Financial institutions and borrowers alike have breathed a collective sigh of relief over the last decade as the U.S. economy has improved from the dark days of the Great Recession. Delinquencies are not what they once were thanks to an improved economy, job growth, and increased credit availability. However, the United States, and in turn, lenders, are not completely immune from delinquency issues.
According to CUData.com’s 2Q 2019 CU Industry Statistics and KPI Trends Report, loan delinquencies and charge-offs remain low, with delinquent loans totaling 0.63% of credit unions’ total loan portfolio as of June 30, 2019. However, preparing for default is a critical component of any lender’s risk management strategy.
Although delinquencies are low and the economy is strong—the unemployment rate is sitting at 3.7% as of August 2019—the fact is, many families still struggle financially. In fact, 1/3 of Americans feel as though a $400 unexpected expense could cause financial hardship.
When your collections team encounters a financially burdened borrower who genuinely wants to make his or her loan payments, but is going through a tough time financially, there are specific tactics your collections team can use to help them.
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