The use of outside vendors by loan servicers is not new, but their role in default servicing and the adequacy of their work has drawn increasing regulatory scrutiny during the last two years. Work performed by Notaries has taken center stage, garnering particular attention in the context of mortgage servicing. To date, enforcement activities by state banking regulators and attorneys general have focused on the servicing practices of the very largest loan servicers, but these entities have also pursued direct actions against a bevy of third-party service providers for their alleged inappropriate actions s during the foreclosure process. State attorneys general across the country have targeted individual foreclosure firms, trustee service companies and document management companies alleging a variety of improprieties in connection with mortgage servicing. The $26 billion National Mortgage Settlement placed significant emphasis on servicers’ relationships with third-party vendors. It requires servicers who are party to the settlement to adhere to a new set of servicing and management standards including adopting procedures and processes for effective oversight and management of these third-party service providers. Last April, the Consumer Financial Protection Bureau issued additional guidance on servicers’ responsibilities for vendor management, recommending that servicers conduct due diligence of their providers’ legal compliance, review their providers’ training materials to ensure appropriate training and oversight of employees, and take prompt action (including terminating relationships) when problems are identified. In view of emerging expectations of both regulators and servicers, third-party vendors should look closely at their own policies, procedures and practices, ensuring that they comply with all applicable laws, regulations, and where possible, industry best practices. In this climate, adopting and effecting sound policies, procedures, and practices is essential in meeting the expectations of regulators and clients alike. Provided by Jonice Gray Tucker, a Partner, and Kendra Kinnaird, an Associate, at BuckleySandler LLP in Washington, D.C. The authors represent financial institutions in litigation, enforcement, regulatory, and compliance matters. They can be reached at email@example.com and firstname.lastname@example.org, respectively.