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Psy debt collection  april2012 Psy debt collection april2012 Presentation Transcript

  • ResolvingApril 14, 2012 www.LTSemaj.com 1
  • Mobile: 876.383.5627 Skype: LSemaj Office: 876.942.9057 Twitter: LSemaj Email: Semaj@LTSemaj.com Facebook: Leahcim Semaj Blog: TheSemajMindSpa.Wordpress.com www.SlideShare.net/LSemaj4/14/2012 www.LTSemaj.com 2
  • UNDERSTAND IT AND BENEFIT FROM ITIGNORE IT AND BE THE VICTIMApril 14, 2012 www.LTSemaj.com 3
  •  … 80 years after the great economist John Maynard Keynes observed that  the market is psychological and goes up and down primarily because of how investors feel,  few people grasp how profound he wasApril 14, 2012 www.LTSemaj.com 4
  •  We still rely on objective standards that are only marginally credible:  graphs and models,  price swings turned into predictive software,  and battling academic theories that never come to a consensusApril 14, 2012 www.LTSemaj.com 5
  •  Princeton Psychologist  2002 Nobel Prize for Economics  "for having integrated insights from psychological research into economic science  especially concerning human judgment and decision ▪ making under uncertainty"4/14/2012 www.LTSemaj.com 6
  • Save The Dollar Campaign (1992) JMMB (1992) The People’s Money Expo (1993) The Cambio System (1994) Home by 30 (92 -) The 10 Immutable Laws of Money Mgmt (2000) Rethinking Retirement (2005)April 14, 2012 www.LTSemaj.com 7
  •  We are going through the most severe global financial crisis since the days of Great Depression - 1929 Originating in USA, economic recession is affecting all the major players of world economy. ▪ Jennie GandhiApril 14, 2012 www.LTSemaj.com 8
  •  A November 17, 2008 Report from the Federal Reserve Bank of Philadelphia based on the survey of 51 forecasters suggested that the recession started in April 2008 and was projected to last 14 months.April 14, 2012 www.LTSemaj.com 9
  • 2011 • 92 Banks 2010 • 157 Banks 2009 • 140 Banks • 25 Banks 2008 • More than previous 5 years 2007 • 3 BanksApril 14, 2012 www.LTSemaj.com 10
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  •  The Bank of Jamaica  classifies non-performing loans NPLs as debt payments overdue for three months or longer.  Today, Jamaica is in a bad debt crisis. A review of the daily newspapers over the past year reveals the following: In one year, commercial banks non-performing loans (NPL) increased 73 per cent, or by J$9.7 billion, to J$23 billion at December 2011. The commercial banks were the main contributor to the new high of J$32 billion in non-performing loans sitting on the books of deposit-taking institutions.April 14, 2012 www.LTSemaj.com 15
  •  National Commercial Bank Jamaica,  at its financial year end in October 2011, disclosed that loans in this category had sextupled from J$693 million to J$4.1 billion. In 2011 Scotia Group Jamaica  J$5 billion of its J$100-billion portfolio was described as impaired and wrote off J$1.9 billion of bad debts. ▪ (Gleaner, March 16, 2012)April 14, 2012 www.LTSemaj.com 16
  •  The National Housing Trust (NHT)  plans to hire a Bad Debt Collector to go after mortgage delinquents, those whose loans are more than three months past due. NHTs non-performing loan portfolio has remained at about J$1 billion for 18 months. Its plan to outsource the collection signals that it has run out of patience with mortgagors that have ignored entreaties to bring their loans into compliance.April 14, 2012 www.LTSemaj.com 17
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  •  At the close of 2011, 15,823 loan accounts or 17.23 per cent of the total loan portfolio reflected arrears of three months or more. These accounts had a value of J$1.015 billion or about one per cent of the total portfolio value of about J$99 billion, in arrears.  (Sunday Gleaner, March 11, 2012)April 14, 2012 www.LTSemaj.com 19
  •  According to the Bank of Jamaicas (BOJs) Quarterly Monetary Policy Report (QMPR) for the October to December 2011 period there was a rise in non-performing loans in tourism, construction and land development, entertainment, agriculture and fishing The report showed that the ratio of non-performing loans (NPLs) on which payments have not been made for over three months to total loans was 8.7 per cent at the end of December compared to 7.8 per cent at the end of September.  (Jamaica Observer, March 7, 2012)April 14, 2012 www.LTSemaj.com 20
