An E-publication from the Delaware League Services
An E-publication from the Delaware League Services
Second Quarter 2006
GMAC Mortgage Continues its Partnership with
Delaware Credit Unions
By Kimberly Grim, District Manager, GMAC Mortgage
2005 was an interesting year for residential mortgage lending. Rates continued to hover around the 6% mark for thirty year fixed loans, confounding the experts who believed rates could not sustain their low levels. Consumers continued to refinance and consolidate debt at record rates. New mortgage products with innovative features (i.e. interest only) have recently hit the market. And credit unions continued to make great strides in their mortgage lending efforts.
As the recommended mortgage lender of the Delaware Credit Union League, we consider it a privilege to be working with the state’s credit unions in achieving their mortgage lending goals. GMAC Mortgage has been servicing the needs of credit unions across the nation for over 15 years. We understand and embrace the credit union motto of “people helping people”.
Delaware credit unions can benefit from using GMAC Mortgage as their lending partner in a variety of ways:
GMAC Mortgage has been active with credit unions in Delaware. Some of the credit unions that are working with GMAC Mortgage include:
Delaware Alliance FCU
New Castle County Employees FCU
First State FCU
DPL FCU
These and other credit unions depend on GMAC Mortgage to bring their members innovative mortgage products, competitive interest rates and great service.
2006 will hopefully be another strong year for the mortgage banking sector. Rates are still at historically low levels, the economy is steady, and the housing market remains robust. There has never been a better time for credit unions to jump start their mortgage lending efforts.
To find out more about GMAC Mortgage and its Credit Union Services, please contact Kimberly Grim, District Manager at 302-428-3030.
Remote Branch Capture and Your Credit Union
By Jeff Stoner, Vice President, Payment Services, Mid-Atlantic Corporate FCU
A hot topic with credit unions is Remote Branch Capture and Deposit. But what exactly is Remote Branch Capture (RBC) and what can it offer your credit union? An RBC product can offer credit unions a cost-effective and efficient way to comprehensively capture check images and send those images electronically to complete the entire settlement process as envisioned by Check 21. It also provides an efficient means of imaging, archiving and electronic check presentment, streamlining back office procedures and eliminating the need to microfilm or copy items. In addition, credit unions will benefit from faster availability of funds and expanded branch cut-off times.
A few months ago, Mid-Atlantic Corporate announced that we had partnered with two companies, Bluepoint Solutions and Goldleaf Technologies to assist us in providing our members with branch image capture solutions. We spent many months evaluating different vendors and options to find the one that would best meet our members’ needs. In the end, we found two vendors were needed. Selecting the proper vendors was a long and difficult process, but it did not touch the complexity of integrating these solutions into our Remote Branch Capture (RBC) and check collection programs.
Mid-Atlantic used the payment processing experience and the technical expertise of our staff to develop two programs, an image capture program and a check collection program. Then we integrated the two systems making sure they worked smoothly with each other, allowed for the proper controls, and established an efficient workflow.
We used the first part of this year to improve the process and are now well into a pilot program. I am sure we could have rolled the product out six months earlier, but our experience told us to wait, do more testing, and improve the product. For this reason, we will allow our pilot to run for some time, making adjustments to the process, if needed. Experience will make it easy for us to make these adjustments. If everything goes as expected, RBC will be available to all of our members before the end of June 2006.
We have developed a very good RBC program with several options to meet our members’ needs. Through Bluepoint Solutions, we are able to allow for branch or teller level check image capture. With both options, images of your deposited checks will be forwarded to us for collection. Bluepoint requires software to be loaded locally on a PC and you will need a check scanner. Even though we will store the images of your items at Mid-Atlantic, Bluepoint comes with a local image archive as well.
With Goldleaf, you can connect to Mid-Atlantic and scan your items directly into our system. This eliminates the need to load software locally, but still requires a scanner. While Goldleaf is best suited for small volume branches, it does make a perfect fit for business member deposits. If you like, a scanner can be placed at the business location, allowing them to scan the items and make a deposit without bringing their checks into your credit union. This system also allows for check conversion to ACH as POP and ARC items.
Regardless of the solution your credit union selects, Mid-Atlantic will process the items we receive each day and forward them to the paying bank for collection, giving you 100% next business day availability. We will accomplish this through our relationships with four Federal Reserve districts, as well as our direct relationships with other financial institutions.
