One of the many activities aimed at improving collections undertaken in the last couple of months was the testing and implementation of an “Early Delinquency” letter series. Although borrowers were already receiving reminder emails and phone calls during the early delinquency period (1 -30 days past due), we thought it worth seeing if an actual letter might drive additional payments. We conducted an initial test in mid-October where half of the early delinquency population was sent a letter and half was not. Measured by the number of manual payments initiated, the results were good. In the three weeks after the letter was mailed 57% more recipients initiated a manual payment (41% vs 26%).
Given this success, a two letter series was produced and a process created to automatically generate and send the letters. The first letter goes out at 15 days past due and reminds the borrower of the “community aspect” of their prosper loan – the money comes not from a bank, but was made possible by a group of individuals. The second letter is generated at 30 days past due and details the various consequences of becoming “delinquent” including collection activities, credit reporting and the possibility of a lawsuit.
Additionally, we have contracted with Accurint (a division of Lexis-Nexis) to provide skip tracing information and are developing an internal process around that data.