Telling a customer to "go to the DMV" to pick up a financial document may not be the very last thing a customer-experience-conscious bank wants to say, but it has to be close.
But there is an alternative. An increasing number of states are allowing electronic lien and title (ELT) management, which allows the department of motor vehicles to electronically exchange lien and title information with the holders of those documents.
For banks and other auto lenders, it's a way to manage changes in liens and title status, as well as trace auto finance processing, loan applications and payments; combat fraud; and store information on vehicles and loans that often gets misplaced by borrowers who have to hold onto paper titles.
"It's very important to be able to automate these records. For example, if the VIN (vehicle identification number) doesn't match the title, right away we can understand the problem if we can view that information electronically," says Ana Deupree, assistant vice president of the collateral department for Crescent Bank &Trust, a New Orleans-based auto lender that has operations across the country.
Crescent recently moved to a hosted VINtek solution to manage the transfer of lien and title information to the different state DMVs that have adopted ELT programs. The bank sees the move as a way to avoid building interfaces with the different ELT systems in different states, as well as manage the labor involved in processing liens and titles. VINtek's competitors include Decision Dynamics, PDP Group and DealerTrack Holdings (TRAK) — who are all chasing ELT business as the auto market recovers.
"We don't have to have someone waiting to receive paper titles, that person can do other tasks. By using the system, the [title] information automatically goes to VINtek and then hits our [Shaw auto finance and lending] system. It then tracks the loan, its payments and other actions, such as collection letters," Deupree says, adding the system also stores and tracks letters submitted to dealers regarding vehicle titles.
The American Association of Motor Vehicle Administrators has developed a standard for ELT design that is used by Arizona, Hawaii, Massachusetts, Texas, Ohio, South Carolina and Virginia. Other states have also adopted ELT outside of the AAMVA's standards, including Pennsylvania, Louisiana, California, Nebraska, South Dakota, Florida, and Georgia. Many of the states have come online recently — Georgia, Texas and Florida began their programs on Jan. 1 of this year, while California and most of the other states have embraced ELT during the past two years.
Before the ELT program existed (and this is still the case in states that don't use ELT) the DMV would mail a paper title to a lien holder. If the borrower made the required payments to remove the lien, he or she would have to obtain a new title without the lien. In most cases, that would require a trip to the local DMV office, which often includes a long wait. The ELT replaces in-person visits and mailing and faxing of paper documents with electronic transfer of information that can "clear" a title of a lien, and produce a new title for a borrower who has lost the original title (which also would have required a trip to the DMV in the past). The electronic system, supported by the technology's ability to track overall payments and archive auto loan documents, allows most of the information tied to auto loans to flow faster, and creates convenience for borrowers and lenders, Deupree says.