PHILADELPHIA -- Larry Highbloom said his company and clients have been "green since before it was cool to be green."
Highbloom is president of VINtek, a provider of automotive collateral management services for lenders that has been involved with electronic lien and title technology (ELT) almost since its founding in 1990.
The technology is now available in about a dozen states, beginning with its introduction in California in 1986. And in VINtek's home state, it's no longer an option.
Two years ago, Pennsylvania legislators passed a law mandating ELT adoption by the Pennsylvania Department of Transportation. The two-year grace period was to give the industry time to prepare for the first of its kind mandate in the country.
As of July 8, titles applied for in Pennsylvania must contain a financial institution number--which corresponds to the lien-holder's registered ELT provider--or PennDOT will reject the application and return it to sender.
"That will add delay and expense to all the parties involved," Highbloom said. And saving time and paper has been the idea behind ELT from the beginning.
Benefits include PennDOT saving money in not having to mail liens to lien-holders, fewer errors on titles, added security, less physical storage needed by financial institutions to store paper titles and less time manually handling them.
Along with the lending and auto sales community, Highbloom said, his company has been preparing for this date.
"We've added staff and a lot of customers and been in communication with the lien-holder community," he said, especially in credit union land. "We are fast approaching 400 customers, and I would say the vast majority are credit unions."
Highbloom's staff has been educating credit unions about the new law, but so have the credit unions themselves.
"I've gotten requests for help from several smaller credit unions about ELTs and how they work and who I use for that process. We've been able to give lots of help and see a lot of people make that deadline," said VINtek customer Deb Brennan, assistant vice president of real estate lending at $1.5 billion Members 1st Federal Credit Union in Mechanicsburg, Pa.
Members 1st began using ELT services from VINtek in March 2006 and now processes between 300 and 500 titles a month through the company. "We were already doing it when it became law. We were good to go," Brennan said.
Highbloom at VINtek added, "The credit unions have been ahead of the curve on this. We also have some commercial banks and finance companies who also have known this has been coming for some time.
"Now we're seeing the buy-here, pay-here operations signing up at the last moment, as they get up to speed on this. The good news is we think it's peaked."
VINtek now has 50 employees and locations in Philadelphia and Las Vegas and currently has more than $80 billion in assets under management in its various programs, Highbloom said.
And Members 1st no longer has to house the 25,000 or so pieces of paper for the liens it holds but simply accesses the records through a Web browser.
"We've saved 1.5 employees by simply not having to manage all that here," Brennan said. "This is just one more way we can go paperless, along with e-statements, e-mail correspondence, online banking, Check 21.... We push hard for our members to do everything they can with us without using paper. It's the green thing to do, but it also really saves us money and helps us improve service even more."
As for hard costs, Highbloom said that "while each financial institution is different, we've done studies in the past that show that handling, managing and shipping a paper title can range anywhere from $8 to $12 each. Paperless titles are a fraction of that."
The end of the process, as far as credit unions and other lien-holders are concerned, is another advantage of ELT, Highbloom said.
"As important as cost savings are, so is the smoothness in operations," the VINtek president said. "You cannot lose an electronic title. You don't have to have a storage room. You don't have people shifting around paper, and when it's time to release the lien, the DMV will mail a lien-free title directly to the member, so there's even postage savings as well."
Highbloom said Pennsylvania broke new ground by being the first state to mandate paperless title processing, but that others are following along, including some, such as Florida, that are making it happen without legislation.
"There, when a lien is canceled or released, when the lender is satisfied, they will no longer create a paper title for the owner. It will remain electronic unless a request for a paper title is made," Highbloom said.
"In Pennsylvania, you can still get a paper title with a lien on it for exception-based requests such as repossessions. We connect and talk to PennDOT every night with requests like that," he said.
"And another thing we're seeing across the country is that a lot of lenders, like Deb and Members 1st, don't need legislation to show them how to cut costs," he said.
But for those who do, the VINtek president said, "The whole thing has been kind of like medicine your mom gave you. You didn't know you needed to take it, but you're sure glad afterwards that you got it."
--mrapport@cutimes.com
