A lot of industry attention is currently focused on the finish line for the digitizing of the mortgage business, with mortgage lenders, servicers, and vendors in countdown mode.  In this environment, it’s important not to lose sight of the risks that lay along the route. Additionally, digitizing the mortgage lifecycle only represents a portion of the evolving automated mortgage process, which encompasses expanding data and privacy requirements, the increase of mobile applications, and much more. Vendor partners, have and will, continue to play a vital role in helping the industry manage growth in complexity and innovation, adding value to origination, underwriting, closing, delivery, and servicing, inclusive of loss mitigation and customer retention. However, an inexperienced or unfocused third-party vendor can quickly put lenders, servicers, and even their customers at risk if they don’t stay on top of the challenges.

Vendor Management

Vendor management was a hot topic for several years with regulators, including the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) emphasizing its importance. Although the mortgage industry has largely agreed on the need for thorough vetting of vendors, evolving requirements and standards necessitate that vendors, and the lenders and servicers that hire them, remain vigilant in keeping up with the latest industry developments.  Among the most pressing vendor management issues today are cybersecurity and rapidly evolving privacy legislation.

Cybersecurity and Data Privacy

Earlier this year, TechCrunch reported that more than 24 million mortgage-related financial documents were exposed in a server data leak. The materials included over ten years of customer data, mortgage agreements, repayment schedules, and tax documents tied to mortgage loans. The corresponding loans included Federal Housing Administration (FHA) loans and were made by half a dozen different lenders. The cybersecurity lapse was traced to a fourth-party vendor, underscoring the importance of vendor management.

The leaked documents contained private personal information (PII), including borrower names, addresses, birthdates, Social Security numbers, and financial account numbers. Incidents such as this and the infamous Facebook-Cambridge Analytica data scandal prompted California to enact the California Consumer Privacy Act, which takes effect January 1, 2020.  Thirteen other states currently have similar legislation in the works.  The mortgage industry may soon be faced with the prospect of dealing with a patchwork of privacy legislation and ensuring all their vendors do, too.

Control and Visibility

These scenarios paint an unpleasant picture of what can happen if vendor management goes unchecked.  Technology solutions and workflow automation assist lenders and servicers in maintaining appropriate control over the numerous third-party solutions and internal firm procedures and risk safeguards found in any given shop.  Although there are some point solutions specific to vendor management, automated workflow offers a far reaching and impactful means for checking vendor processes.  Workflow supports a repeatable, auditable, and standardized approach to ensure functionality meets compliance standards, regulation, and industry challenges throughout the mortgage process.

CLARIFIRE^® for Vendor Management

Clarifire, the trusted business process automation company, uses their own proven automated workflow technology, CLARIFIRE, to drive all aspects of vendor management, from onboarding new vendors, supporting annual and new client audits, to review of communications and scorecard assessments.  CLARIFIRE creates a full picture of your vendor relationships, including a centralized view of events to build a comprehensive assessment of vendor risk, both internal to the company and external to business partners and clients. 

Additionally, the CLARIFIRE workflow application simplifies process configuration and changes to help hone your oversight and management of third-party activities.  The CLARIFIRE suite of solutions can help your organization achieve flexibility, transparency, and compliance.  Leverage and manage, your vendor relationships with confidence through CLARIFIRE.  Call us today at 866.222.3370 to learn more about vendor management and the power of automated workflow.