Collections Departments and Fast Food – America at its Unhealthiest...

Earlier this week, I posted (and then accidentally re-posted & re-posted again) a blog by Don McNay featured on The Huffington Post, about the $8.5 billion settlement Bank of America made with its investors on Tuesday.

In his blog, Mr. McNay argued that, regardless the size of the penalty, BofA is still undertaking practices which clearly show they don’t really understand how their actions (and similar actions by other lenders) largely caused the mess we’re in today.

One small example he cited goes a long way in showing why it’s not only back to business as usual at BofA, but that it was never really anything but business as usual.

Last year, their collections department held a contest encouraging employees to push products on customers who were calling in seeking assistance. If the required quotas were met, the entire department would get to choose something off Burger King’s $1 menu.

Yes - convince a customer seeking help, to make their situation worse, and get a Whopper.

Not that I’m surprised to read this – after all, we deal with collections departments (often disguised as “loss mitigation” departments) every day – but sometimes I need to be reminded what they’re capable of. I’m calling on behalf of a law office; I know a different script is used when they’re speaking with me. However when a client calls in, emotionally distraught and desperate, this was an example of what they might get.

The first problem you might pick up on is that the customers calling in for assistance were directed to the collections department. And worse than that, it was apparently a collections department with a sales-oriented staff.

How efficient and multitasking of them.

It’s no secret that when the real estate market collapsed, many banks turned to their collections departments to handle loss mitigation issues as a temporary solution. As mortgage applications dropped to record lows, they began converting mortgage reps to loss mitigation associates. Not a great transition, since you’re still working with a “get the deal” mentality, but better than dealing with a collections mentality – “you’re lying to us, we know you have the money, pay us!”

As Mr. McNay points out, people calling in for assistance don’t need a sales pitch, they need help. Until lenders begin taking this more seriously, it will only prolong the recovery. People need help and lenders who chose to avoid offering assistance are simply kicking the can down the road to be dealt with later – and make no mistake; it will be dealt with later.

If lenders want to continue having sales rallies, etc., for potential customers seeking new mortgages, great, have at it - per the reference to Glengary Glenross, reward the top three salespeople and fire the rest. But take those current customers seeking help seriously… and help them.