Time to Do Some Spring Cleaning?
by Corinne Sherman, Vice President, Card Services, Pennsylvania Credit Union Association
Credit unions spend a significant amount of time and money figuring out how to grow their card portfolio. In addition to focusing on growing the portfolio, it’s important not to lose sight of the routine maintenance needed on your existing portfolio. Sort of like “Portfolio Spring Cleaning”. Taking the time to spring clean your credit card portfolio could bring an immediate boost to its performance without adding any new accounts or balances.
The spring cleaning of your credit card portfolio should begin with cleaning out “old” stale accounts that may be costing the credit union based on monthly billing charges. Many processors charge a per account fee for file residency, fraud detection, various enhancements and loyalty programs. Cleaning out these “old” stale accounts can improve the statistics within the card portfolio, finally reflecting where the card program actually is.
Begin your focus on cleaning up inactive accounts. An inactive account includes; a card that was mailed to a member and has not been activated within 30 days, and any account with a zero balance at month end not being used for the required minimum number (predefined by your credit union) of transactions in a 12 moth period. When a cardholder waits longer than 30 days to activate their new credit card, or pays their account to zero and stops using the card it signals someone who is not planning to use this card as their primary. Knowing the credit union is paying a series of fees at the per account level each month, the credit union should not be interested in being the member’s “emergency card”. Requiring member’s to use the card at least six times per year helps recoup some of the per account expenses.
Don’t loose track of statused and/or block accounts. Leaving accounts on the system that may have been upgraded, closed by the member, or lost/stolen is not necessary and can be costly. A list of all of these accounts should be reviewed at least annually.
Once you’ve cleaned up all of the accounts, it’s time to move to the next step. Contact your processor to see what operational efficiencies they have to offer. Things such as online credit card applications, internet access, audio response access, and ACH payments can improve the efficiencies of the credit union staff. Inexpensive statement messages can be created to notify your cardholder of these options.
Spend time looking at your fees and corresponding system settings. Be sure that if your disclosure indicates a late fee will be assessed 5 days after the due date that it is truly being assessed at that time. If a fee isn’t being collected for another 10 days, it could have quite an impact on the credit union’s fee income.
Is it time the credit union consider adding an inactivity fee? It’s important to evaluate the fee structure of your credit card program. Have you kept up with the industry? Evaluating your fees and comparing them to what’s going on with other credit card offerings is important. Did you know the average late fee for credit unions is $20-$25 and the average late payment grace period is 5 days, not the 10-15 days many credit unions used in the late 90’s. If you’re charging fees that require any manual intervention (i.e.; statement copy fees or research fees), work with your processor to determine if there are any automated ways to handle those fees. Don’t bog your program down with miscellaneous fees that are rarely collected due to manual intervention. Also, too many miscellaneous fees make your credit card offering cumbersome and not competitive.
Has your credit union considered implementing risk based pricing for the credit card program? Risk based pricing in the credit card industry is standard practice. Use the spring cleaning opportunity to evaluate moving into risk based pricing for your credit card program. It’s important to have one of the riskier loan portfolios priced that way. Maybe it’s “performance pricing”. “Performance Pricing” is put into place when a cardholder reaches a certain stage of delinquency, your processor can automatically change their rate.
Don’t forget the actual plastic itself! When was the last time your plastic card design was changed?
Now that you’ve cleaned up and improved the functionality of the program, it’s time to assign product ownership. Too often, the least successful card programs are those which:
The credit card is NOT just an access channel, it is a core product offering and should be treated as such.
Debt Sales - Simplified
Debt sales (the selling of your CU’s charged-off loans) have been, up to now, a bit cumbersome and labor-intensive for credit unions. Not so any longer, at least if they are working with Ascend United, a subsidiary of the Washington Credit Union League.
According to Phillip Slater, Program Manager, Ascend United has updated internal procedures that allow nearly every credit union to export their charged-off account data directly from their collection system to an electronic file. That file can be sent to Ascend United to facilitate a sale of this type of debt. Prior to these changes, credit unions were asked to provide their data in a specifically formatted Excel spreadsheet which typically required manual input.
Using the new procedures, Ascend United is now able to accept nearly any electronic file format and converts the data in-house. “We made these changes to significantly reduce the labor costs to our participating credit unions. In addition, the $100 set-up fee is being waived for all new clients. Cost reductions translate directly into an increase in the net gain from any debt sale.” Slater said recently.
“I am happy to work with any data processing department to help them produce a file we can use. Normally, an e-mail and a ten minute telephone call is all it takes to get the process moving.” according to Slater.
Ascend United is a wholly-owned subsidiary of the Washington Credit Union League. They can be reached at 800-552-0680. Emails should be sent to ascendunited@waleague.org. Slater can be reached at 206-340-4843 or via email at pslater@waleague.org
Thank you for reading Service Issues!