For nearly 25 years, the City of Minneapolis Office of Community Planning and Economic Development (CPED) has worked with Community Reinvestment Fund, USA (CRF) to service its loan portfolio of more than 1,600 community development loans.
The CPED portfolio includes residential housing loans and small business loans, each with different terms, maturity dates and monthly payment schedules. For such a complex portfolio, CPED needed a better way to track delinquencies, make more loans and eliminate costly administrative time.
“There is no way we could do this ourselves with the same level of efficiency as CRF,” said Scott Ehrenberg, loan portfolio specialist for CPED. “Their expertise is second-to-none and we are proud to have been working with them since 1995. Our partnership is very strong.”
CPED conducts multiple payment transactions on a monthly basis, and with a limited staff would have an impossible time trying to manage these transactions.
The City is also replacing an old legacy loan management system and turned to CRF to help with file transfer, data migration and digital reporting. CRF has been there throughout the process to make sure third parties and the entire CPED team are providing what CRF needs for reporting.
Given the large number of loans in their portfolio and a small geographic concentration, CPED would have a difficult time managing and tracking properties under foreclosure threat. CRF has also strengthened CPED’s oversight of subordinate loans in the portfolio.
“Minneapolis has complex loan portfolios with multiple terms, loan types and conditions,” said Michelle Page, vice president of loan servicing for CRF. “We understand the nuances of servicing large loan portfolios and partner with longtime clients like CPED to create efficiencies and strengthen the loan servicing process at every turn.”
With financing available for mortgage assistance and home improvement, some programs within CPED are “niche” loans with limited resources for servicing. That’s why Ehrenberg was enthusiastic to find he already had a partner in place.
One of the biggest advantages of a CRF contract loan servicing relationship is the collaboration with customers to improve the entire loan servicing process. When it comes to information exchange, reporting and monitoring, CRF and its clients communicate their needs clearly and effectively at the beginning of a process. This way, there is greater consistency in applying rules to the entire portfolio, despite the differences in terms and payment options.
“Today, we are consolidating our loan portfolios to make servicing them easier.” said Ehrenberg. “We recently brought a new portfolio of loans into direct administration between us and CRF, and that level of oversight makes the process easier for everyone. But most of all, our relationship with CRF helps us deliver a better customer experience.”
Guidance, collaboration, and expertise are three pillars of the CRF/CPED relationship. The difficulty of managing one loan among thousands is daunting for CPED staff, but with CRF’s experience in loan servicing – as well as their history and experience of partnership with the City – can make the process smoother and more individualized.