  •  During the period April to June 2011 period, the ratio of non-performing loans to total loans was 7.9 per cent at the end of June 2011 compared to 6.9 per cent and 5.6 per cent at end-March 2011 and end-June 2010, respectively. (Jamaica Observer, August 31, 2011)April 14, 2012 www.LTSemaj.com 21
  •  NON-PERFORMING loans (NPLs) of commercial banks jumped by $3.7 billion, 27.5 per cent over the three months to March 31, 2011, according to the Bank of Jamaica. (Jamaica Observer, May 25, 2011) Previously the BOJ had released statistics showing that non-performing loans (NPLs) — loans unserviced for over 90 days — among local building societies were 6.8% at the end of September 2010; up almost 2 percentage points.April 14, 2012 www.LTSemaj.com 22
  •  Bad debt at Jamaican commercial banks climbed in December while loans outstanding fell, after the rise in non-performing loans and the fall in loan stock eased in September following a 18-month period of deterioration. According to the Bank of Jamaica (BOJ) in its quarterly monetary policy report (QMPR) for the December quarter, "the quality of the private sector loan portfolio deteriorated marginally during the review quarter“.April 14, 2012 www.LTSemaj.com 23
  •  Non-performing loans at commercial banks jumped by another billion dollars during June 2010 quarter, while the number of loans to the private sector continued to decline. In its quarterly monetary policy report (QMPR) for the three months ending June 30, 2010, the BOJ said that the quality of the private sector loan portfolio, measured by the ratio of NPLs — loans that have been unserviced for more than three months — to total private sector loans was 6.4% at end-June 2010 compared with the ratio of 6.0% at end-March 2010 and 4.2% at end-June 2009.April 14, 2012 www.LTSemaj.com 24
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  •  Students Loan Bureau (SLB): Jamaican students owe $760 million, money that, if collected, could fund nearly half of the more than 9,610 persons who have so far applied for loans to pursue advanced studies this year. The delinquents number 7,127 and are mainly graduates of the University of the West Indies (UWI), Mona campus, and the University of Technology (UTech).April 14, 2012 www.LTSemaj.com 26
  •  Jamaicas Credit Unions: Over the past two years, the stock of outstanding loans have been increased by approximately 10%. Credit unions have hiked their provision for bad debt by 78%, reflecting the trend of peoples inability to pay in a bad economy. But even then, their 2.42% or $899 million allowance for loan losses in 2010, was significantly below the more than 5% of the portfolio that commercial banks have had to put aside to cover borrowers who do not pay.April 14, 2012 www.LTSemaj.com 27
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  •  Courts: Operating profits declined as a result of the lower service charges on credit sales, higher discounting and increased bad debt provision.April 14, 2012 www.LTSemaj.com 29
  •  Victoria Mutual Building Society (VMBS): Richard Powell acknowledged that the market has experienced a "sharp increase in non-performing loans" since mid-2009, but he said VMBS delinquency rate stabilized during the latter half of 2010.April 14, 2012 www.LTSemaj.com 30
  •  Jamaica National Building Society (JNBS): "Mortgagors continue to be impacted negatively by unemployment, the downturn in business and reduced disposable income,“  Mortgage and Operations Executive, Wanica Purkiss,April 14, 2012 www.LTSemaj.com 31
  •  Scotia Jamaica Building Society:  In its 2010 Annual Report, they reported that "The local housing market trended downwards in 2010, resulting in increased inventories of unsold properties at all price points, and escalating foreclosures as property owners felt the impact of the economic recession."April 14, 2012 www.LTSemaj.com 32
