DALLAS, Texas-With bankruptcies up across the board, National Bankruptcy Services is looking to expand its reach into the credit union marketplace, and has partnered with one well-known firm to do so.
National Bankruptcy Services, which manages a portfolio of more than 150,000 active bankruptcy-impacted loans for at a number of financial institutions, believes that its experience with regional banks and its new partnership with consulting firm Dollar Associates will provide the boost it needs within the credit union community.
"Within the regional bank market we focus almost exclusively on consumer loans, and the processing models to adequately service the bankruptcy portfolio won't be significantly different than on the credit union side," said NBS CEO Paul Bourke. "By and large the regional banks handled their bankruptcy portfolios in house, but as the volume has grown and as the regulatory requirements (have become more stringent) they've been open to the notion of outsourcing."
Approximately 150,000 members at the 170 largest credit unions filed for bankruptcy in 2009, a 12% increase over 2008, Bourke pointed out. He said the larger volume has made it more difficult for smaller institutions to manage their defaulting portfolios, and that bankruptcy judges have been much more focused on the accuracy of every piece of information financial institutions bring to hearings.
Moreover, he said increasingly complex compliance regulations and defaults have become a major burden on credit unions, especially those in areas with high unemployment or those hurt by the housing collapse.
On its end, NBS manages every aspect of bankruptcy portfolios from administration to case management to payment monitoring and performance reporting. The firm boasts a very strong reaffirmation rate in the banking industry and is seeking to improve upon that if and when it begins working with credit union members.
"We see the NBS system translating itself well into the credit union space," Dollar Associates' Principal Partner Dennis Dollar said in a statement. "Any company that can deliver consumer lenders reaffirmation rates in excess of 50% for eligible loans should be able to surpass those impressive results in the credit union space. We know a lot of credit unions that could really benefit from improved recoveries and reduced loan losses and legal expenses."
Bourke, who has previously worked with credit unions when he ran office integration vendors, acknowledge the uniqueness of the marketplace and said that NBS is "committed to staying the course" and "demonstrating the ability to perform once we get an opportunity."
