Since the “mortgage meltdown” a few years ago, lawmakers and policy makers have imposed new federal requirements and guidelines on regulated (supervis
ed) financial institutions, particularly with respect to a lender’s use of third party vendors (AMC’s) to outsource their collateral valuation programs.
The Consumer Financial Protection Bureau (CFPB) recently issued Bulletin 2012-03 that states:
- “The mere fact that a supervised bank enters into a business relationship with an AMC does not absolve the bank of responsibility for complying with Federal consumer financial law to avoid consumer harm”, and
- “To limit the potential for statutory or regulatory violations and related consumer harm, supervised banks…should take steps to ensure that their business arrangements with service providers (i.e. AMC’s) do no present unwarranted risks to consumers…”
The FDIC Compliance Manual (December 2012) states:
- “The board of director and senior management or an insured depository institution are ultimately responsible for managing activities conducted through third-party (e.g. AMC) relationships, and identifying and controlling risks arising from such relationships, to the same extent as if the activity were handled within the institution”, and
- Compliance risk exists when the products or activities of a third-party are not consistent with governing laws, rules, regulations, policies, or ethical standards.
Compliance Valuation Resource provides independent compliance assessment and analysis to help regulated financial institutions and/or AMC’s assess their compliance with federal laws, rules, regulations and guidelines regarding their collateral valuation programs.