regulatory bodies. Consumers are more knowledgeable and want real-time access to their accounts, make a payment and/or talk to someone at their discretion. Federal regulatory agencies, such as Consumer Financial Protection Bureau and the Department of Housing and Urban Development, want to protect consumers from any unscrupulous financial practices. Some of these same regulatory agencies now regulate vendors’ relationships with servicers or lenders. Trying to satisfy the two does not have to be double efforts. Servicers can have a synergy between their consumer management system and vendor management systems that provide complete transparency and at the same time create reports for management and auditing purposes.

While I understand and believe in the need to protect consumers, regulations are extremely restrictive and the best way for servicers to do this is to focus on using their current internal data to create better, cost effective vendor management processes seamlessly.

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In order to be productive and survive any federal audits, servicers have had to adjust to not only understanding vendor management requirements but educating their staff, implementing processes and systems that can help them with the process. They have modified their current day to day practices to include vendor oversight efforts. This has included educating their staff about ever changing regulations in addition to possibly adding new technology. And as if that isn’t enough, they must repeat the process with every single one of their service providers. The kicker is if these service providers cannot comply with regulatory requirements, the lender/servicer unfortunately is forced to find an alternative service provider. This process takes precious and valuable time away from their core business, originating or servicing loans.

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So imagine if you will, a scenario that would include effective, ongoing regulatory monitoring for compliance, having a viable contingency plan in place, notification of any updates that staff need to be trained and made aware of and having this done in real time without hiring a staff to maintain it. It is possible to make this happen but with proper planning by the servicer. During the development or purchasing of a vendor management system, servicers need to consider major factors that can affect how they perform, such as updating, educating and training around regulations that are constantly changing. It becomes imperative for servicers to have a robust and adaptable system. In fact, with the right system, whenever there is a change in regulations, the system’s provider should provide the update. Such a system should provide a seamless update for users. Adapting to such a system can save the servicer time with immediate updates and money by avoid regulatory fines.

Servicers survival now depends on adhering to these regulations, and even further, adapting to the regulations in a cost effective manner. They can either develop their own technology from scratch or license the product from other vendors. I would think they would turn to a trusted third party that would provide user-friendly technology that can be easily configured to the latest regulatory changes along with stellar customer service. Going this route will help servicers focus more on their core business; servicing loans and meeting the needs of borrowers.

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