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Closing Agent Due Diligence

Q: Are closing agents considered a vendor? If so, am I required to have internal controls in place to verify their qualifications before remitting mortgage proceeds?

A: Yes, based on the definition of a third-party service provider, closing agents are considered high/moderate risk vendors since they receive non-public information (NPI). The CFPB has issued guidance that lenders are responsible for vetting their closing agents. Best practices may include ensuring the closing agent operates in a compliant manner, properly handles confidential information, maintains adequate licenses and insurance, follows ALTA's Best Practices, and maintains transparent procedures for safeguarding NPI and closing errors.

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