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22 | Th e M Rep o RT Feature performance and continuity), an onsite due-diligence visit should be scheduled and will be wel- comed by the vendor. Lastly, she recommends that a solid vendor governance protocol needs to be in place and shared with each vendor so that expectations are clear and ongoing performance can be monitored. Adjusting Internal Controls and Processes B rentwood, Tennessee-based lender Churchill Mortgage started preparing for the effects of the CFPB vendor manage- ment rule by reviewing existing vendors, identifying common criteria, and building a vendor review strategy based on guide- lines and internal practices. This is an approach that has been encouraged by Lenders One, of which Churchill is a member. As a mid-sized independent mortgage lender, Churchill created a position specifically to meet the guidelines of the bulletin released by the CFPB. Then the lender considered how each of its vendors would present opera- tional, compliance, and reputa- tional risks and ranked them in tiers. According to Erin Stryker, compliance analyst and vendor manager, vendors that posed the greatest operational risk or high direct consumer contact risk (such as loan origination systems and document providers) are consid- ered by Churchill as tier 1. Tier 2 service providers are considered to have moderate effect on an organization's operations and may have indirect contact with customers. The tier 3 vendors may provide services, such as the snack or vending machines, for example, and do have not contact with customers, posing no immediate effect on operations. After identifying the vendors by tier, Churchill identified and requested documents for tier 1 and tier 2 vendors that could substan- tiate their culture, environment, and stability. These factors point to the responsibility vendors place in their own performance and consumer interactions, according to Stryker. Some of the informa- tion Churchill requests includes: • Number of locations and the functions performed at each • Any pending litigation • Financials (at least liability and asset ratios) • Procedures for tracking and re- solving consumer complaints—a direct request from the CFPB • Copies of security protocols for offsite employees, social media guidelines, and diversity state- ments/training requirements, as well as hiring policies and employee handbooks—to shed light on culture and ethics with specific attention to customer data privacy • Adherence to federal regulations that vendors may be required to abide by, such as Gramm Leach Bliley and Fair Lending • Policies for working with, and managing, subcontractors During onsite visits, Churchill delves further into operational processes, including security measures, such as shredding ca- pabilities, server room access, and visitor policies. At that time, vendors are also asked for feedback on Churchill as a client. Maintaining a two-way dialogue is important, Stryker added: "This shows that Churchill is dedicated to doing all it can to maintain a solid relationship and transparen- cy as we work with our vendors to adhere to regulations." Churchill completes and shares a scorecard after each site visit, which checklists key items, quantifies the effectiveness of the relationship, and records any compliance or operational risk(s). Stryker says it is im- portant to involve leadership in other departments, based on who touches the vendor relation- ship, in order to most efficiently develop any necessary solutions noted on the scorecards. Stryker stresses that Churchill management is keenly aware of smaller vendors' challenges to comply with the new CFPB rule. Smaller organizations, like smaller lenders, may take a bit more time to respond because of fewer compliance resources. She expects that in time vendors may start organizing general informa- tion packages for lenders to help start the vetting process. The fact that small and large vendors are inundated with requests from lenders who often want different information, as both Kuentz and Aydelotte men- tion, is something lenders should keep in mind. "Being specific about the information required and providing an adequate time- line for response is important," Aydelotte said. "Just as there is no one interpretation of the guidelines, there also is no com- mon checklist on hand. We have developed a standard process for this and for due-diligence site visits; however, we tailor both to meet the needs of each request." Churchill's process takes ap- proximately 60 days, and moving forward, the firm plans to stagger reviews in order to accomplish an annual review for each vendor partner. While Stryker takes the lead, she enlists assistance from three to six other employees, mostly from operations and IT, as needed. She points out that while vetting vendors was once driven from the departmental standpoint before the CFPB guidance, now Churchill and other lenders are creating designated positions and working groups to drive the process. Reality Check D espite the vagueness of the CFPB guidance, service pro- viders and lenders are developing plans to meet the rule's require- ments. Lenders, such as Churchill, have approached the vendor vetting process by identifying a project leader and putting a manageable process and collabora- tive resources in place in order to meet the requirements without being overwhelmed. Vendors have prepared materials and site visit protocols and can provide information and suggestions for vendor management to lender cli- ents, helping to add value to their relationships. Keuntz offers a reminder that there can be more than just the costly fines motivating lenders to be compliant with the CFPB rule: The possibility