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CRIF Lending Solutions Blog

Expert Insight. Forward thinking. Trusted perspective.

Ask the Experts: Smarter Ways to Spur Indirect Lending Growth

For anyone who missed our complimentary indirect lending webinar last month, James (Toby) Smith is the vice president of lending for SECU of Md., and he joined us to share his credit union's success story of how it broke away from a CUSO to operate its own program. Don’t worry if you missed it, you can request a link to the recording below. Following his detailed presentation, Toby fielded a number of questions from attendees regarding SECU’s indirect lending transformation. Here are just a couple of those questions and his responses:

Q: Did you make any changes to your dealer base to help accomplish your results such as cut dealers off or narrow your network in any way?

A: Yeah, we actually did. We had some dealers that carried over with us from our CUSO days, and again it was one of those deals where we were building out our analytics internally. We have a great business manager and business analysis here. So we’ve always had tight delinquency and monitoring of charge off rates and payment defaults. But we did end up severing some of our dealer relationships that were really sending us some very good business as an independent for us. [However] when we looked at the delinquency rates and charge-off rates, they just weren’t cutting the mustard for us. So we went another way, and we communicated that to them. It’s not to say we won’t consider new ones, but we’re very selective in that independent space.

Q: How do you and your team view stipulations? For example, too many can affect the amount of business you get?

A: That’s a great point, and this actually predates our relationship with CRIF Select. We understood early on that we needed to ease up on some of the condition sheets we presented to both dealers and our members on our pre-approval letters. Some things we included on pre-approval letters and conditions just made no sense. Why would we need to tell members about LTV? To them, it means nothing and is another acronym that they might not understand. So what’s the interest in showing that? Other things, like requiring income and paystubs, things of that nature, we really abandoned some of that for our A, A-plus and B tiers. We really only require income verification on certain of our lower-credit tiers.

In addition, we’ve asked our underwriting team to examine what decisions were being rendered on the loans, themselves. We took a deeper look at those decisions and wanted to understand why they fell out of our [automated underwriting system] in the first place. What we found is that certain decisions were being made with a rubber stamp. They would fall out because maybe they didn’t meet a DTI or bankruptcy indicator requirement. We were slowing down approvals to dealers and adding more underwriting work to our team, so we decided to change the parameters. It involved both a front-end tweaking of the conditions and stipulations that we communicate to dealers to make their lives easier and prevent them from shying away from SECU as well as a tweaking on the back end. If we were going to get 2,100-2,500 applications each month with only two underwriters, we needed to find a way to balance the risk in making those decisions to do away with some of those conditions and stipulations while ensuring loan performance didn’t deteriorate.

Are you interested in hearing what else Toby from SECU had to say? Our recent webinar includes plenty of other questions that explained more about SECU’s transformation to smart growth for its indirect lending program. If you’d like to learn more, please click the button below to request a link to the recording.

Request Our Webinar Recording Today!

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