100% Committed to Bank and Credit Union Collection and Recovery

Loan Payments Recovery: Information Bank Lenders Need to Collect Money Faster

Loan payment recovery process efficiency for bank lenders is a critical need in today’s economy.

Borrowers need funds for every type of debt situation. As credit dependence increases, people may seek loans and services with high fees from non-traditional lenders. Examples include title loans, car title loans, and other property loans. Cash lenders charge high interest rates for these non-traditional lending practices. Loan collateral can include a car, vehicle, family property, and other things of value.

Types of loans and lender practices vary between financial institutions. This guide answers questions that credit union and bank debt collectors ask about improving their debt collection process efficiency.

Every lender must process more loans faster than ever before, as:

Information in this lender support guide can help bank and credit union debt collectors to:

Mortgage Loan Recovery

Loan Recovery Process Options for Credit Unions and Bank Lender Institutions

Loan recovery process options for credit unions and bank lender institutions vary. The typical process of debt collections is actually a series of processes, depending on the type and nature of debt.

For example, lenders use specific processes to collect these types of debt:

The requirements of each loan guarantor must be followed by taking several steps within each process. Details must be diligently performed and recorded by lenders, or they risk non-compliance fees and more.
If a bank fails to complete a step, or if they complete a step but do not document it, they jeopardize the guarantee position. Guarantors include state authorities, Fannie Mae, Freddie Mac, FmHA, and others.

Lender Debt Repossession

Borrower Credit Score Impacts the Loan Payment Collection Process

Credit score is typically used to originate loans, and is an indicator that banks review throughout the loan. The credit process is shaped as loans are rescored to compare the difference between the current and the original score. Credit score changes can influence the process and type of loan recovery. One type of credit origination score is the FICO® Score. Lenders form judgements about customers’ credit risk using FICO® scores. Other types of credit scores are also used for different collection-specific purposes.

The loan recovery process involves two key factors:

This situation demands higher dependency on technology to simply, streamline, and improve compliance.
CARM-Pro™ Collection and Recovery Manager – Professional™ by Intelligent Banking Solutions is a highly recommended technology platform that automates the loan recovery process for banks and credit unions.

Customers’ reviews provide proof of how CARM-Pro™ benefits their financial institutions.

Automation For Loan Recovery

Fixed rate loans are usually sold to guarantors outside a bank. If interest rates change, banks avoid the risk of a higher than preferred interest rate.

Variable rate loans (typically mortgages) tend to stay in the bank’s portfolio. A bank has the ability and option to adjust interest rates as market interest rates change, which reduces bank risk.

Cash Loan Payment Recovery Amount Increases with Automated Debt Collection Software

The amount of cash loan payment collection that a bank can achieve depends on whether its debt management practices include using automated debt collection software.

Loan payment collection best-practice examples include:

As rates of loan recovery increase, automated technology such as CARM-Pro™ enables banks and credit unions to:

Outstanding Loans

Application Types that Help Increase Rates of Bank Loan Asset Recovery

Each type of application (a.k.a. system, software, platform) for loan asset recovery is not alike. Equity between application types is very low, and a bank cannot afford to waste time with an option that does not offer powerful comprehensive automation of the debt collection process.

A basic application with limited-capability to automate loan asset recovery processes is included with every major core account servicing system. In a favorable economy, this rudimentary tool may be sufficient. However, problems like soaring inflation and increased workloads for bank debt collectors require an application that delivers high-performance, best of breed loan asset recovery abilities.

Ability to Recover More Money with Less Effort

Lenders who use CARM-Pro™ Collection and Recovery Manager – Professional™ by Intelligent Banking Solutions (IBS™) receive exclusive access to the guides outlined below. These two documents help financial institutions increase recovery rates using CARM-Pro’s robust collection automation software.

Default Lenders

Benefits for Credit Unions & Bank Debt Collectors Using Automated Recovery Software

Benefits for bank and credit union debt collectors who use automated debt recovery software include:

Bank Income Increases with Loan Collection Management Automation

All banks and credit unions reserve money from their monthly net income as Allocation for Loan or Lease Losses (ALLL). The amount of funds that financial institutions are reserving is on the rise. This increased funding is due to rampant inflation, a looming recession, and higher consumer debt levels.

Automated debt collection technology is proven to increase bank staff productivity and effectiveness. Since lenders can recover more money faster with automated loan collection management such as CARM-Pro™ by IBS™, they can set aside less money to cover future losses. This increases bank net income because it enables banks to contain or reduce their outstanding delinquencies and reduce allocation for loan and lease losses. For example, income rises by 20 cents per dollar when a bank can devote only 30 cents instead of 50 cents of every dollar of income to funding ALLL.