Delinquency Management

Effective delinquency management requires the right approach for each stage of past-due status. Canopy's automated segmentation transforms how you identify, track, and address delinquent accounts through intelligent tagging that evolves with the account status.

The Delinquency Challenge

Without clear segmentation, delinquency management becomes reactive rather than proactive. Collection agents may waste time on low-risk accounts while high-risk situations deteriorate. Communication strategies might not match the severity of the charge off risk as an account moves forward in delinquency, and reporting can obscure important trends when all delinquencies are treated identically.

As one lending manager shared with us:

"Every week, I strategize with the Servicing/Collections Lead by manually looking at our loan tape. We need the portfolio to end the month with X% delinquency rate, so we try to figure out the best way to allocate human resources against the delinquent accounts."

Nancy Lopez, Credit Strategy & Analytics Manager @ Novo

Automated Delinquency Segmentation

Canopy addresses these challenges by automatically categorizing accounts into dynamic delinquency buckets:

How It Works

1. Continuous Monitoring - The system tracks days past due for every account
2. Dynamic Classification - Accounts are automatically tagged with the appropriate delinquency bucket (1-30 DPD, 31-60 DPD, 61-90 DPD, 91-120 DPD, 121+ DPD)
3. Automatic Progression - Tags update as accounts move between delinquency stages
4. Resolution Tracking - When accounts return to current status, delinquency tags are automatically removed

Special Attention: First Payment Default

Accounts that miss their very first payment receive a special "Missed First Payment" tag in addition to standard delinquency classification. This critical early warning sign helps you identify potential fraud in the form of First Pay Defaults.

Implementation Examples

Collection Strategy Alignment

For example, a Credit Risk Analyst or Collections manager could use our delinquency segmentation notifications to align their team as follows:

For loans 1-30 days past due, our strategy is a "gentle reminder" with weekly contact by standard agents, focusing on curing the account and getting the customer’s account out of delinquency. When servicing loans via Canopy we can get this queue easily. As accounts move to 31-60 days past due, the tone shifts to "concern escalation" with contact handled in such a way that warns that now there may be consequences of permanent account usage or negative reporting. Identifying these accounts automatically allows the Collections and Operations teams to focus on how to collect versus, “which accounts need this treatment”.

Finally, for loans 61-90 days past due, we move to a liquidation approach with daily contact. At this stage, the focus is on immediate action and exploring all available options to bring the account to a settlement or some kind of restructure (which you can do in Canopy!). Remember, our communication should always be professional and aim to help the customer keep their account from progressing toward charge off. Even a settlement shows that some payment was made.

Real-World Impact

Lenders using Canopy's delinquency segmentation report:

• Improved Compliance as Operations teams can ensure the right account received the right treatment per their Policy and Procedure
• Hours saved by Risk Strategy Analysts, Operations and Collections Teams
• Lower Error rate of accounts being placed in the wrong “operational queues”
• Reduced progression to serious delinquency stages
• More efficient allocation of collection resources
• Better identification of systemic underwriting issues
• Improved regulatory compliance and reporting

Getting Started

To implement automated delinquency segmentation:

1. Set up notification preferences for segment changes
   1. Use "notification_type": "ACCOUNT_SYSTEM_TAG_APPLIED" and "notification_type": "ACCOUNT_SYSTEM_TAG_REMOVED"
2. Integrate segment data with your collections workflow
3. View segmentation data in reporting