Three key components of a proficient vehicle recovery partner. By Karen Townsend Sponsored by SWBC 
Managing risk is both an art form and a science. Understandably, many auto lenders fear making the wrong collateral protection insurance choice. Although charge-offs at U.S. banks decreased 0.28 percent from fourth quarter 2014 to second quarter 2015, a loss is a loss and the goal of all lenders is to keep repossessions as low as possible and minimize risk to the best of their ability. With CPI, skip coverage is one of those perceived risk mitigation tools. It protects lenders when borrowers are unable to pay on their loans and/or keep up with their state obligation to pay auto insurance premiums. However, not all skip coverage is created equal. A proficient provider of this vital auto lending risk management component will be armed with tools and resources to give your credit union the best opportunity to recover its collateral and maximize the return on its investment. This could include:
- a vast network of reliable partners that gives your credit union access to volume-based rates that can save you money and help you achieve the highest return on your assets.
- technology integration to streamline skip tracing and asset recovery. After all, these processes can be tedious and time-consuming, involving multiple vendors and touch points. A good tool will integrate with your insurance tracking and payment acceptance system, can save your staff time, and help you recover assets faster.
- compliant practices and procedures. The Consumer Financial Protection Bureau has become the “big bad wolf” for most lenders, in all aspects of their operations, and collections and asset recovery are not immune from the regulations and requirements. Make sure your skip-tracing partner has developed thorough consumer protection compliance into its business model, or it could put you at risk.
Sometimes the combination of the loan payment plus a lender-placed insurance premium can push a member into delinquency, and potentially cause the credit union to have to repossess the vehicle. To help credit unions mitigate this possibility, we developed CPI Hybrid, a product that significantly reduces premiums by stripping out unnecessary coverage, improving the lending situation for both borrowers and their credit unions. With this option, members are more able to stay current on their loans should they let their auto insurance coverage lapse and their lender has to place an insurance policy. For added peace of mind, our Hybrid Skip Tracing solution can help credit unions facilitate vehicle recovery in the event that a borrower skips. Check out our CPI Hybrid case study, where we highlight three credit union clients that converted from a traditional collateral protection program to our hybrid program, and subsequently experienced reduced member noise, reduced administrative burden on their staff, and an increase in risk tolerance. Karen Townsend is the asset recovery program manager for CUES Supplier member SWBC, San Antonio. She has extensive knowledge of auto finance, specifically within the repossession and remarketing arena. CUES School of Consumer Lending and CUES Advanced School of Consumer Lending, both slated for July in Seattle, will help your credit union strengthen every aspect of its loan programs.
