Compassionate collections

Collections isn’t typically the first department credit unions mention when highlighting how they improve members’ financial well-being. But this function is about much more than collecting debts, says Jose Iregui, senior vice president of lending services and collections at $5 billion asset Langley Federal Credit Union in Newport News, Va.

“There's a lot you can do to help people. And there are a lot of people in need,” he says. “At Langley, we have programs that allow us to utilize our expertise and knowledge for the sole purpose and benefit of enhancing our membership.”

Credit Union Magazine recently caught up with Iregui to talk about those programs, modern collections efforts, the impact pandemics and recessions have on collections, and more.

Credit Union Magazine: What brought you to Langley Federal?

Jose Iregui: I joined Langley as vice president of collections seven years ago. I knew little about credit unions and it was refreshing to see the positive environment. At the banks and private equity groups I worked at, the focus was on shareholder return and profits. The focus of credit unions is members. That was a much-needed change in my career.

Q: Why is serving underprivileged and underrepresented groups so important to you?

A: I try to take every opportunity I have to help people. When I worked in private equity overseas, I’d look around and see the critical needs many people have. When I came back, I realized you don't need to be 16,000 miles away to understand there’s need right in your backyard. I became much more involved.

It ties together with the credit union mantra of helping members. We have members who are wealthy, but they’re not the reason we exist. We serve everybody.

We launch projects, programs, and methods to help people who aren’t privileged in terms of income and opportunities. We take a great deal of pride in that.

Q: Can you tell us about some of these programs?

A: We recently launched an initiative called “Once a member, always a member.” At many financial institutions, once a member generates a loss to them, they write them off.

We need to remember that often happens because of a situation out of the member’s control. We want to engage with members and give them an opportunity to rebuild their history with us.

We have another program that started two years ago when Gov. Ralph Northam passed some welcome legislation that fought against predatory lending by capping fees on small loans. That was great, but it also left a vacuum for members who need a small loan to make it through. So we launched a program to help members through the pandemic, offering very low interest rates.

We also have a first-time home buyer program with all kinds of incentives. We don't charge for private mortgage insurance, we help with the closing costs, and we have a mortgage program for people of lesser means.

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Q: How did the pandemic affect collections?

A: We needed to be nimble. We’d never considered what remote work would look like. We were forced to implement it without warning, and we produced some of our best years on record.

Part of it was because there was a lot of money in the marketplace. But there were a lot of people in trouble. So, what do we do? How can we help members? Should we do a payment deferral? You have to get creative, think outside the box, and give members the benefit of the doubt.

Q: How would a recession impact collections?

A: There’s a saying that a recession is when other people lose their jobs, and a depression is when you lose yours.

Things happen to good people, and our job is to do everything we can to keep members in their cars and homes.

Q: How can credit unions improve their collections?

A: Say no to silos. Not only internal silos, but also external silos.

It's critical for you to be able to call anybody in the industry: “Hey, what do you think? What are you seeing in the market?”

Credit unions are good at sharing best practices. There are no grudges because we don't compete. Our job is to do the best we can to help our membership.

Also, fix your roof on a sunny day. Don't wait until things are tough to start fixing problems. If things are going well, they can always get better.

Q: How has collections changed since you’ve been in the industry?

A: One big change is the implementation of artificial intelligence. You have all these black box products that help with decisions. It’s certainly a gamechanger for how we do business, but I want to make sure members aren’t convicted by an algorithm. It’s impossible to understand what kind of parameters are being applied to a decision when you have 12,416 different factors.

Going forward, I’m interested in how we enhance online banking and how we incorporate new technologies to help members. I also think we need to continue investing in green energy and initiatives to start building toward something more sustainable.