“If you can’t measure it, you can’t improve it.”
─Peter Drucker

 Welcome to 2022! While you toasted the New Year with family and friends, and listened to Uncle Harry belting out Auld Lang Syne, did you suddenly think, “OMG! Is my Portfolio Servicing under control and compliant?” Well, maybe. It’s a stretch. Still, confidence in your Portfolio Servicing is essential to your CDC’s well-being.

 How will you know? Metrics! When it comes to Portfolio Servicing, metrics are a must. Working together, CDC management and your Servicing Team should establish a set of metrics they’ll review jointly, and at least monthly. This way, no monkey wrenches will be thrown into your well-oiled operations.

 What to Monitor? Here’s the good news. You don’t need a Ph.D. in math to monitor your Servicing. If you set up regular tracking for your Insurance items, Financials, 2-Year Job Certifications and State and/or County UCCs, you’re already ahead of many of your peers. The trick is to keep your reports easy to maintain, updated regularly, and showing month-to-month progress. Otherwise, how will you know when things get better? And if you track them, they will!

Your Compliance Rate. A Must-Know. OK, let’s get granular. For each loan in your portfolio, you must identify every item you need to track based on the Loan Authorization. To get your rate, divide the total number of compliant items received and filed by the total number of tracking items. Want to get fancy? How about items due for renewal in the next month or the next three? And how about items more than 1 month past due? These are a must-know to allocate adequate time and resources for collection.

And remember: Insurance items aren’t considered “compliant” until you have verified their correctness according to your CDC’s ACORD Checklist. Read our last month’s Servicing eBulletin.

Chasing down “those loans.”  Some borrowers will reply to your request right away, but others are a “bear” to chase. How many attempts should you make? SBA requires you to document best efforts. As we’ve mentioned, you should be tracking your contact attempts.”

By now you know the drill. Good thing Financials are “seasonal’ work. How many loans did you get Financials on by now? For those you didn’t, what were your contact efforts? How many loans are risk rated? How did the ratings compare to last year’s?

Here you need to track loans with upcoming two-year funding anniversaries requiring Job Letters/Certifications, and how many certifications were received vs. not received. Has the proper data been collected according to SBA requirements? As with Insurance, you should be tracking your contact attempts.

No brainer: Track the number of loans requiring initial filings and/or continuations.

“What gets measured, gets managed.” Peter Drucker (quoted here) was a savvy management guru, yet you just want to run your CDC knowing there are no icebergs coming at you from the Servicing side. Having basic reporting and reviewing it regularly will do that. By the way, what’s your Insurance Compliance Rate? We’d love to know! And if you don’t know – you might want to Contact JRB!

Your JRB Team