Lending Advice Columns (preview)


Date Title Excerpt
11/1/2004 Indirect Auto Lending - Dancing with the Devil

That is how I affectionately refer to indirect auto lending. Now before some of you get all excited about my description of your beloved lending program, I am going to go on the record right here...

 

3/1/2004 The Lost Art of Loan Interviews

If you do an honest assessment of the loan interviews being done at your credit union today, are they described by one or more of the following situations... The majority of your consumer loan interviews consist of an order-taking employee filling out the required screens of a mindless…

 

5/1/2004 The Boxes That Bind You

I am sure that most of you have heard the business-world expression, “We are in the box.” The first box that I find lenders in actually has you making loans that you should not and is called the “good credit, approved…good credit, approved” box...

 

7/1/2004 Lending Management Reports

I hope that all of you are enjoying your summer. This month I am going to address an issue that frequently arises when I am at a credit union as a lending consultant – lending management reports. Too often I find that what I consider to be basic lending reports are not being produced or...

 

9/1/2004

I Have Met the Enemy to Better CU Lending And the Enemy is…

 

The VP of Lending, the CEO and the Board of Directors. Wow. That may be the strongest statement you will ever read from my pen...
1/1/2005 The Case for Centralized Underwriting

I can think of ten good reasons why I believe you should utilize centralized underwriting in your loan department: A centralized underwriting operation will result in more consistent loan decisions...

 

3/1/2005 Internal Barriers to Better Lending

In the last couple of years I have been to a number of credit unions that have suffered an absolute blood bath in loan losses from their indirect lending programs. During a plane ride this week I started adding up the total loan losses that I have personally seen at these credit unions and it...

 

5/1/2005 Deficiency Balances - I Feel Your Pain!

Do you remember the good old days? You know the days I am referring to. Back when your deficiency balances on repossessed cars only ran $3000 to $4000...

 

7/1/2005

Collections – A Strength or A Weakness at Your Credit Union?

 

Boy, it seems like half of my time this year has been spent at credit unions that are suffering through abnormally high delinquency and loss numbers…
11/1/2005 Essential Attitudes & Tools for Successful Underwriting

Do you remember the good old days? Do you remember when human loan officers made all of the credit decisions? Today I am routinely in credit unions where automated underwriting software makes 30 to 60 percent of loan decisions. If your credit union’s management team has not gone down the road of using software to make loan decisions…

 

8/1/2006 To VantageScore or Not to VantageScore? That is Your Question!

Welcome to my first monthly advice column as a new business owner. I am very excited to be out on my own and I greatly appreciate your past and future support of my lending training and consulting services. It is great to get back in the saddle of sharing my lending thoughts and opinions with you on a monthly basis... This month I have decided to write on the hot new topic of the VantageScore credit score introduced by the three national credit bureaus a few months ago. Please note that I have researched this topic from both sides of the coin (the credit bureaus and the Fair Isaac Corporation) and I have no biases or pre-conceived preferences one way or the other... My analysis is based on the different press announcements that were released…

 

1/1/2004 Are You Risk-Based PRICING or Risk-Based LENDING?

Happy New Year! May 2004 bring your credit union great lending success. It is my hope that this month’s column will assist you in achieving that goal. I am going to start this month’s article out by discussing a finer point of credit union lending terminology that has intrigued me for several years – the difference between “risk-based pricing” and “risk-based lending.” Now you may view…

 

9/1/2006 Your Most Valuable Resource - Employee Loans

Your Most Valuable Resource. I am writing this month’s Advice column for the senior management teams at credit unions around the country. It is my hope that you CEOs and Vice Presidents will give this subject some serious consideration. This will not be a lengthy column, but it is an important topic. Call this month’s article “food for thought” about your most valuable resource – your own employees. I would submit to you that in the final analysis…

 

10/1/2006 Can You Humble Yourselves and Learn From Your Competitors?

A lot of what I learned about being a better lender, I learned from credit union competitors. Personally, I don’t believe that credit unions have got it all figured out. A strong credit union leadership team is always looking to improve, no matter their level of current success, and many good ideas come from outside our industry. In this month’s Advice Column I would like to share with you some of the wisdom I have learned from your competitors…

 

9/1/2005 Anticipating the Questions of Your Loan Underwriters

This year I have been to quite a few credit unions working one-on-one with loan department interviewers and underwriters as follow-up training to the classroom instruction that I presented previously at the credit union. I really enjoy these jobs because I am able to get on the phones or out in the lobbies to work directly with real live credit union members and I get to help underwriters make…

 

11/1/2006 Making Loans to Youngsters

I don’t know really how to say this any other way, so I’ll just say it straight up. I believe many credit unions have a bias against approving loans to younger members and potential members (defined by me to be borrowers 18 to 24 years old). Every time I do a training job for a credit union…

 

12/1/2006 The Principles that Govern Successful Variable Pay Programs - Part I

I hope you had a great Christmas holiday and that you are looking forward to personal and professional success in the New Year. These past few months I have spoken a number of times to credit union audiences on the subject of compensation, variable pay and incentive programs. I have also consulted with a number of credit unions this year to assist them in designing their variable pay plans. Hence, I thought that the beginning of a new year would be a great time to offer...

