The mortgage market is one that seems to be in a constant state of transition.
Whether it is transferring mortgage servicing rights from one servicer to another; ramping up loan boarding, subordination and lien release teams to deal with refinances, and then ramping them back down; shifting from a refinance market to purchase and home equity demand; planning to comply with a new compliance requirement; or even just day-to-day productivity and capacity challenges, outsourcing has become a “go to” strategy for getting things done, but it is important to remember that not all vendors are created equal.
With new outsourcers appearing every day, it is time to revisit the dos and don’ts of vendor selection and management.
Governance
Do look for a vendor that is managed by an able team with a vision for the industry, the ability to execute and the structure to provide transparency into the services performed on your behalf.
Do not rely on vendors that can tell you what they do, but they cannot show it. Words do not define success, only action and results can define success. Expect vendors to show you results.
Industry Expertise and Experience
Do look for a vendor that has depth in the management team in terms of both domain expertise and experience in providing the services.
Do not rely on vendors that rely heavily on a single individual to deliver results. Consistency in providing results depends on having a strong team of people working on your behalf and not just one individual that is carrying the weight.
Risk Management
Do look for the requisite licensing, defined business continuity plans and internal quality controls that not only mitigate risk, but drive performance improvements. The risk and regulatory environment is not static and the risk management process needs to be dynamic as well.
Do not work with vendors that put you at risk for compliance. Vendors need to be able to show you how they are qualified to do business and how they manage quality and compliance on an ongoing basis.
Breadth and Depth of Service Offering
Do look for vendors that offer a suite of services. Established vendors have stood the test of time and have mitigated the risk that goes along with concentration on a single market or a single product and service.
Do not get stuck with a “one trick pony.” The vendor vetting process is not easy and the ongoing responsibility to monitor performance is time consuming. Working with fewer vendors who can provide more services is one key to mitigating vendor risk and assuring you have products and services available in a changing market is critical to staying competitive.
Agility and Flexibility
Do look for vendors that can adapt to the changing market environment. Business needs change and a vendor should be able to adapt to change with new products, new services or upgrades to existing services.
Do not get caught with a vendor that cannot change. As we shift from refinance to purchase, fixed rates to adjustable-rate mortgages and the home equity market making a return, you should not need to shop for new vendor if you have selected the right vendor from the start. As lenders wind down big refinance pipelines, their vendor should work with them to enable better service on their purchase loans and to ramp up for resurgence in home equity volume.
These rules may seem like common sense, but it is easy to lose sight of what is important. Take the time now to make the right vendor decisions and you will save time and money while mitigating risk in the long run.
Anne Politis is executive vice president, mortgage fulfillment for ISGN.