  •  ACCESS Financial: Posted a 123% increase in Net Profit to $147.2 million for the year that ended December 31, 2010, but their Bad Debt portfolio doubled. Jamaica Mortgage Bank (JMB) show that debts gone south on its books amounted to an estimated 40% of the loan portfolio as at March 31, 2010.April 14, 2012 www.LTSemaj.com 33
  • The New Rules of Engagement
  • The Industrial Revolution 1830 - 1840The Abolition of Slavery 1834 -1838
  • Labour was the first price, the original purchase -It takes cash money that was paid for all to care things. It was not by gold or by silver, but by labour, that• Edward Seaga all wealth of the world was originally purchased. Adam Smith
  •  Given Jamaica’s  Many Debtors economic reality just cannot  No/Low economic make the growth payments  Significant Job Loss  They are scrambling to in a cross-section of cover food, lunch industries/sectors money, utility bills,  Limited options for medication increasing  They feel bad/anxious household income about not meeting their commitmentsApril 14, 2012 www.LTSemaj.com 38
  •  "We can evade  “You cannot reality, escape the but we cannot responsibility evade the of tomorrow consequences  by evading it of evading today” reality"  Abraham Lincoln  Ayn RandApril 14, 2012 www.LTSemaj.com 39
  •  Debtors need  Creditors want to information on what collect they can do  Creditors do not want  They need this to be to become re-sellers provided in a ‘safe’ of houses, context equipment, cars,  They need options furniture etc that factor in their  especially in a market existence where qualified  they still need to eat buyers are fewApril 14, 2012 www.LTSemaj.com 40
  • Either You Or Your Competitor Will Find ItApril 14, 2012 www.LTSemaj.com 41
  •  advised that the Jamaican economy should ‘Batten Down’, as we started experiencing the outer bands of the global financial storm. The gale-force winds were predicted with a GDP forecast for negative outturns from 2008-2010. Since the Jamaican economy lags about 18- 24 months behind developments in North America and Europe, economic rebound was not expected until about 2011.  (Dr. Wesley Hughes – PIOJ - Gleaner Feb 5, 2009)April 14, 2012 www.LTSemaj.com 42
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  •  We experienced 14 consecutive quarters of ‘negative growth’ With this level of economic decline,  the exponential growth in bad debts was predictable.April 14, 2012 www.LTSemaj.com 44
  • 2008 2009 2010 -0.9% -3% -1.1%April 14, 2012 www.LTSemaj.com 45
  •  Attempts have been made to address this situation from 2 perspectivesApril 14, 2012 www.LTSemaj.com 46
  •  Debt Collectors met to discuss incentives aimed at boosting compliance in a sector plagued by a record $20 billion in bad debts. The professionals met at the Credit & Collection Conference 2010. These collectors represented financial institutions, utilities, hospitals and large furniture storesApril 14, 2012 www.LTSemaj.com 47
  •  they are refinancing or negotiating loans at lower rates in order to salvage some of the debtApril 14, 2012 www.LTSemaj.com 48
  •  Increasing the Collection of Your Debts Through the use of Platinum Negotiations TechniquesApril 14, 2012 www.LTSemaj.com 49
  •  Lloyd Eubank-Green and Associates hosted a seminar titled  "Debt Collection in a Cashless Society“ 1999 The seminar was designed to assist  Financial Controllers  Chief Accountants  General Managers  Accounts Receivable personnel to use the latest collection strategiesApril 14, 2012 www.LTSemaj.com 50
  •  Only 45% of persons with bad debt deliberately contracted the debt without any intention to repay. His belief is that 65% of bad debt is collectible  if collectors use some simple, rational strategiesApril 14, 2012 www.LTSemaj.com 51
  •  "Several of the companies which folded recently had large non- performing loans because the borrowers would not pay for one reason or the other," and the situation could have been improved if the creditors had employed some simple, rational strategies.April 14, 2012 www.LTSemaj.com 52
  •  collection standards, procedures and practices; credit policies; the establishment of a collection system; how to determine the cost- effectiveness of your collection systemApril 14, 2012 www.LTSemaj.com 53
  •  A Different Approach for Debtors and Lending Institutions The current situation warrants a different approach towards the reduction,  if not the elimination of the bad debt crisis now plaguing our lending institutions.April 14, 2012 www.LTSemaj.com 54
