The new risk of outsourcing

by MPA11 Feb 2016
I'm a big fan of outsourcing. The mortgage industry is built on a range of providers offering different levels of service to fill market niches and optimize profit for everyone involved. Because certain companies are better at certain facets of the industry, they are able to specialize and excel at what they do. Trying to do everything in-house can lead to mediocrity and cause you to lose your competitive advantage.

That being said, excessive regulation in recent years has caused some to rethink outsourcing as a business strategy. On the Feb. 1 episode of my Lykken on Lending podcast, we learned about one company that was dealt a serious blow due to the TRID impact on its third-party originators. We've gotten so caught up in worrying about getting ready for and implementing TRID guidelines that some of us have forgotten that these new regulations are affecting our partners as well.

So, with stricter regulations, outsourcing forces us to worry about our own adherence to the rules – as well as our partners'. I'm not saying that more organizations in the industry should bring services in-house; I don't think that's a good long-term solution. However, I think it's important that we all reassess the value of our partnerships. We need to make sure we're working with organizations we can trust. If you feel as if you need to be constantly monitoring your partner to get the results you need, it's probably time to start looking for a new relationship. With the risk that comes with the current regulatory environment, we can't afford to work with people we can't trust.