First Associates' CEO, David Johnson, published in the Credit Union Journal

Loan Servicing Not Just Processing Payments

Written by First Associate’s David Johnson
Published in the "Credit Union Journal" on Monday, June 25

The loan servicing industry is due for a shake up; starting with truly understanding the business in which they operate.The widely held myth by such entities is that they are payment processors.

Not true at all. They're in the people business, and help individuals fund their dreams, pay off their obligations, and
work towards a responsible financial future. As member-facing entities, loan servicing companies and credit unions
must view the borrowers as valued patrons and treat them accordingly.

In doing so, they'll find their response rates rise and delinquency rates drop. The right approach for loan servicing firms should be to understand that the term "service" means something.

Here's a case in point. A recent survey we conducted with our customers showed that two-thirds of participants desire

to be contacted via e-mail and text by such firms. This stat dovetails nicely with a September 2011 Pew Research

Center study that indicated text messaging usage is up; with individuals sending an average of 41.5 messages a day.

Despite this trend, most loan servicing companies do the exact opposite and attempt to reach borrowers almost

exclusively by phone or postal mail. It's no wonder, then, that a lot of firms are struggling with high delinquency and
default rates within the portfolios they service.

 High-Touch Engagement Is Vital

Effective, hands-on, high-touch personal engagement with the borrower is at the heart of what loan servicing companies should focus on. That requires a well-tuned and updated platform that holds accurate information on the account holders. It also means leveraging multiple methods to convey and receive information such as SMS messaging and e-mail; not just the standard voice or snail mail. Above all else, loan servicing firms must reach out and connect with borrowers early, often and well before the payment due date.

Additionally, being nice to borrowers can make all the difference. There's not a person who doesn't recall a scenario

when they felt invalidated by a rude customer service representative, an insincere e-mail or form letter. That's a
sure-fire way to turn people off and have them do the exact opposite of what you intended. The old adage is still true;
you get more flies with honey than you do with vinegar.

It's not an old wives tale either. In 2009 alone, the financial services sector lost $44=billion due to bad customer

service, according to a multinational study commissioned by Genesys Telecommunications Laboratories. This sizable
figure is not attributed to market dynamics, but instead, because many organizations lack adequate care and concern
for their customers.

In this day and age, where kindness is in short supply and communication platforms are available to efficiently offer
customized and genuine conversations with clients, it's important for loan servicing companies to follow suit. Such firms must do a better job to recognize the numerous and changing consumer preferences and incorporate them into
operations that drive enhanced performance for lenders and superior customer experiences for borrowers. It's not only the right thing to do by individuals, but the more lucrative approach for the portfolios they manage.

Press Release- PEAKS Private Student Loan Program

First Associates Loan Servicing selected by PEAKS Private Student Loan Program

- Program launched in 2010 to provide financing for ITT Education Services students -

SAN DIEGO – June 5, 2012 – First Associates Loan Servicing, one of the country’s fastest growing consumer loan servicers, will service the PEAKS Private Student Loan Program.

Launched in 2010, the program provides financing for tens of thousands of students who attend the more than 100 ITT Technical Institutes in 37 states.

“The PEAKS trust was designed to provide $300 million in private student loans when it was created. It targets individuals who have demonstrated a commitment to complete their education but lack the resources. PEAKS helps students   pay for the reminder of the educational costs that federal and state financial aid or the students’ own resources won’t cover,” remarked Kevin Moehn, Program Administrator for the PEAKS program. “We recognize these students as people dedicated to realizing their dreams, paying off their obligations and working towards a responsible and enhanced financial future. We needed a state of the art loan servicing firm to help them reach their goals. First Associates has been a great partner for us”

First Associates operates under a different philosophy than legacy loan servicing firms, making it ideal for a wide range of markets, including student loans and other consumer assets classes. The four pillars of its approach are:

·         Manage information accurately. Use of a state of the art, communication platform that ensures the data on loan types and borrowers are correct from the start.

·         Use of multi-communication channels. Leverage nontraditional channels such as email and text messages in addition to more traditional voice mails to remind consumers of upcoming payments and other essential information. Customers can respond in the manner that’s convenient for them, while still having the option of talking to a live person.

·         Start early. Traditional service firms wait until the borrower is delinquent to start contacting customers, putting the loans on the fast track to 180-day delinquency. First Associates implements customized marketing campaigns during the grace periods to significantly reduce this trend.

·         Be nice. The firm’s expert customer service staff prides itself on courtesy and support for the borrower. In doing so, First Associates solves late payment problems before they cascade to default.

“The recent economic challenges put a giant spotlight on the inefficiencies of legacy servicing firms, most notably their reliance on outdated systems and processes under a highly bureaucratic mindset. This fosters a nice recipe for poor service and significantly higher delinquency rates,” said David Johnson, CEO of First Associates. “We feel that there’s a far better solution, one that recognizes the fact that loan servicing companies are – first and foremost – in the people business where they help individuals finance their education, successfully pay off their obligations and assist them in beginning a responsible financial future. We’re privileged to be servicing the PEAKS Private Student Loan Program under this mantra.”

About First Associates Loan Servicing

First Associates is one of the nation's premier consumer loan servicing firms and comprised of a team of professionals with a world class experience, first-rate knowledge and exceptional technology. . First Associates provides best-in-class servicing for titled assets and unsecured loan portfolios with a staff that is committed to providing the highest level of service to borrowers while maximizing lender and investor returns. More information is available at www.1stassociates.com.