Even in today’s dynamic environment of increased regulations and lending oversight, many community lenders remain committed to some old-school processes within their loan operations. In some cases, inefficiencies and frustrations can be common issues that are connected to these burdensome administrative processes. In a time when many community lenders are adopting a “get lean” approach to their operations, for some reason, these old-school philosophies remain entrenched. The phrase, “but that is how we have always done it” is uttered often. Why is it that simple change can be so difficult to embrace? Why, from the executives to the loan operations staff, is it often difficult for a community lender to let go of these old-school processes?
One area that is worth focusing on is the process of collateral insurance tracking. Lenders have, for decades, been programmed that tracking the loan collateral insurance of their borrowers is the only method to protect them from an uninsured loss. This process of monitoring the insurance documentation is a cumbersome assignment, no arguing that. Some lenders will pay a third party to handle the actual tracking and outreach to their borrowers, but there remains a substantial amount of internal work that goes into the monitoring of that tracking program. For lenders that still track insurance, they do so for all mortgage lending, consumer lending, and equipment lending. They just cannot seem to let go of that “tracking mindset” and feel that force-placed insurance on a borrower that has been found to have lapsed insurance is the only way to protect the portfolio. The entire process is complex, inefficient and often leads to unnecessary negative interactions with their borrowers. Human error remains a significant risk factor in any tracking program. In a lending world full of change, why haven’t providers done more to promote a “new” alternative solution to this old-school dilemma? If the goals of these unproductive and time-consuming processes are to protect the institution against uninsured loss and to appease the requirements of examiners, then it might make sense for a community lender to consider true Blanket Portfolio Protections in lieu of all that tracking clutter. Blanket Protections can provide 24/7 coverage as well as full compliance with examiners.
Read our blog post: "How Lenders Reduce Workloads, Save Money, and Improve Examinations."
Lenders that have made the switch to Blanket Protections have shared that this new way has led to reduced administrative workloads, reduced negative interactions with their borrowers, and overall improvement within the efficiencies of their loan operations. They recognize that the elimination of collateral insurance tracking allows for a greater focus on improvements to loan operations and lending growth strategies. A common theme among case studies of community lenders that have made the change away from tracking and force-placement is that they have never even considered going back to that old-school mindset.
Read our blog post: The High Cost of Tracking
Maybe “change” of this sort is not nearly as difficult as once thought? If tracking collateral insurance is a “time suck” for your loan operations staff, Blanket Portfolio Protection might be a solution that is worth considering. The elimination of these tracking procedures might not be “the way that we have always done it” – but it could very well become a long-term solution to eliminate an old-school problem.
Click the image below to get in touch with your Collateral Protection Consultant at Golden Eagle Insurance to explore new options that make loan operations more efficient, while fully protecting your collateralized portfolios in a borrower friendly and compliant way.