of a negative public image that comes with noncompliance can be even more costly in the long run. "While no one knows what the financial expense will be, most of our clients do understand there is a greater cost in being labeled as noncompliant," he said. Vendor vetting and manage- ment is not new, but under the watchful eyes of agencies such as the CFPB, the fact is that it is re- quiring more attention on the part of lenders and vendors to ensure compliance. Approaches from the vendor side may be different from the approach of the lender, but the results should be the same: a plan that includes communication and input from both parties to ensure full compliance and ultimately protect the consumer. Service providers and lenders are developing plans to meet the rule's requirements. Accurate Title Group Steve Black Serving all 50 states 888.456.4383 x1604 sblack@accurategroup.com Affinia Title Josh Magnuson Serving Georgia, Florida, Alabama 678-281-6506 josh.magnuson@affiniacorp.com Albertelli Law Jonathan Sawyer Serving Georgia, Tennessee 813-221-4743 jsawyer@albertellilaw.com Alliance Title & Escrow Corp Jenny Martin Serving Idaho, Montana, Washington, Wyoming 208.947.4204 jenny_martin@alliancetitle.com Bay National Title Company Evan Grimm Serving Florida, Wisconsin, Colorado, Michigan, New York, Ohio, Missouri, New Jersey, Iowa, Minnesota, Pennsylvania, New Hampshire 727.331.8500 egrimm@bntc.com Black McLaren Jones Ryland & Griffee, P.C. Drew Johnston Serving Tennessee, Mississippi 901.762.0535 djohnston@blackmclaw.com Brady and Kosofsky Jaime Kosofsky Serving North Carolina, South Carolina 704.849.8008 jkosofsky@bandklaw.com California Title Company David Skarman Serving 38 states, please call for information 949.582.8709 davids@caltitle.com Clear Title America Stephen Dorsett Serving Florida, Alabama, Colorado, Indiana, Kansas, Michigan, Minnesota, North Carolina, Virginia 813-288-1660 sdorsett@cleartitleamerica.com Continental REO Services, Inc Katie Van Hook Serving Missouri, Kansas, Wisconsin, Nebraska, Arkansas, Colorado, New Mexico, North Dakota, South Dakota, Minnesota, Ohio, Iowa 314.862.2447 kvanhook@creoco.com Delta Title Corporation Howard Leach Serving Louisiana, Mississippi 504.885.9222 hleach@deltatitlecorp.com Elizabeth Wellborn, PA Elizabeth Wellborn Serving Florida, New York 954.354.3544 ewellborn@erwlaw.com Federman & Associates Thomas Federman Serving Pennsylvania 215.572.5095 tfederman@federmanlegal.com First Financial Title of MN Larry Zielke Serving Minnesota 952-831-5010 lzielke@logs.com First International Title Jim Moran Serving Florida 954.905.3881 jim.moran@firstintitle.com First Title and Escrow Stephen Papermaster Serving 38 states, please call for information 301-279-0303 spape@firsttitleservices.com Florida Premier Title & Escrow Company Robert Kahane Serving Florida 954.356.1280 robert@reofl.com Freedman, Anselmo, Lindberg Jennifer Hester Serving Illinois 513.515.9917 jhester@fal-illinois.com Independence Title Brian Pitman Serving Texas 512.454.4500 bpitman@independencetitle.com Kozeny & McCubbin, LC Colleen Beckett Serving Missouri 314.991.6755 cbeckett@km-law.com Landcastle Title Jessica Thorne Serving Alabama, Delaware, Florida, Georgia, Indiana, Maryland, Ohio, Tennessee, Virginia, West Virginia, South Carolina, North Carolina 404.545.0280 jthorne@closingsource.net Liberty Bell Agency, Inc Jim O'Rourke Serving Pennsylvania 215.625.3660 jim@libertybellagency.com LSR/InTitle Richard Rothfuss Serving Ohio and Kentucky 513-412-6600 rmr@lsrlaw.com Manley Deas Kochalski Karen Michaels Serving Ohio, Kentucky, Indiana, Illinois 614.947.5744 kjm@manleydeas.com McCurdy & Candler Deborah Cheek Serving Florida, Georgia 404-373-1612 dcheek@mccurdycandler.com McDonnell and Associates, PA Dawn Player Serving South Carolina, North Carolina, Georgia 866.931.8793 dawn.player@mcdonnelllawfirm.com Merit Title Andrea Laster Serving Wisconsin, Illinois 404.257.0068 andrea.laster@merittitle.com Nova Title Agency John Dyer Serving Ohio 330-425-4201 jdyer@novatitleagency.com Ohio Title Corp Annamarie Tucky Serving Ohio 440.886.6141 atucky@ohiotitlecorp.com Oklahoma REO Closing & Title Services Vicky Blackmon Serving Oklahoma 918.491.3123 vblackmon@oreotitle.com Omega Title Agency Shannon Moore Serving Ohio, Kentucky, Florida 330.436.6700 smoore@omegatitlellc.com Paramount Land Jeffrey Zipser Serving New York 631-224-1345 jzipser@paramountland.com Parks Title/Potestivo & Assoc, PC Julie Mckee Serving Michigan, Illinois 248.591.2751 jmckee@parkstitle.com Pierce & Associates, P.C. Jill Rein Serving Illinois 312-476-5156 jrein@atty-pierce.com Riley Pope & Laney Lowndes Pope Serving South Carolina 803-799-9993 lpope@rplfirm.com Rubin Lublin Jason Thurber Serving Georgia, Tennessee, Mississippi 770.246.3300 jthurber@rubinlublin.com Security Title Services Mike Nichols Serving Indiana 317.590.4848 cmichaelnichols@aol.com Serrano McKinney Umpierre Frances McKinney Serving Georgia 770.951.2223 fmckinney@smulawfirm.com Sojourner Title Majenica Springer Serving Indiana, Ohio, Kentucky, West Virginia 317.844.4039 majenica.springer@rslegal.com Terra Abstract Hassan Matthews Serving Pennsylvania 215-572-5025 hmatthews@terraabstract.com The Hunoval Law Firm, PLLC John Langston Serving North Carolina, South Carolina, Virginia 704.626.4364 john.langston@hunovallaw.com Title365 Michelle Hymer Serving 42 states, please call for information 763-295-3513 Michelle.Hymer@Title365.com For more information, contact: Brent Lockhart | 214.525.6709 | Brent.Lockhart@TheFiveStar.com T H E F I V E S T A R D E F A U L T T I T L E C O A L I T I O N THE FIVE STAR DEFAULT TITLE COALITION Join the Coalition today. 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