Mortgage

SOC 2 – Trust Service Principles

A SOC 2 helps service organizations align their third-party compliance, sometimes known as trust service criteria and principles. A SOC 2 report is a detailed report published for users, auditors, and specified parties on controls at a service provider linked to compliance or operations of Information Technology. Principles covered includes: 

• Security 
• Privacy  
• Processing Integrity  
• Availability  
• Confidentiality 

When selecting a SOC 2 report, mortgage service providers can scope for one or many of the above criteria, which may apply to a wide variety of systems. Your auditor can help you determine what is appropriate for your customers based on the services you provide. 

SOC 2 creates stringent standards for client data protection by: 

• Making it mandatory for companies to establish and observe data protection policies and procedures for cloud-based data systems. 
• Performing assessments to verify that the companies are complying with their SOC 2 data protection policies and procedures. 
• Regularly updating information compliance and security standards to expose the unique challenges presented by current cloud data security threats. 

Scope of SOC 2 Report 

The primary focus of the report is on operational controls and covers an underlying IT environment. It involves a specified scope and system that includes and is driven by: 

• Infrastructure 
• Software 
• Procedures 
• People 
• Data 

The service provider establishes a specific pre-defined criterion on which it selects the five trust principles. The auditor will generate a report that defines if these trust principles have been met. 

Types of Reports 

There are two types of SOC 2 reports, and the fundamental difference between the two is the coverage over time. 

• Type I covers only a specific point of time. It assesses that the controls are in place and designed to address the prescribed criteria to a particular point of time. This type of report is typically appropriate only in the first year, however some companies may elect to go straight to a Type II report. 

• Type II report covers a period and includes a test of the design, operational effectiveness, and the analysis of results during that period. This is type of report is appropriate after the first year and will be expected to be completed by customers and their auditors.   

Why is it Needed? 

Mortgage companies are continually outsourcing functions at a greater rate due to talent shortages, cost savings and leveraging qualified experience. However, information security is a concern for services that represent vital business processes. A SOC 2 is a standardized compliance framework that can help mortgage companies trust a service provider with their valuable data. Any firm storing customers’ data in the cloud must meet SOC 2 requirements to curtail risks and exposure to that data. These reports play an essential part in: 

• Oversight of the organization 
• Internal corporate governance 
• Risk management processes 
• Vendor management programs 
• Regulatory oversight 

Many organizations are suitable candidates for a SOC 2 report, and few of them are listed below: 

• Hosting providers (e-mail hosting, web hosting, document storage, cloud computing, backup service providers, dedicated server, network administrators, and more) 
• Printing for production support (direct mail marketers, print and mail providers) 
• Software as a Service (SaaS) 
• Application Service Providers (ASP) 
• Health care service providers 
• Government service providers 

Reasons for SOC 2 Compliance 

Few reasons for compliance with SOC 2 procedures and strategy are: 

Regulatory compliance: As the requirements interlink with various other organization frameworks, attaining certification can expedite the organization’s overall compliance efforts. 

Customer Demand: Safeguarding client data from breaches and theft is of most significant concern. This makes it necessary for the organization to get SOC certification. 

Competitive advantage: With a SOC 2 report, the organization gets a competitive edge over those who cannot show compliance. It also enhances the organization’s reputation as trustworthy. 

Cost-effectiveness: A single data breach may cost an organization a million, and the figure rises every year. The cost of the audit is far less and saves your business as well.  

Peace of mind: besides assuring clients, passing an audit ensures the organization also that its systems and networks are secure. 

Value: The benefits that SOC 2 report provides an organization go beyond measure by giving valuable insights into the organization processes and procedures. 

A SOC 2 confirms that a firm’s information security measures are in line with today’s cloud requirements’ unique safety principles. As companies leverage the cloud to keep customer’s confidential data, SOC 2 compliance is becoming compulsory for a wide variety of organizations. Contact us today to learn more about SOC audits, our process and how to get started scoping your engagement.