 

1/1/2007 The Principles that Govern Successful Variable Pay Programs - Part II

I recommend that the credit union’s Board of Directors approve the CEO’s bonus potential and his or her specific bonus plan. I recommend the CEO be able to earn a bonus up to 50% of annual base pay depending on job performance. The Board of Directors should then delegate to the CEO the...

 

2/1/2007 Lending Department Organizational Design Options

In my ten years of extensive travel in our industry I have come across three different ways that credit unions can choose from to organize their employees that are given the responsibility of making loans to members. In this month’s Advice Column I will present you with these three organizational design options, give you the pros and cons associated with each option and then give you my preferred structure that will enable you to maximize lending success...

 

3/1/2007 Loan Product Design Suggestions

In this month’s Advice Column I would like to give you some random musings about loan product design... auto loans, boats, motorcycles and recreational vehicle loans, credit cards, mortgages, checking loans, land and home construction loans, and more...

 

4/1/2007 Your Toughest Challenge as a Manager

In this month’s Advice Column I would like to give you some advice on what I believe is your absolute toughest issue as a middle or senior manager – your own internal, employee issues. I am talking about non-performing employees...

 

5/1/2007 Policy vs. Procedures

About 40 to 50 times a year I go in to a credit union as a lending consultant or trainer. In preparation for my visit I always ask for a copy of the credit union’s loan policy and a sample of loans... I am thrilled when the package of material arrives in a FEDEX envelope because this indicates a maximum of about 100 sheets of paper. I shudder when the policy and loan samples show up in a FEDEX carton box (now we are up to 300 pages) and I just broke down in tears when two credit union customers sent me their information on a CD ROM disc (one of them had over 400 PDF...

 

6/1/2007 Recommended Loan Policy Provisions

This month’s Advice Column is not meant to be printed up and used word-for-word as your loan policy. It would be impossible for me to write such a document because there are several items in your loan policy today that are specific to just your credit union and how you do business. But I hope that you will read my suggested policy provisions, discuss them...

 

7/1/2007 Loan Delivery Channels

There are many ways that your credit union can receive loan applications from your members. Examples include: Direct Branch Loans, Indirect Auto Loans from Dealers, Telephone Loans, Mailed-in & Faxed-in Loan Applications, Internet Loans, Off-site Loan Events, and 24x7 Vendor Partner Phone Loans. In this month’s advice column, I would like to give you my thoughts regarding your three primary methods of receiving loan applications – from your...

 

8/1/2007 Loan Rates

In the last four years I have written 26 monthly Advice Columns for credit union lenders and I have a list of ideas for 44 more monthly articles. You will find it interesting to know that I never thought I would write about this month’s subject - Loan Rates. Why was I planning to skip such an important topic? Because there is no way in the world that I...

 

9/1/2007 Learning from Recent Lending Disasters

It has been quite a summer of news for loan losses in the credit union lending industry and the overall national mortgage lending industry. How many tens of millions or hundreds of millions or billions of dollars in bad loans have been charged off or will be charged off in our country over the next couple of years? How many CEOs and senior lending managers have led their companies to these losses, expensive lawsuits or even worse…

 

10/1/2007 CU Organizational Design

At about $80 million to $100 million in assets, nearly all credit unions go to a classic organizational structure of three senior managers: the Chief Operations Officer (COO) the Chief Financial Officer (CFO) and the VP of Lending (VPL). The very large credit unions begin adding other senior managers, but these three positions certainly cover most of the employees at the credit union and…

 

11/1/2007 Loan Department Training

As you know, I love training credit union lenders on how to do their jobs better. It is my favorite thing to do when I am hired by credit unions. But what about the on-going lending and sales training that is needed at a credit union through out the year? I believe this on-going training should be a primary responsibility of the Lending Manager or Vice President of Lending. I will tell you that the day I made the commitment as a VP of Lending at my former credit union to train…

 

12/1/2007 A Few World Records

In the spirit of the holiday season and in keeping with my core philosophy that we should never take ourselves too seriously, I have decided to make my December Advice Columns fun... This week I reached 4.1 million American Airlines miles traveled. I have now accumulated in excess of 2.0 million Marriott points. I have been on the road 150 to 200 nights a year for ten years. I have personally been to more then 500 credit unions and I have trained employees from thousands of credit unions... Please allow me then to share with you some of the world records...