  •  We now need to go beyond the previous strategies of  Seminars for Debt Collectors and  Seminars for the Debt–Ridden EntitiesApril 14, 2012 www.LTSemaj.com 55
  •  Debtors and lending institutions are in this together. We need to bring both into the same setting  so that mutually beneficial solutions can be crafted, developed and implementedApril 14, 2012 www.LTSemaj.com 56
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  •  The Federal National Mortgage Association (FNMA),  commonly known as Fannie Mae in the USA announced a new website for consumers struggling with mortgage paymentsApril 14, 2012 www.LTSemaj.com 58
  •  was designed to educate homeowners on where to get help and on how to avoid foreclosure. Fannie Mae noted that many of the homeowners who actually go on to lose their homes often had minimal or no contact with their mortgage company. Hiding is never a viable option.April 14, 2012 www.LTSemaj.com 59
  •  offers homeowners easy to understand information on  Avoiding foreclosures  Refinancing  Forbearance  Deeds-in-lieu of foreclosure  Short sales  Repayment plansApril 14, 2012 www.LTSemaj.com 60
  •  There are many other websites in the USA that offer similar information.April 14, 2012 www.LTSemaj.com 61
  •  is hoping that the site will become the credible, authoritative place to go for consumers seeking information on how to get help to avoid foreclosure. The new site is part of Fannie Mae’s ongoing efforts to help homeowners avoid foreclosure.April 14, 2012 www.LTSemaj.com 62
  •  Interactive Options  Finder to help homeowners identify options that might be right for their situation Calculators  to help borrowers understand how many of the options work including refinance, repayment, forbearance and modification Videos  featuring real homeowners discussing how they got help and housing counselors providing adviceApril 14, 2012 www.LTSemaj.com 63
  •  A Virtual Assistant  to walk homeowners through key areas of the site Next Steps and Helpful Forms  including a financial checklist and contact log to help borrowers be prepared when contacting their mortgage company or housing counselorApril 14, 2012 www.LTSemaj.com 64
  •  some homeowners may decide that they can no longer afford to stay in their home while others, although struggling, may want to work through their situationApril 14, 2012 www.LTSemaj.com 65
  •  In order for a homeowner to determine the best course of action, Fannie stresses the need for homeowners to contact either their lender or a mortgage counselorApril 14, 2012 www.LTSemaj.com 66
  •  We can do the same here in Jamaica. If we bring debtors and lenders together in one setting, we can develop far-reaching options that are relevant to the Jamaican situation, for all types of bad debts.April 14, 2012 www.LTSemaj.com 67
  •  We can fine-tune this model and make it happen. We propose a multi-pronged approach to help deal with the different kinds of debt.April 14, 2012 www.LTSemaj.com 68
  •  We propose staging a series of Expos that would focus on three (3) types of debt:  Mortgages, Business Loans and Personal Loans and Credit Card DebtApril 14, 2012 www.LTSemaj.com 69
  •  Locations:  Expos would be staged in Kingston, Ocho Rios, May Pen and Montego BayApril 14, 2012 www.LTSemaj.com 70
  •  A 12-part series  focused on giving people information they can ACT on  Duration - 30 minutes each  Aired on a station or 2 whose listeners match the demographic profile of the typical debtorApril 14, 2012 www.LTSemaj.com 71
  •  A facility similar to that offered by The Federal National Mortgage Association (FNMA), aka Fannie Mae so that individuals and entities have some idea of their options before they ‘brave it up’ to call the financial institution that they owe.April 14, 2012 www.LTSemaj.com 72
  •  This will be discussed as this will be based on  the scope  the locations  the number of additional institutions invited to participateApril 14, 2012 www.LTSemaj.com 73
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  •  Leahcim SemajApril 14, 2012 www.LTSemaj.com 75
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