Due Diligence and Ongoing Monitoring

Hi everyone 😊

We're evaluating whether Title Companies and Appraisers should be included in our vendor management program, and I'd appreciate hearing how other banks are handling this.

A few questions for the group:

1. Are you adding Title Companies and Appraisers to your vendor list and performing full initial and ongoing due diligence?
2. If so, have you encountered any roadblocks or resistance from the title companies or appraisers when requesting due diligence documentation?
3. If you are not including these entities in your TPRM program, how are you documenting this decision for audit or examination purposes?
4. What is your reasoning for classifying them as outside the scope of vendor oversight?

This message was posted by a user wishing to remain anonymous

Both Title companies and Appraisers are excluded from Third Party Risk inventory.  This is how we document our reasoning in policy.

• Title Companies. The customer and the seller (if applicable) select the title provider. As a lender, we are required to provide a list of available providers in the area, as part of TRID. The disclosure indicates this is not an endorsement of or recommendation of the Title provider. Therefore, the bank has no business arrangement with each and every title company used in transactions.

• Real Estate Appraisers & Construction Inspection (Draw authorizer) firms and Field Examiners and Field Appraisers, are excluded from the Third Party Inventory because:
1. They are subject to a Commercial, Consumer, Trust, or Mortgage Program's Due Diligence and Assessment standards;
2. They are subject to Secured Credit's inventory, qualification, and review process and standards;
3. Real Estate Appraisers are vetted by FHA/USDA/VA (GSEs) and regulations require their use; or
4. For appraisals outside our market, where we have no panel appraiser, we rely on a software/service provider to assess and provide lists of licensed appraisers
5. For Inspectors outside our market, where we have no regular inspectors, we rely on Line 1 due diligence (reviewing samples of their work product, reviewing client lists, reference checks, relevant licensure, etc.) to select individual inspectors.

• FMB panel appraisers are inventoried within the Commercial, Consumer, Trust, or Mortgage programs. Non-panel appraisers are inventoried and assessed either by the relevant GSE or the software provider.

May I please ask who your regulator is?

This message was posted by a user wishing to remain anonymous

Both Title companies and Appraisers are excluded from Third Party Risk inventory.  This is how we document our reasoning in policy.

• Title Companies. The customer and the seller (if applicable) select the title provider. As a lender, we are required to provide a list of available providers in the area, as part of TRID. The disclosure indicates this is not an endorsement of or recommendation of the Title provider. Therefore, the bank has no business arrangement with each and every title company used in transactions.

• Real Estate Appraisers & Construction Inspection (Draw authorizer) firms and Field Examiners and Field Appraisers, are excluded from the Third Party Inventory because:
1. They are subject to a Commercial, Consumer, Trust, or Mortgage Program's Due Diligence and Assessment standards;
2. They are subject to Secured Credit's inventory, qualification, and review process and standards;
3. Real Estate Appraisers are vetted by FHA/USDA/VA (GSEs) and regulations require their use; or
4. For appraisals outside our market, where we have no panel appraiser, we rely on a software/service provider to assess and provide lists of licensed appraisers
5. For Inspectors outside our market, where we have no regular inspectors, we rely on Line 1 due diligence (reviewing samples of their work product, reviewing client lists, reference checks, relevant licensure, etc.) to select individual inspectors.

• FMB panel appraisers are inventoried within the Commercial, Consumer, Trust, or Mortgage programs. Non-panel appraisers are inventoried and assessed either by the relevant GSE or the software provider.