 

1/1/2008 Hiring Sales People

For those of you that have heard me speak, you know that I have repeatedly stated that if you would like to improve your lending results at a credit union it is very helpful to have sales people working up your loan applications, new accounts and new deposit inquiries... In last month’s Advice Column I validated this point by telling you of a lady working at a credit union in South Carolina that disbursed $1 million in one month in consumer loans at a branch and I know the guy at a Texas credit union that routinely does $3 million in consumer loans per month by phone... By the way, my definition of sales people is as follows: Sales people…

 

2/1/2008 FICO® Credit Score Update

My friends, this is shaping up to be a very interesting lending year. Please buckle up your seat belts. How about I start off this month with a list of your troubles and potential troubles? 1. We are either in a recession or we are dangerously close to being in a recession. When people are uncertain about their jobs and/or their future earnings potential they tend to spend less money and therefore borrow less money. Oil has hit $100 a barrel and gas may soon be at $4 a gallon – ouch! When people pay $50 or $75 to fill up their gas tanks they feel pinched financially and they are then not...

 

3/1/2008 The 'BK' Man Returns!

I hate to be the one to tell you, but it looks like your old nemesis (loan losses due to bankruptcy) is making a return. The bankruptcy law changed in October of 2005 and you had a nice break from losses in 2006, but on January 3, 2008, Sam Gerdano, the Director of the American Bankruptcy Institute made this statement: The number of Americans filing for consumer bankruptcy increased by nearly 40 percent in 2007 over 2006. “The spike in 2007 presages an even higher number of filings this year as the heavy consumer debt load is made worse by the home mortgage crisis.” And a couple of weeks ago I read online that February 2008 bankruptcy filings were 15% higher then January 2008. Ouch! It definitely appears…

 

4/1/2008 Auto Loan Terms

In this month’s Advice Column I would like to give you my thoughts on auto loan terms. I have had a number of credit unions recently ask me for guidance on this subject... I would like to start with some recent national statistics I found...

 

5/1/2008 Loan Pricing Future

Every week I spend some time or a lot of time in airports and airplanes traveling to work at different credit unions around the country. As a general statement I do not enjoy the harassment program that flying has become in the last few years, but one advantage that it affords me is the time and opportunity to read various magazines and books. This month I read a very interesting article tucked inside of the May 2008 issue of Smart Money magazine, which is published by the...

 

6/1/2008 Marketing Thoughts

I am certainly not a marketing expert, but sixteen years of lending experience at and working with credit unions has allowed me to form a few opinions on the subject. In this month’s Advice Column I would like to share a few marketing ideas that will hopefully assist you in your effort to improve your credit union and to more specifically....

 

7/1/2008 2008 Lending Trends

Hey. Does anyone out there have any good news? Because I’m looking at this year and I am getting a little depressed. Consider the following: New car sales have fallen significantly. Home property values have leveled off, come down slightly or fallen dramatically in some markets. Savings rates are low. Delinquency and loss numbers are climbing. Bankruptcy losses are up...

 

8/1/2008 People Helping People

I think that most of you that know me know that I have a real passion for lending and a love affair with credit unions. I have never worked a day at a bank, finance company or dealership and I am sure that I never will. But this month I would like to discuss with you my biggest disappointment with our industry – the conservative or ultra-conservative nature of most credit unions when it comes to underwriting loans... How about a few tales from a road well traveled (4.3 million American Airline miles in 11 years)?... A billion dollar plus credit union in the Northeast....

 

9/1/2008 Auto Leasing Update

Just in case you missed it this summer amidst the melt down of the mortgage lending industry and the financial service industry, significant changes are taking place within the auto leasing industry. In this month’s Advice Column I would like to describe these changes and the ramifications of the changing lease business... Before I discuss the summer’s happenings on this topic, I thought I would begin with a quick review of the advantages...

 

10/1/2008 Hiring a Centralized Underwriter

I believe that most of you know that I prefer centralized loan decision making over de-centralized decision making. I don’t care if you are a credit union with $2 million in assets or you have $10 billion in assets, I strongly recommend that you be centralized, which of course results in reducing the number...

 

12/1/2008 Survival Strategies This week I spent time at a credit union with a very sharp CEO that estimated his state would see the number of credit unions drop in the next five years from 260 to 60. In the 1970s the credit union industry peaked at nearly 24,000 credit unions. By the end of September this year, the industry had dropped down to 8066 credit unions. Ouch! I believe that you.....