Outsourcing - Contract Employees and Exclusionary Lists
If we utilize outsourced service providers, such as contract underwriters and processors, are we required to check them against exclusionary lists?
Checking a contract underwriter or processor against exclusionary lists is certainly a best practice. However, it may not always be feasible to do – particularly if the lender is not made aware of the individual contract underwriter’s/processor’s name by the third party service provider that employs them. Below is a summary of Agency guidelines on this issue.
 Fannie Mae defines third-party origination as any loan that is completely or partially originated, processed, underwritten, packaged, funded, or closed by an entity other than the seller (or its parent, affiliate or subsidiary) that sells the loan to Fannie Mae. Note, Fannie Mae advised that if a seller enters into a contract with a third party known for the quality of its underwriting (such as a mortgage insurer) to help the seller in underwriting its mortgage originations, the loans will not be considered third-party originations.
 HUD permits a mortgagee to utilize contractors to perform administrative and clerical functions, such as typing of mortgage documents, mailing out and collecting verification forms, ordering credit reports, and/or preparing for endorsement and shipping Mortgages to investors. HUD prohibits the use of contract underwriters.