Slash Your Delinquency Rates

Save your members from foreclosure and bankruptcy by connecting them with state assistance.


By securing Michigan’s loan rescue money and working more personally with members, Elga Credit Union ($300M, Burton, MI) significantly lowered its delinquency rates and is increasing its loan portfolio.

Elga CU, which participated in risk-based lending, faced increasing challenges with delinquency just after 2007 when bankruptcies and foreclosures started to rise. In January 2010, Elga CU’s delinquency was 4.47%, with its heaviest delinquency rates in mortgages and commercial real estate and its lightest delinquencies in unsecured loans, credit cards, and autos.

Through a multi-pronged effort, the credit union lowered its delinquency rate to 2.54% as of April 2012.

Michigan was one of the hardest hit states for unemployment during the recession and many unemployed members were struggling to pay their bills. By 2011, Elga had 20 foreclosures, 259 Chapter 7 bankruptcies, and 63 Chapter 13 bankruptcies. This year, the trend continues but is slightly less severe with three foreclosures, 61 Chapter 7 bankruptcies, and 10 Chapter 13 bankruptcies as of the first quarter 2012.

As one of the more severely hit states during the recession, Michigan received a substantial amount of money from the government to help people in distress. That grant money went to the Michigan State Housing Development Authority, which distributed it through the Help For Hardest Hit program.

Elga CU helped its members take full advantage of the grant assistance by securing 21 grants from August 2010 to December 2011, saving 21 mortgages from foreclosure totaling $2.2 million. It worked with an unemployment subsidy, which paid one-half of members’ house payment while they were on unemployment income for a year.

It also worked with a loan rescue grant that provided up to $5,000 — which was increased to $10,000 in March — for a one-time hardship for those who could prove they could make their payment going forward.

“This was a great program we were able to get involved with,” says Lori Hawk, credit solutions manager at Elga CU. “I know there are programs in other states through your housing development.”

Elga has taken several other deliberate steps to reduce delinquency. Collectors are required to interview borrowers about their situation instead of making calls to collect on delinquent loans.

“I wanted us to be viewed as a friend and someone who wanted to work with them,” Hawk says.

Five employees took advantage of the opportunity to become a Certified Financial Counsler through a program paid for by Elga CU. The additional certification has helped the credit union's collectors conduct phone-based counseling and walk members through a budget. Hawk also provides one-on-one counseling with the collectors to provide encouragement and coaching.

To reduce the expense of hiring a collections attorney, the credit union hired its own on-staff attorney. The move has helped the credit union secure more collateral at a faster rate.

Elga also has brought on new software to help with collections. The software provides licenses that allow all 143 staff members to understand members’ delinquency status.

Finally, Elga has created a family environment, full of high-fives and little discipline, to prevent burnout and turnover and provides incentives for successful performance. The atmosphere helps the employees encourage one another and work with members in a non intimidating manner, and the incentives motivate staff to lower delinquency further.