Watch NTC's COO Michael O'Connell answer "What are the impacts from new Federal regulations on 3rd party suppliers?" In the past, third party suppliers to banks and mortgage servicers were, to some degree, insulated from the effects of regulations. The recent guidelines from the CFPB, OCC and the Fed, however, appear to have heightened scrutiny on the banks. As a consequence, it also affects the third-party supplier.
The Federal Reserve’s guidelines, updated in December of last year, clearly state that using third-party servicers is a perceived risk to financial institutions, and was the primary reason for the updates. Nearly all of the security breaches experienced by a single major servicer in 2013 came as a result of using a third-party servicer, making them one of the highest risk sources of business in the mortgage space.
