TALLAHASSEE, Fla. - As collections becomes an increasingly challenging-and bigger-part of credit unions' business, some may find they need to turn to a third-party collections firm.
The challenge: making sure that third-party collections firm's approach and philosophy aligns with the credit union's philosophy. It's one reason some credit unions are specifically turning to CUSOs that offer collections services.
When it comes to helping members during this time, the key is getting the member to call, said Denise Zuehlke, director of collection services for United Solutions Group, a CUSO in Tallahassee, Fla.
"It's hard," Zuehlke said. "A lot of people are just walking away from their homes. They're just turning in the keys to their house."
Learning To Be More Creative
One thing Zuehlke said she is seeing credit unions do is be creative in ways such as allowing their delinquencies to be higher than they should, and offering creative mortgages, such as a three-year balloon mortgage with hopes that the economy will be better in three years and people can refinance at that time.
Zuehlke said she sees differences in the ways credit unions handle collections, compared to other lenders-mainly that credit unions tend to be more "member-friendly" because of the closer relationship they have with their members.
"And our goal is to be an extension of the credit union," she said. "We make sure when we hire people that they fall into that credit union philosophy."
John Revilla, CEO of Credit Union Service Alliance Group LLC (CUSAG), a CUSO based in Langdon, N.H., said the biggest challenge for credit unions that try to do collections on their own is not having the resources or staff to handle the burden.
"If you aren't calling them as frequently as you should, you'll be the last to collect," he said. "It's paramount that you be at the forefront in contacting these people. If you don't have a good, consistent approach that works, you're doomed to fail."
Not A Job For The Average Employee
When it comes to collection calls, Revilla said that it's not a task that can be passed on to the average employee.
"It takes a unique individual who is enthusiastic about collections, and will make numerous calls," he said.
Revilla said that delinquent members are also more likely to open a letter that is handwritten, and not addressed with a printed label.
"When you sit down and hand-address it, and actually put a stamp on it, some people say 'I wonder what this is.' And they open it."
Because a trained staff with specialty experience is imperative to collections, CUSAG stresses outsourcing.
"We believe outsourcing is a good solution because you get a professional solution," he said. "Yes there is a cost, but there is more of a cost to not do it effectively."
CUSAG sets up toll-free telephone numbers for each of its credit unions.
"We become an extension of their staff," he said.
For credit unions hoping to do collections on their own, Revilla advised: "Be consistent. Be persistent. Tighten underwriting." (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com/ http://www.sourcemedia.com/
