Due Diligence and Ongoing Monitoring

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Hello,

I work in the banking/financial industry and want to know what other banks and organizations do to obtain vendor due diligence documents from Appraisers, Title Companies and Attorneys? Are there any best practices that could be suggested for obtaining their due diligence documents or what to do if they don't have due diligence documents? 

Thank You!

We don't have those types of vendors. However, I do know that it can vary by state requirements at least for Appraisers. There is a Dodd-Frank Act Appraiser Independence regulation that you might want to research. There are standards for independence, licensure, renewals, and appraiser engagement - which is where I imagine your due diligence would come in, but don't quote me. I believe there are specific ways you must show the selection criteria, including competency, approval status, etc. Also, look up USPAP. It might also be helpful.

For individual appraisers and the company they work for (as appropriate), my credit union verifies the appraiser license is current and checks for adverse actions by the state licensing body, checks their BBB rating/complaints, checks state court records to see if they've been the defendant in a lawsuit, checks OFAC, get a W-9, and tracks their E&O coverage expiration.  We mostly do the same for title companies, although they aren't licensed - we do require their privacy policy.  We've had appraisers who refused to get E&O insurance, so we dropped them from our appraiser panel.

With the increase in fraud related to title companies being hacked/email takeover, etc., I'd love to require info about their security procedures, but I expect the majority of them would have nothing to give us.