Recovery Optimization for Your Lending Program
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This document discusses recommendations for optimizing a lending program's recovery efforts. It begins by reviewing current delinquency rates and procedures. It then outlines various internal and external risk mitigators that can help, such as strong dealer contracts, early delinquency indicators, insurance tracking, and data-driven recovery providers. The document advocates building a robust recovery model with compliance-focused processes and resources like license plate recognition. It concludes by promising recommendations to strengthen the lending program's recovery optimization.
Recovery Optimization for Your Lending Program
- 1. Recovery Optimization for Your Lending Program October 18, 2016 E. Andrew Keeney, Esq. Kaufman & Canoles, P.C. Pete Hilger Allied Solutions
- 2. 2 E. Andrew Keeney, Esq. Kaufman & Canoles, P.C. 150 West Main Street, Suite 2100 Norfolk, VA 23510 (757) 624-3153 eakeeney@kaufcan.com http://www.kaufcan.com/movies/ credit-unions.html Pete Hilger Allied Solutions (317) 428.5463
- 3. 3 Topics to Cover – Items of Interest • Current delinquencies • Some current procedures • Some current offerings • New products and offerings • Recommendations for consideration
- 4. 0% 1% 2% 3% 4% 5% 6% All FDIC-Ins. Community Banks FICUs Delinquency Ratios Source: NCUA, FDIC
- 5. 5 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% Credit Card Auto First Mortgage Other R/E Business FICU Delinquency Ratios by Type Note: Auto delinquencies not available prior to 2016 Source: NCUA
- 6. 6 Risks Lack of Data to Determine Risk Tolerance Identity Theft Inadequate Underwriting Guidelines Weak Dealer Contracts No Dealer Quality Control / Audit Program FTE ownership Lender Level Lack of Strong Management Oversight Product Cancellation Lack of Risk Management Tools Lack of Early Delinquency Indicators Military Personnel- Lending and Collection Franchise versus Non- Franchise Dealers Ill equipped Collections Model Repossession/Redemption/Reinstatement Compliance Insufficient Legal Counsel Support Dealer Compliance Borrower Fraud Rings Inadequate Vendor Support
- 7. 7 Internal Risk Mitigators • Strong Dealer Contracts • Audit Program • Buy Back Provisions • Early Delinquency Indicators • Robust Collection/Recovery Model • CFPB
- 8. 8 Internal Risk Mitigators (cont.) • Effective Charge Off Collections • Strong Legal Support • Strong Underwriting Guidelines • Dealer Buy Back Programs • Dealer Management • Process for Product Cancellation and Credit
- 9. 9 External Risk Mitigators • Insurance • Insurance Tracking • Title Tracking • Address Scoring Services • AutoCheck • CARFAX
- 10. 10 External Risk Mitigators (cont.) • DRN • License Plate Recognition • SKIP Resources • REPO Resources • Alert Services • Product Cancellation Provider
- 11. 11 Litigation Regarding Repossessions • Trend • Class Action
- 12. 12 Make Recovery Easier • Forwarders/Aggregators for expanded footprints • Data Driven Providers (LPR) • Integration with Insurance Program • Integration with Collection Software • Strong Indemnification Contracts • Use Remarketing Support – Online Auction
- 13. 13 Red Flag Mitigators • Compliant Vendors – Fidelity Bonds – Background Check – RISC Members – Secure Lots – Insurance Required Garage Liability • Measure/Score – Recovery Rates – Speed of Recovery – Complaints
- 14. 14 Robust Recovery Model State Specific Notification and Processes at time of repossession (redemption and reinstatement Compliance Focused Buy Back Provision Adherence Remarketing Strength beyond local Built out and tested ahead of loan delinquency – Leverage partners and volume Territory Management versus Local/State Management Internet Bids for Collateral Robust locate resources, SKIP, LPR, Repossession network, incentives and payments Indirect Collection Practices- speed to collect and repossess Legal resources for Dealer Recourse License Plate Recognition Recovery Program- insurance recovery on repossessed collateral Data analytics on loan performance/dealer performance Recovery partner for Dealer Products (GAP and MBP) Vehicle Alerts
- 16. 16 E. Andrew Keeney, Esq. Kaufman & Canoles, P.C. 150 West Main Street, Suite 2100 Norfolk, VA 23510 (757) 624-3153 eakeeney@kaufcan.com http://www.kaufcan.com/movies/ credit-unions.html Pete Hilger Allied Solutions (317) 428.5463
- 17. Recovery Optimization for Your Lending Program October 18, 2016 E. Andrew Keeney, Esq. Kaufman & Canoles, P.C. Pete Hilger Allied Solutions