Using New Technologies
to Drive Efficiencies
Moderator: Tom Cox, Harvard Collection Services, Inc.
Presenters: Thomas Glanfield, Boston Portfolio Advisors
Jackie Bohline, Veri-Tax
2015 NCHER KNOWLEDGE SYMPOSIUM
November 4-6, 2015 San Antonio, TX
NCHER Knowledge Symposium
Technology Tools Can Optimize
Portfolio Performance
Presented by
Boston Portfolio Advisors
November 2015
Today’s Discussion
Leveraging Data into Powerful Action Steps
There is Plenty of Data Out There — Just Use It
1.
Increase recoveries using advanced analytics by prioritizing
accounts based on Net Present Value
2.
Optimize expenses by matching the right account with the right
effort
3.
Deepen portfolio penetration cost effectively
4.
Rehab programs increase the payer base and portfolio value
3
BPA Introduction
Boston Portfolio Advisors, Inc. (“BPA”) has been providing
advisory services for over 30 years and prides itself on
delivering the highest quality services that address and solve
complex client issues. Highlights that can make a difference:






Focus on portfolio performance for optimal value
Sophisticated proprietary analytical tools provide balanced,
productive, cost effective guidance
Staffed by industry veterans with extensive experience and deep skill
sets and with PhD practioners in Data Mining
Superior portfolio management, finance, operations and data/
analytics capabilities re-designed for the post 2008 environment
Understand the new paradigms of consumer credit behavior
Years of experience improving portfolio values – we have done it
4
BPA Technology Toolkit
Tools that Assist in Portfolio Management
 Advanced Analytics embedded in the Gain Model scores and
segments accounts based on propensity to repay and estimated
total collection
 Accounts throughout the entire lifecycle are managed and
monitored and the database
 Champion/Challenger Approach for improved tactical operations
 Calls and Contact Data continuously enhance results
 Valuation Model assesses NPV and potential value of each account
 Account Level Tactical recommendations for contact approach and
frequency
 Customizing Settlement Offers based on probability of payment vs.
opportunity cost
5
Consumer Behavior – 15 Typical Bills Most People Have
6
Integrating Data Points Increases Account Value
Modest Increase in Effort Produces Significant Improvement
7
Other Data Points That Enhance Results
8
Data Flow and Feedback Process
Data Collection
From multiple sources
Collection
Agencies
Other
Clients
__________________________________________________________________________
Gain Model Analysis and Methodology
Creates Prioritization of borrowers for highly
targeted contact strategy
Find correlations across entire field of attributes
GAIN MODEL
Historical
Performance
/ Tactics
Loan
Info
Feedback Loop
__________________________________________________________________________
Borrower
Info
Program Management
Collection tactics driven at account level based on
Priority Score
PROGRAM
MANAGEMENT
__________________________________________________________________________
Results Monitored, Scoring Model
Updated
Account level tactics revised for optimal results and
actionable information provided to all parties
Other
Collection
Agencies
Clients
9
Advanced Analytics = BPA’s Gain Model
Gain Model includes data and analytics to serve different aspects of the
student lifecycle:
Life
Cycle
Phase
Model
Employed
In School
In Grace
In Repayment
Continue
Repayment or
Default
Graduation
Probability
Default
Recovery
Potential
Loan Sale
Valuation
 Key differentiator is combining Borrower, Loan, and Historical Performance data
 Data to build models comes from over 200,000 loans in the past few years (no old data)
 Loans represent over 400 educational institutions – 4 years public and private, 2 years public
and private, career schools, and other
