COLORADO SPRING, Colo.-The recession led Ent FCU here to take a different approach to its collections process.

"Five years ago, had we talked to a borrower who had faced a loss of income and was having problems making their car loan payment, more than likely we would've said 'You need to make a full payment and that's it.' Once they got three payments past due, we'd repossess their car," said Bill Vogeney, EVP/chief lending officer at the 213,000-member, $3.6-billion credit union.

But the recession led Ent to change that approach, including rebranding its collections department as the Member Solutions Department. It beefed up its staff and added employees from the consumer lending department in order to reach out to members.

Vogeney noted that one strategy EFCU looked to was lowering payments but not changing the amortization. "We did loan modifications at 0% and lowered auto loan payments down to about 60% of their previous levels," he recalled. "If somebody came to us in distress and had a $500 car payment, we reduced it to 0% for six to 12 months, and we lowered the payment down to $300."

Listening for 'Situational Info'

The EVP said that the strategy was essentially a give-back to members. "We'll take a lower payment...but what we gave up in interest, we probably saved ourselves four to five times that amount in reduced charge-offs. We would've had a lot more auto loans and home equity defaults had we not done this."

Staff have also been trained on how to listen for clues that the member is in distress. Calls became more about listening for situational information rather than just collecting a payment, he explained. "If you hear the distressed financial situation, let's talk to them immediately and get updated information. It was almost like building a new loan application-what's your current income today, what are your current debts today, are you getting help from any of your other creditors?"

Not surprisingly, Vogeney said, most members were not getting help from other creditors, which made them "extremely appreciative" of Ent's efforts. "The vast majority-95% to 97%-of these loan modifications continued to pay and resumed regular payments six to 12 months down the line," he reported.

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