Outsourcing is a very common practice in the finance industry. Since the 1970s, banks and other businesses have been outsourcing several functions including clerical, record storage, accounting, data processing, security and plant maintenance. The mortgage industry too followed suit soon. What fuelled the growth of outsourcing is the fact that outsourcers could do the work at a fraction of the cost of what companies spent to maintain themselves.
Outsourcing – The Norm
Top mortgage enterprises prefer to outsource their work to service partners in different areas ranging from loan boarding, document processing, pre-funding QA, post-close ops, etc. They choose to do so rather than spending resources on building in-house teams or funding in-house product development/ R&D. Outsourcing enables them to partner with third-party providers that excel in their niche.
Vendor Management – Critical
Mortgage companies, apart from outsourcing some of their key processes also need to work with several 3rd party agencies like appraisal management companies and title companies. While several of these activities may be outsourced, the final outcome responsibility remains with the mortgage company.
Managing relationships, following up for deliverables with multiple third-party vendors and contractors – each handling a different vertical – can get very complex very quickly. It is critical for lenders to outsource their assignments to be vigilant right from identifying the correct type of vendor to carrying out all the other formalities in order to ensure tension-free project executions with the desired quality standards. This means managing vendors is one of the most critical functions of the mortgage process yet it can pose a major headache for lenders.
Effective Vendor Management is an imperative part of the whole mortgage processing ecosystem as it can produce significant value. It can also go a long way in reducing costs, improving contract terms and increasing the value the organization yields from each vendor.
It is, therefore, beneficial to have a mortgage processing partner on board who can handle the entire vendor management process. With one entity managing all the vendors, it not only reduces the burden on the lender but also standardizes the deliverables so that every vendor is using a uniform and predictable process.
Compliance – Another Important Aspect
Compliance is another essential aspect that has to be factored in during a mortgage process. The more the number of vendors, the more chances there are that they might stray out of compliance and face increased risk. With state and federal regulations in place for supervised banks and nonbank financial institutions, the consequences of noncompliance are no trifling matter. There is a risk that vendors can create if they are not complaint.
A partner processing company that promises to deliver end-to-end loan processing can actually take up the onus of looking after the vendor relationships as well. The partner can be involved, right from proper due diligence to vendor selection and then managing the vendor deliverables. A partner processing company can also take care of the time and effort, especially if multiple vendors must be synchronized in their deliveries.
PrivoCorp is one such mortgage loan processing company that can undertake managing multiple vendors. This can save time for lenders from a lot of administration and supervision activities. To avail, some of our expert services, come talk to PrivoCorp now!