Buckling up before hitting the road is an ingrained practice for most drivers and their passengers.
Promptly securing vehicle titles after a sale is finalized should be no different. Lenders should always ensure that the titles and liens for every asset they have on the road are properly filed to help avoid the inevitable hazards that may appear during the life of the lease or loan.
Whether it is a mix of changing priorities in day-to-day operations, sheer title volume or a repetitive process eventually forgotten, follow through on securing titles and lien filings can fall through the cracks. Titles may get hung up between the dealer and the Department of Motor Vehicles (DMV), they may be issued in the wrong name, or the lender may simply fail to secure the title from the DMV at the onset. Every hand it passes through in the process increases the risk of the vehicle’s legal ownership being lost in the shuffle.
The result? Lenders that do not have proof of ownership for all of their assets open themselves to needless risk and vulnerability with their bottom line and borrower satisfaction.
Hazardous Consequences
Whether an account reaches its maturity date and the vehicle is turned in or becomes delinquent and is subsequently repossessed, lenders must produce a title to sell the vehicle at auction. While a title associate chases down the missing title among a backlog of months-old paperwork, the asset itself sits on the auction lot exposed to weather, intentional or unintentional damage, or incur storage charges as well as the impact to the inventory balance on the general ledger vs. the value received at the time of disposal. There is also risk that the auto auction partner may become aggravated with idle vehicles sitting outside the lanes waiting to be sold or moved.
A missing title can also impact borrower trust. Borrowers who have diligently made their monthly payments will not be pleased when the lender is unable to transfer the title at the time of payoff because it was never in house. In an era where social media can amplify a disgruntled borrower’s experience to a global audience, securing every vehicle title becomes a matter of reputational protection.
A Smarter Way to Keep Track of Ownership
Lenders can operate smarter by automating tasks that are labor intensive and prone to human error. Instead of using staff to sort through physical piles of mail for incoming titles, cross check it against ownership information and enter it into the servicing system, titles and liens can be tracked and managed electronically. Integrations with third-party solutions can streamline operations by automatically tracking title issuance by state DMVs. These third parties support operations for all 50 states and understand the nuances associated with each DMV, saving title associates both time and hassle.
Automation then frees up title associates to manage the exceptions, not the norm. In effect, title associates no longer need to spend the day making calls to dealers and state DMVs to track each and every title or lien. Instead, they can focus on problem areas, such as titles that were issued with errors or titles that are stuck in the system. Lenders, in turn, can streamline their operations and reduce their risk.
There’s a lot riding on a simple piece of paper. Ownership. Lenders that secure their titles and liens automatically and at the outset will set themselves up for a smooth road ahead.
This article was written by Jeff Hanna, product manager, of automotive account servicing at Fiserv.
