This article was originally published on CU Insight.
In today’s economy, the efficiency of recovery efforts is affected by many factors—from compliance and regulatory changes to consumer trends and lending preferences.
Specifically, impacts of the pandemic, such as the increase in remote work (affecting borrower and collateral locations) and the rebound from repossession moratoriums, are causing credit unions to pivot and reevaluate their risk management strategies. To maximize risk mitigation, it’s important to have strategies for both collateral and monetary recoveries.
Challenges for Collateral Recoveries
Physical collateral recovery was impacted by the pandemic when repossessions faced moratoriums. As activity picks back up many credit unions (and their vendors) are facing a backlog of collateral recovery and recovery resources are becoming scarce. Many borrowers have shifted to working in remote locations and while this has reduced traffic and potentially claims, it has also resulted in collateral not residing at the address on file. Some important collateral recovery solutions to consider include repossession and remarketing. Using a third-party provider for these services gives credit unions access to a nationwide network of agents, and helps credit unions of all sizes improve collateral recovery results.
Changes for Monetary Recoveries
The recovery of dollars on delinquent accounts is just as important as the recovery of physical collateral. While collection moratoriums, forgiveness programs, and stimulus payments helped carry Americans through the pandemic, many are still experiencing financial instability. Keeping in mind your members’ financial situations, while maintaining compliance with delinquency management regulations is a balance. Outsourced collections and remediation for claims and product refunds, are solutions that leverage technology to help respond to these recovery challenges. Solutions such as debt buying can help credit unions monetize debts and gain cash flow for long-term income generating assets.
5 Questions to Ask about your Collateral Risk Program
For holistic collateral risk management in 2022, ask these 5 questions:
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