There are a variety of ways in which accounts, or debts, are collected. However, aging technology and legacy servicing (collection) infrastructure restricts a lender’s ability to leverage automation and technology. Without this automation and technology, a lender’s ability to collect is diminished, forcing it to sell debts to third parties who are optimized for collection. This hurts the lender as it receives pennies on the dollar when selling accounts. Also, it potentially causes the lender to lose its relationship with its borrower. Leveraging technology to be more transparent and engage in cross-channel communications with borrowers will boost a lender’s ability to collect and allow it to keep its relationship with its borrowers.

In addition, the provisions in Regulation F will permit collection through text messages and other channels, while allowing borrowers to choose the channel on which they want to be contacted. Modern servicing platforms allow borrowers to retain flexibility over their debts by allowing them to change due dates, create payment plans, reverse payments, and more. At bottom, collection systems should operate like it’s 2022 not 1952. But only while remaining conscious of legal restrictions like those in Regulation F and elsewhere. Lenders, servicers, and others engaged in collection should look for ways to include technology into their servicing and connect with borrowers in ways that resemble how people communicate in 2022.