 Results of the models are used with servicers and collection agencies for specific campaigns
and tactics on specific loans
 Correlations are measured by categories and numerical results
6
Student Loan Case Studies
1. Call Reallocation Produces Recovery Lift
2. Portfolio Penetration Improves with
Optimization Effort
3. Better Data, Better Results
4. Improve Revenue and Probability
Performance at the Same Time
5. Rehabilitation Efforts Lead to Higher Values
6. Loan Sale Valuation are Based on NPV and
Market Prices
11
Case 1 – Call Reallocation Produces Recovery Lift
Historical Performance - Produces 5.8% Recovery Rate
Segment
Historical Phone Attempts
Phone Attempts (% of Historical)
Contact Rate
Close Rate
Realization Rate
Historical Collection Amount Per
Phone Attempt ($)
Historical Collections
% of Total Collections
Historical Placements
Historical Collection Rate
1
295,000
100%
3.2%
18.7%
80.1%
2
417,000
100%
2.7%
14.6%
82.2%
3
208,000
100%
2.8%
9.8%
76.0%
4
278,000
100%
2.3%
8.0%
79.6%
5
431,000
100%
1.6%
4.9%
76.4%
6
275,000
100%
1.5%
2.6%
82.7%
7
317,000
100%
2.5%
18.6%
83.5%
8
104,000
100%
3.4%
8.3%
81.2%
Total
2,325,000
100%
2.4%
8.9%
79.4%
$5.61
$3.60
$7.17
$4.54
$0.53
$0.56
$2.87
$7.07
$3.41
$1,656,000
20.9%
$1,499,000
18.9%
$1,491,000
18.8%
$1,261,000
15.9%
$229,000
2.9%
$153,000
1.9%
$908,000
11.4%
$735,000
9.3%
$7,932,000
100.0%
$10,614,000 $15,389,000 $21,645,000 $28,137,000 $16,999,000 $27,860,000 $7,060,000 $9,053,000 $136,757,000
15.6%
9.7%
6.9%
4.5%
1.3%
0.5%
12.9%
8.1%
5.8%
Improvement by Redistributing Phone Attempts - Increases Recovery Rate by 32%
Segment
Phone Attempts - Redistributed
Phone Attempts (% of Historical)
Contact Rate - No Change
Close Rate - No Change
Realization Rate - No Change
Projected Collection Amount Per
Phone Attempt ($)
Projected Collections
% of Total Collections
Collection Rate With
Redistribution of Phone Attempts
Gain ($)
Gain (%)
1
443,000
150%
2
521,000
125%
3
364,000
175%
4
348,000
125%
5
154,000
36%
6
101,000
37%
7
238,000
75%
8
156,000
150%
SAME AS HISTORICAL
Total
2,325,000
100%
2.4%
8.9%
79.4%
$5.61
$3.60
$7.17
$4.54
$0.53
$0.56
$2.87
$7.07
$2,487,000
23.8%
$1,873,000
17.9%
$2,609,000
24.9%
$1,579,000
15.1%
$82,000
0.8%
$56,000
0.5%
$682,000
6.5%
$1,103,000
10.5%
$10,471,000
100.0%
23.4%
12.2%
12.1%
5.6%
0.5%
0.2%
9.7%
12.2%
7.7%
$831,000
50%
$374,000
25%
$1,118,000
75%
$318,000
25%
($147,000)
-64%
($97,000)
-63%
($226,000)
-25%
$368,000
50%
$2,539,000
32%
12
Reallocating Collection Calls Optimizes Effort
Traditional Industry Approach (Gray bars) use credit bureau recovery
scores to direct efforts borrowers
Gain Model Approach uses enhanced data on the account and prior
activity to focus on accounts based on probability of success (Green is
highest)
Historical Attempts
New Attempts - High Priority
6
New Attempts - Medium Priority
New Attempts - Low/No Priority
Contact Effort Index
5
4
3
2
1
0
1
2
3
4
5
6
7
8
Segment
13
Case 2 – Optimizing Improves Portfolio Penetration
High Effectiveness - Focus on highest return accounts
High Opportunity - Different tactics and frequency implemented to focus also on B
and C Priorities to enhance results
High Effectiveness
– 75% of Recoveries
from only 14% of
balances
Decile
Priority
% of Total
% of Total
Balance
Recoveries
1
2
A
Recovery
Rate
Lift
Factor
5.4%
55.2%
53.63%
917%
8.9%
20.0%
11.82%
124%
3
10.1%
7.2%
3.77%
-29%
4
10.1%
4.5%
2.36%
-55%
10.1%
3.5%
1.81%
-66%
6
10.6%
3.3%
1.64%
-69%
7
10.7%
1.8%
0.88%
-83%
11.1%
1.3%
0.63%
-88%
11.0%
2.3%
1.11%
-79%
12.0%
0.9%
0.40%
-92%
5
B
8
C
9
10
TOTAL
D
TOTAL
100.0%
100.0%
5.28%
Recovery
Priority
TOTAL
% of Total
Rate
A
75.2%
27.63%
B
15.2%
2.65%
C
6.4%
1.04%
D
3.2%
0.74%
100.0%
5.28%
High Opportunity
- Incremental lift
can be achieved
with B and C
accounts
14
Traditional Thinking in 2015 can be Misleading
15
Case 3 – Better Data, Better Results
Gain Model identifies 82% of future payers vs. 57% using enhanced
