Hello Dave, This is Robin in Canton Ohio. I developed a scorecard, after we had a significant increase in defaults. The scorecard is a way to score the credit (character, capacity and collateral) I pulled samplings of loans in trouble, loan paid off, loans paying well and loans defaulted. From the sampling I found various and surprising trends. From these finds I weighted the trends based on their significance and percentages involved and for each application coming through to the committee a score card is attached reflecting a level of risk. The scorecard value ranges between -25 to + 25. I presented this at the institute.
After being in the program for nearly four years, I found that my program had very low default rates, until the loans were 18 months old or older. I started to see loans defaulting. I feel the committees struggle with this being a business and a social program. It is hard to work under these themes. The need educated in making a statistical rather than judgmental decision. The process seems to assist in assessing the likelihood of a positive outcome to the level of financial risk. The committee members love this new tool. It summarizes various things in a format that is easy to understand. We have made less loans over the past year, but they appear to be good loans. 27% of the loans we approved and funded in 2002 went south. We needed to re-evaluate and seek trends in order to stay in business. I resample cases on a regular basis to see the effectiveness. The committee still makes the decision and they have taken higher risks sometimes knowing the scores in advance. We have seen these lower scores in regular collections. I took a 2 month period and sampled and evaluated. You would be surprised at some of the trends we found, which could vary significantly for other sites. I hope this helps and would love to share the scorecard information with you. Robin S -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of [EMAIL PROTECTED] Sent: Wednesday, February 04, 2004 9:23 AM To: [EMAIL PROTECTED] Cc: [EMAIL PROTECTED] Subject: RE: [WTW] [WtW] delinquency: proactive measures Hello Dave: Great idea. What we are doing in Detroit is to identify those "characteristics" or pattern of "characteristics" among those folks who default so that we can then begin to develop a profile that we will review quarterly as part of our quality indicator process (CQI). We will also compare this data against the loan eligibility criteria and review that also. Michelle Rowser Ways to Work Detroit > -----Original Message----- > From: Dave Washburn [SMTP:[EMAIL PROTECTED] > Sent: Tuesday, February 03, 2004 5:15 PM > To: [EMAIL PROTECTED] > Subject: [WTW] delinquency: proactive measures > > Dear colleagues, > > I'd like to develop procedures to correct defaults/delinquencies > before they get to our maximum tolerance of 15%. I'm thinking some > kind of corrective > actions- beyond regular collections -should be scheduled if the > default rate gets up to and beyond 11%. > > My current ideas: > * Perform analysis of defaulted customers to ID "red flags" that may > not have been noticed during loan review. > * Meet with loan review committee for decision on corrective action to > be taken. > * Schedule time (1-4 weeks) to freeze new loan activity (no new loans, > no > interviews) to concentrate on corrective action and collections. > > What do you do that has proven to be successful? > > Please add to or comment on my brainstormed bullets, above. > > Thanks, > > Dave Washburn > Consuelo Foundation > Honolulu
