If our bank acts as a correspondent lender for residential mortgages, do we have to be concerned with vendor management since we only collect information from the buyer and do not work with any vendors?

That’s an interesting question. My first reaction is that it is unusual in my experience for a correspondent lender’s functions to be quite so limited. Obviously, if that really is the sole extent of the correspondent’s action, I would advise to take a look at the Bureau’s guidance on mini-correspondents and ensure you are on the right side of the line and that you are the lender and not functioning as the broker in the eyes of the law. [Note: The CFPB’s policy guidance on mini-correspondents is available at http://files.consumerfinance.gov/f/201407_cfpb_guidance_mini-correspondent-lenders.pdf.]

To answer more directly, when originating a mortgage you are going to have some interaction with venders such as appraisers and settlement agents. I have not come across an instance where the correspondent lender is that divorced from all the activities, but I want to know more about this situation. If it really was limited to that degree, I’d have some concerns about who truly is the lender here.

Note: This transcript has been edited from the January 2015 vendor management webinar for clarity and completeness.

Answered By: Ben Olson