attributes when selecting top 20% of borrowers
Prior: Using Limited
Attributes
Enhanced Results: Using
Additional Attributes
16
Recovery Model – Sample of Numeric Variables
17
Recovery Model – Sample of Categorical Variables
18
Case 4 - Improve Revenue and Profitability Performance
Comparison of Results with and without Gain Model Prioritization
Results Without Targeting
Calls
Decile Attempted
1
100,000
2
100,000
3
100,000
4
100,000
5
100,000
6
100,000
7
100,000
8
100,000
9
100,000
10 100,000
Total 1,000,000
Contacts
Made
3,381
3,230
2,787
2,678
2,549
2,327
1,587
1,518
1,288
1,016
22,362
Contact
Expense
$10,735
$10,255
$8,849
$8,504
$8,094
$7,387
$5,039
$4,819
$4,088
$3,227
$70,998
Results With Targeting
Payment
Calls
Rate # Payers Revenue Profit/Loss Decile Attempted
23.26% 786
$196,584 $185,849 1
160,000
9.73% 314
$78,586
$68,331 2
160,000
3.50% 97
$24,364
$15,515 3
130,000
2.02% 54
$13,517
$5,014 4
130,000
1.71% 44
$10,899
$2,804 5
130,000
1.12% 26
$6,519
($868) 6
70,000
0.86% 14
$3,422
($1,617) 7
70,000
0.53% 8
$2,003
($2,816) 8
70,000
0.95% 12
$3,064
($1,024) 9
40,000
0.51% 5
$1,294
($1,934) 10
40,000
1,361 $340,252 $269,254 55 1,000,000
Modest Increase
in Expense
Contacts Contact
Made Expense
5,410 $22,314
5,168 $21,318
3,623 $12,229
3,482 $11,751
3,314 $11,186
1,629 $4,071
1,111 $2,778
1,062 $2,656
515 $1,030
407
$813
25,721 $90,147
Payment
Rate # Payers
23.26% 1,258
9.73% 503
3.50% 127
2.02% 70
1.71% 57
1.12% 18
0.86% 10
0.53% 6
0.95% 5
0.51% 2
2,055
Revenue
$314,534
$125,738
$31,674
$17,573
$14,168
$4,563
$2,396
$1,402
$1,226
$517
$513,791
Profit/Loss
$292,220
$104,419
$19,445
$5,821
$2,983
$492
($382)
($1,254)
$196
($296)
$423,644
GAIN $
$106,371
$36,089
$3,930
$808
$178
$1,360
$1,235
$1,562
$1,219
$1,638
$154,389
GAIN %
57.2%
52.8%
25.3%
16.1%
6.4%
156.6%
76.4%
55.5%
119.1%
84.7%
57.3%
Sizable Increase
in Results
19
Case 5 - Rehabilitation Efforts Lead to Higher Values
 Measures consistency and amount of payments
 Identifies accounts needing remediation
 Focuses on rehabilitation process
Current
accounts
beginning a
streak
Current
30 Days
Delinquent
Broken streak in
Nov 2014, began
new streak Dec
2014
20
Rehabilitation Continuity equals Higher Values
Rehabilitation
Success
Settlement
Success
21
Case 6 - Loan Valuation and Sale
 BPA typically recommends keeping the High Value Loans as expected cash
flows are significantly higher than the expected sale price.
 Sale Pool Loans fall within the range where the expected sale price is higher
than the expected future cash flows
 Low Value Loans are typically non-performing and would realize the lowest
sale price. Recommendation many times is to hold these loans until they are
re-performing so that they can achieve a higher sales price
Expected Cash Flow
Sale Price
NPV
High-Value Loans
Sale Pool Loans
Low-Value Loans
22
Thank You for the Interest
Tom Glanfield
Boston Portfolio Advisors
tglanfield@bostonportfolio.com
954-832-3556
23
Electronic Income Documentation Retrieval
November 5, 2014
Topics for Today
I. Income Based Repayment
II. Collection of Income Documentation
III. Tax Transcript Retrieval with Veri-Tax
IV. Metrics of Success
25
Department of Education Repayment Program
As of July 1, 2014, the Department of Education requires
income documentation to qualify a borrower for an
Income Based Repayment Plan
Income Based Repayment Criteria
Adjusted Gross Income
Filing Status
Taxable Income
Poverty Guideline
Family Size
Discretionary Income
Collection of income documentation
27
Collection of income documentation
Option A
Borrower Experience
• Manually intensive
• Uncomfortable sharing sensitive
information
• Frustration!
Collection Agency Experience
• Ask and ask and ask and ask…
• Wait and hope
• Frustration!
28
Collection of income documentation
Option B
Borrower Experience
•
•
•
•
Convenient
Confident
Secure
Happy!
