Industry professionals interested in having a say in standards intended to improve third-party risk management and reducing costs may want to participate in two new groups being organized by MISMO, the mortgage industry’s standards organization.
One group, the Third Party Business Partners Risk Management Community of Practice, will be a forum for industry-wide discussion about challenges and concerns associated with the use of third-party service providers, according to a press release. Such issues include risk assessment procedures across all stages of the third-party relationship, including on boarding of third parties. Lenders, servicers, service providers, appraisers, title companies, software vendors, business groups and regulators are all invited to participate. The group is expected to devise specific task oriented efforts to develop best practices or standards for different aspects of third party risk management.
The other group, the Third Party Oversight Questionnaire Development Workgroup, will be tasked with compiling a list of standard questions that lenders and servicers can use in third-party assessments. The goal of developing such a standardized questionnaire is to provide a consistent and efficient way to collect information needed to assess third parties and the risks associated with their products and services. The group will evaluate existing marketplace questionnaires to determine if they can be utilized in the mortgage industry standard and create guides for implementing and using the questionnaire.
“As our industry continues to expand, third party compliance and oversight have become major business obstacles,” MISMO Executive Vice President Rick Hill said in the release. “Lenders and servicers are ultimately responsible for the work of third parties, but current practices for managing risk associated with third parties are often inefficient and expensive. As regulatory and investor requirements continue to push costs higher, the lack of industry-wide standards or best practices is costly for all involved. A collaborative effort to develop best practices and standards that includes lenders, service providers, investors and regulators, offers the opportunity to foster more efficient and productive third-party risk management strategies that will benefit lenders, service providers and others.”
Individuals and companies do not have to be members of MISMO to join either group, but only MISMO members will be able to vote on any standards or serve in leadership roles.