Delinquent Loan Donation Program

A Graphic to Illustrate the Process

Center for Consumer Recovery - Delinquent Loan Donation Program

Benefit to Banks

  1. Tax Deduction

    Center For Consumer Recovery (CCR) is 501(c)3 organization. Banks that donate delinquent loans to CCR are entitled to a charitable tax deduction equal to the fair market value of the loans donated.

  2. Potential CRA credit

    The donation of delinquent loans to a qualified 501(c)3 falls within the definition of qualified investments earning Community Reinvestment Act credit. CCR has met with OCC and has requested a specific letter ruling acknowledging such eligibility. We believe that ruling will be forthcoming.

  3. Earn substantial public relations value

    Oklahoma banks are the first banks in the nation to establish this “Consumer Friendly – Consumer Helpful” process. This will provide national major-media press coverage for Oklahoma banks and the Oklahoma Bankers Association.

    Because of the effect this program will have on the Oklahoma economy there will be a press conference with the Governor where the Oklahoma Banking Association will be praised for its forward thinking approach.

    As individual banks donate loans to CCR, there will be an opportunity for the bank to participate in positive local TV, radio and print exposure.

    As delinquent loan customers begin to experience success from this program there will be opportunities for continued positive public relation events. These media events will cast the bank as kind, caring and compassionate.

  4. Create Regulatory favor

    Banking regulators have been adamant in their displeasure with banks that use aggressive collection techniques or turn their accounts over to collectors who use such tactics. Donation of delinquent loans to a non-profit that:

    • Does not abuse the customer
    • Does not litigate
    • Helps the customer gain employment; negotiate their other obligations, provides social services and teaches financial literacy and budgeting will appeal to all of the bank’s regulators
  5. Reduce legal, economic and reputational risk

    Donating delinquent loans to a non-profit that does not abuse consumers and does not litigate removes all potential legal, economic and reputational risk associated with the delinquent account

  6. Improve customer retention and attract new customers

    Become known as the “consumer friendly bank”

    1. Retain customers because they will feel safe in these uncertain times.
    2. Will attract customers from competitors.
    3. Will not sever relationship with former customers who fell from grace and will have the opportunity to get the customer back once rehabilitated.
  7. Reduce bankruptcy losses to other loan products

    A consumer driven to bankruptcy by one creditor also files on all of his/her other creditors. This approach will reduce the bankruptcy rate in Oklahoma by as much as 50% which inures to the benefit of every bank that currently experiences bankruptcy filings by its customers.

  8. Reduce administrative – record retention expense

    Once loan is donated, bank no longer required to maintain records or deal with administrative issues, 1099, etc.

Benefit to Banking Industry and Oklahoma

  1. Reduce bankruptcy – save tens of millions in losses to Oklahoma banks
  2. Reduce unemployment in Oklahoma - Create 4,000 direct jobs and tens of thousands of indirect jobs
  3. Pump $315 million into the Oklahoma economy
  4. Reduce SNAP payments (634,000 Oklahomans on SNAP at present)
  5. Reduce state expense to enforce/collect child support
  6. Increase tax base (taxable wages, increased home ownership)
  7. Reduce debt collector lawsuits – unclog court system (192,500 debt related suits filed last year in Oklahoma)
  8. Reduce foreclosures – helping consumers get jobs and resolve other credit issues, allows them to pay their mortgage
  9. Raise FICO scores – increase access to bank credit
  10. Reduce the Oklahoma divorce rate (currently #1 or #2 in the nation)
  11. Reduce spousal/child/substance abuse
  12. Reduce high school drop-out rate
  13. Reduce teen pregnancies
  14. Reduce financial based crimes
  15. Reduce displaced (foreclosed) families – homelessness
  16. Reduce dependency on predatory lending
  17. Reduce the number of unbanked, under-banked in Oklahoma (34% of Oklahomans)
  18. Increase financial literacy and budgeting skills

The Oklahoma Plan