Collection Agency Experience
•
•
•
•
Streamlined
Controlled
Authentic
Happy!
29
Tax Return Transcript
Adjusted Gross Income, Taxable Income, Family Size, Filing Status,
and Discretionary Income are listed on a 1040 Tax Return Transcript
30
Tax Transcript Retrieval Process with Veri-Tax
Agency
Borrower
Creates
Order
E-signs 4506-T
Sends 4506-T to IRS
IRS
Receives
Results
Sends
Results to
Agency
Receives
Results
Account Management / Customer Happiness Support
31
Veri-Tax Web Portal
Agent performs 3 Steps to Create
a Transcript Order:
1. Enter borrower’s information
2. Select the product type, year(s)
requested, and transcript type
3. Confirm the request and submit
the order
32
4506-T E-Signature Ceremony
33
4506-T E-Signature Ceremony
The prefilled 4506-T opens for
review and e-signature.
After successfully e-signing, VeriTax electronically receives the
4506-T with audit log and sends
the order to the IRS.
34
How to Access the Tax Transcripts
Veri-Tax provides results through three options of delivery
Web Portal
Web Services
SFTP Delivery
Veri-Tax Ordering Tracking and Management System
35
Tax Transcript Results – 1040 or Wage & Income
The 1040 Tax Return Transcript is a
summary of the filed 1040 tax return
The Wage & Income Transcript is a
summary of the filed W2s, 1099s, 1098s
13
What do I do with the tax transcript?
37
Tax Return Transcript Summary Coversheet
In addition to the requested tax transcripts, Veri-Tax will include a summary coversheet that
highlights key line items for income analysis and IBR calculation ease
The 15% Income Based Repayment calculation is on the summary sheet for easy analysis
38
How do we measure success?
39
Veri-Sight Performance Report
Reports enhanced turnaround time calculations, rejection rates
by user, and overall volume metrics, to deliver the most
accurate insight into each account's performance.
Metrics
Description
Number of Years:
Track order volume trend broken down by number of years
Form Type:
Monitor order volume trend broken down by number of form type
Top Ten:
Turnaround Time:
Track user volume trends so you can plan for future capacity
Monitor order turnaround time trends to ensure they are falling within the SLA
thresholds
Volume:
Track and monitor order volume trends
Rejection Breakdown: Track order rejections by type over time
Rejection Stats:
Rejection Rates per
User:
Track rejection rate over time so you can manage resources effectively
IRS Data:
Includes the raw order data used for the reports without sensitive consumer data
IRS Downtime:
Includes each occurrence of IRS related downtime for the given report period
Monitor user level rejection rate trends so you can improve future performance
40
VSPR - Turnaround Time Report Sample
Turnaround Time Report accurately monitors order turnaround time by excluding holidays, non-working days,
and IRS downtime to ensure SLA thresholds are met
Turnaround Time (Minus Holidays, Non Working Days and IRS Downtime)
# of Orders
0 - 8 Hrs 8 - 16 Hrs 16 - 24 Hrs 24 - 32 Hrs 32 - 40 Hrs 40 - 48 Hrs Over 48 Hrs Grand Total
2013
February
294
6
35
226
59
157
58
835
March
2360
273
186
1685
4496
1336
3640
13976
April
1629
163
176
2212
2826
881
4208
12095
May
598
148
37
962
1316
565
1127
4753
Grand Total
4881
590
434
5085
8697
2939
9033
31659
Turnaround Time
0 - 8 Hrs
2013 May
8 - 16 Hrs
16 - 24 Hrs
2013 April
24 - 32 Hrs
32 - 40 Hrs
2013 March
40 - 48 Hrs
Over 48 Hrs
2013 February
0%
20%
40%
60%
80%
100%
41
Summary
I. Income Based Repayment
 July 1, 2014 – ED requires income documentation
II. Collection of Income Documentation
 Option A – Manual
 Option B – Electronic
III. Tax Transcript Retrieval with Veri-Tax
 Receive electronic income documentation directly
from the IRS, typically within 72 hours
IV. Metrics of Success
 Veri-Sight Performance Report
42
Veri-Tax Contact Page
Jackie Bohline
Director of Client Services
and Customer Happiness
949.783.2121
Jackie.Bohline@veri-tax.com
Customer Happiness Team
800.969.5100
customerhappiness@veri-tax.com
8 am – 7 pm Central Time
Veri-Tax, LLC
30 Executive Park, Suite 200
Irvine, CA 92614
43
Questions
2015 NCHER KNOWLEDGE SYMPOSIUM
November 4-6, 2015 San Antonio, TX