PERSON OF THE WEEK: Vendor management has become a strong focus for mortgage lenders in recent years, due mainly to new regulations from the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency that essentially put lenders “on the hook” for fines and enforcement action should one of their vendor partners make an error that results in noncompliance with current mortgage regulations.
Critical to meeting these new vendor management compliance mandates is close monitoring of vendor partners, including their processes and software systems. One of the main ways lenders are doing this is through reporting – however, many lenders still have questions as to how frequently that reporting should take place and what reporting techniques work best for each specific vendor function.
To learn more about the importance of reporting in vendor management, MortgageOrb recently interviewed Christina Hardin, systems analyst at FirstClose, which offers a reporting solution that comprehensively delivers title, flood, valuation and other important data elements in a single report.
Q: How are today’s reporting techniques influencing vendor management strategies?
Hardin: Recently, there have been major advancements in the world of reporting, including the perfection of software tools that allow companies to collect data and display it in ways that are easy for employees to consume. Those employees are then better able to ask the right questions and not only become influential decision-makers, but data-driven decision-makers who can effectively guide their customers to the best course of action.
For companies like ours, that provide all-in-one solutions to vendor management as opposed to the traditional model of ordering title, valuation and flood reports from different vendors, having the ability to also provide an all-in-one solution to vendor reporting is critical. Now we can understand exactly how vendors are performing and where we might be able to introduce new vendor partnerships to add even more value for our customers, all by viewing one vendor report.
Q: What types of things should an organization look for in its vendor reports?
Hardin: One thing to remember is that there will always be one-off scenarios where, for instance, an appraisal took an unusually long amount of time due to unexpected factors. However, the goal is to use reporting data to determine if these scenarios are actually part of a larger trend. If not, and the vendor is performing positively the majority of the time, no changes need to be made. If the data does indicate a larger trend of poor performance, the company is then able to help its customer make an appropriate decision about better vendors for them in the future.
On the other hand, it is just as important to look for the positive data within the report as it is to look for the negative. When employees see that the work they are doing directly translates into positive vendor relationships and happy customers, their morale is significantly enhanced.
Q: What steps are taken if a vendor is flagged on a report?
Hardin: It is important for companies to first focus on internal reporting so that they can ensure they are doing the best possible job for their customers. When evaluating these reports, companies may note things like a vendor consistently slacking on turn times or a lender that is lending in an increasingly wide footprint. Upon seeing things like this, the company can provide its customer guidance on what alternative vendor options they may have.
And, just because a vendor is flagged for one customer does not mean it is flagged for all customers. Not all vendors are great performers in all areas; one may be a top performer in California but fail miserably on the East Coast. It is up to the reporting company to ensure that each of its customers’ unique requirements is met at all times.
Q: Why is it important for organizations to take vendor reporting seriously?
Hardin: Reporting and analyzing data is truly the best method of vendor management. If a company has a customer that is adamant about changing vendors, that company should be able to collect accurate data on the vendor and present it to its customer to either enforce or dispute the customer’s concern. The last thing you want to do is make a vendor change based on an isolated incident that actually only makes the problem worse. The most important thing is to ensure that if a customer is making a vendor change, it is the right one.
Data-driven decision-making isn’t new, but it has become much easier to adopt. With proper vendor reporting, companies can act as counselors to its customers and give them sound advice that helps all parties in the long run.