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:
- People react to higher interest rates, inflation and looming recession
- Credit card debt is growing
- The amount of bank loans is rising
- Cash loan amount per borrower is increasing
- Borrowers’ ability to repay loans is declining
- Fewer people must service more loans at lender institutions
Information in this lender support guide can help bank and credit union debt collectors to:
- Collect money faster with powerful automated debt collection software
- Process all payments and documents quickly and compliantly
- Increase bank income by enhancing current staff productivity
- Decrease funding of Allocation for Loan or Lease Losses (ALLL)
- Learn application options for one powerful automated debt collection software tool

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:
- Mortgage loans sold to guarantors
- Mortgage loans in bank or credit union portfolio
- Direct customer loans
- Indirect customer loans
- Overdraft checks
- Credit card 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.

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:
- Various regulatory requirements require multiple concurrent collection steps
- Guarantors require lenders to complete each step in a timely manner, with accurate documentation
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.

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:
- Use borrower -preferred communication options
- Address problems in a timely way to maintain borrower confidence and loyalty
- Maintain documents impeccably for future clarification or litigation
- Automate process details and eliminate manual tasks as much as possible
As rates of loan recovery increase, automated technology such as CARM-Pro™ enables banks and credit unions to:
- Use borrowers’ preferred way of communicating – such as email, SMS text, personalized voice message delivery, or U.S. Mail.
- Service debtors by name – with consistent touches compliant with FDCPA requirements

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.
- Collect More Money with Less Effort: A CARM-Pro Best Practices Guide details the way that IBS™ recommends that customers deploy the capabilities of CARM-Pro™ to automate their process. Lenders appreciate that this guide defines CARM-Pro™ abilities without influencing the unique personality of their collection processes. The guide helps users maximize automated technology in order to uphold their bank or credit union’s borrower relationships and debt collection goals. Bank debt collectors can customize the way CARM-Pro™ supports them and their customers.
- CARM-Pro’s Effective Use Report is an exclusive feature of this best-in-class automation software. Once a month, CARM-Pro™ evaluates its own history file of the scoring anchor capabilities of the product, and how well an institution used those capabilities within the last 30 days. This helpful, unbiased feedback simply outlines underutilized features of CARM-Pro™, and provides two lists:
- A list of how lenders can better leverage each feature to achieve their goals
- A list of benefits that lenders can gain from using each feature effectively

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:
- Prevents increased expenses by eliminating the need to adding full time staff members
- Enhances productivity of existing staff members by enabling them to do more in less time
- Reduces compliance risk and the costs of compliance failure by deploying full automation technology to consistently execute the collection requirements of insurers and guarantors
- Improves borrower communication and effectiveness by leveraging technology to select and use the appropriate process for effective outreach to every type of debtor, to enhance recovery rates
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.