DS News

60 Mortgage lenders and servicers have always held their service providers accountable for doing good work in compliance with investor guidelines and government regulations. Vendors that could not meet these minimum requirements failed out of the business, often creating problems that required time and money for the industry to clean up. In the past, the industry had the luxury of making mistakes right and financial institutions could operate in the sure knowledge that if a problem presented itself, the solution would not unduly hinder the operation of the enterprise. at's no longer true today. e Consumer Financial Protection Bureau (CFPB) has made it abundantly clear that the failures of any third-party service provider will be held against the financial institution. Banks, mortgage banks, and mortgage servicers are now ultimately responsible for every job performed on their behalf by any third party. is fundamentally changes the dynamic between institution and service provider. Companies that don't realize this and attempt to continue to operate as if service level agreements are a fail-safe to disaster will be systematically driven from the business by federal regulators. In response, lenders and servicers have stepped up their due diligence, digging into the backgrounds of every servicer provider they consider hiring in an effort to uncover flaws that could lead to errors that might later be held against them by the government. Background checks are now ordered on a regular basis and vendor visits are a necessity. But is the industry looking in the right places to mitigate this risk? We often see the leaders of settlement service providers in the trade press, talking intelligently about the key issues of the day. When lenders and servicers visit with these companies, they sit down across the conference room table from a team of highly trained and experienced executives, and it's upon the reputations of these individuals that the decision is made. But what about all of the other people working in the company—the people most likely to do the actual work the lender or servicer is outsourcing? How good are they? In our experience, financial services companies seeking to outsource work rarely ask for details on the potential service provider's internal training regimen before making their decision on a partner, when so much depends upon getting the job done right. is will have to change if lenders and servicers hope to comply with increasingly stringent investor requirements and government mandates. ere have been many articles on preparing an RFP, vetting vendors, and even managing vendor relationships. Few, if any, have covered this issue. Of course, simply asking about employee training in a request for proposal is not sufficient due diligence. Lenders and servicers interested in evaluating a potential vendor's internal training methods need guidance in order to ensure that all of the vendor's employees are properly trained to provide a fully compliant service. WHY YOU MUST ASK ABOUT EMPLOYEE TRAINING Every good company has some method for bringing new employees up to speed on the standard operating procedures required S U C C E S S F O R M U L A S / S H A W N S O R E N S E N Ensuring a well-trained workforce could mean the difference between sinking or swimming in today's strictly regulated environment.

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