ELGIN, Ill. -- Lending Solutions Inc. provides collections outsourcing services to credit unions that are struggling to address the rise in delinquencies in the current economy.
In the last quarter, Lending Solutions has signed on eight credit unions to use their services. According to Lending Solutions Executive Vice President David Brooke, the company typically signs on one client per month and in the past quarter averaged signing two clients a month.
"It's the nature of the financial service environment right now," Brooke said. "People are seeing that its not just mortgage lending where delinquencies are high."
Lending Solutions' entire client base is credit unions, and the company works as a first-party collector calling members as if they were a credit union employee, using the credit union name.
"We understand the credit union mentality and appreciate what credit unions are trying to accomplish. We know the credit union wants to continue the relationship with the member when their account becomes current and that requires a certain approach," Brooke said.
Credit union clients typically come to Lending Solutions because of human resource issues, he explained. The company will take on a specific type of loan or even sometimes a certain alphabetic range of members for the credit union.
"It's almost as if we are a credit union employee. We use a VPN to access the credit union's collection system to view accounts when talking to a member, and we leave notes in the system."
Basil Buchanan vice president of lending at McCoy Federal Credit Union in Orlando, Fla. said the credit union has been using Lending Solutions services for its loan by phone operation since 2005 and said the partnership has been going extremely well. Last year, McCoy started using Lending Solutions' collection services last year.
"We've had issues with a lot of vendors and you're always going to have some sort of issue, but so far from talks I've had with our collection manager so far everything is going good," Buchanan said.
When working with a credit union, Brooke said Lending Solutions allow the credit union to control their own accounts. The employees follow the credit union's collection guidelines and give the credit union's address where members can send payments.
By having employees dedicated to making collection calls, Brooke said they also help the credit union lower delinquency rates because they can give the accounts more attention than the credit union typically can. While an account may sit delinquent at the credit union for six to eight weeks before contact with the member is made, Brooke said, Lending Solutions employees will call the delinquent member every two days to make contact. Also, if a delinquent member's information isn't up to date, Lending Solutions will locate the member and find their current address and information.
"We show to the member that you're not going away. They know we're going to be attentive until their account is made current."
Brooke also said it's not just smile-and-dial collection call. Employees determine why the members haven't made a payment and work with their past-due payments by allowing the member to make half a payment or whatever is needed to help get their account current.
"This is just a peak, delinquencies will come down, and credit unions will be able to handle accounts on their own, but for now at least there is help out there to give the accounts the attention that they need."