Category Archives: Industry Interviews

An Interview With Mark Rubenstein – Co-founder of Pagus.io, LLC

Robert: So Pagus has a unique business model for a print vendor. Why do you focus on low volume mailers while all your competitors are driven by high volume?

Mark: Well, this is a model that we’ve been developing for the last 20 years. The Collection Industry, which has been our focus for the last 4 years, provided an ideal platform to perfect it.   When we started back in 1999, it was difficult to compete with the incumbent printers since no one knew who we were. By default, we looked for and took on customers that couldn’t find print venders to outsource to because they were too small. For a startup this turned out to be a great strategy because our larger and more entrenched competitors didn’t compete with us at this end of the market. Larger companies need larger customers to move the revenue needle.

 

Robert: Sounds like a disruptive market strategy. Is this the reason for your success?

Mark: It was a large part it.  When you don’t have to worry about competitors at every turn, it definitely gave us an opportunity to build on something. We learned that these same customers had very different problems to solve. And solving them required a different approach. For the same reason our competitors couldn’t afford to focus on customers too small, we had to be smarter in our approach to service them profitably.  Our success however, is based on the technology strategy.  We deliver “mass customization” -which is really creating the same technology solutions that were offered to customers magnitudes the size of ours by our competitors and creating product offerings that our customers could use and pay for as they needed it. In essence we were providing access to technology and making it affordable.

 

Robert: Mass customization? Tell me more about that.

When you think about disrupting a market, it really means entering a space that is naturally being vacated. The challenge is finding that space and finding strategic ways to serve customers that competitors aren’t looking for, customers not worth fighting for, and customers quite frankly, they’re kind of happy to get rid of.

With all the print horsepower out there from some of these large printers, I don’t think the collection industry needed just another print vendor. And we definitely knew from experience, that we didn’t want to be that. Our plan focuses on 1 thing- building a process of dependable innovation that continuously solves problems, delights customers, and improves their outsourcing experience. The strategy of “mass customization” allows customers to access the same technology offered by these large printers and offer it more affordably.

Robert: What are you customizing?

Mark: Haha. A lot. But collection letters are really at the core of the offering.

 

Robert: Don’t your competitors do that? What’s so unique about customizing a letter?

Well customizing a letter really isn’t and it goes back to what Pagus does- finding problems that need to be solved  and finding the “jobs that need to get done” and do them better. This is and always has been part of our DNA. The biggest problem that needed to be solved for the attorneys and collection companies we serve with smaller mailing volumes was the problem of TIME. In other words, providing enough attention to customers to get this job done faster. Getting it done right. And repeating it consistently. You know Rob, how many proverbs are written about “lost time”. It’s our clients’ most precious resource. We can all agree that it is and always has been in short supply.

Robert: So I have this vision of hundreds of little elves running around your shop serving customers to create the magic but I know there’s something more here.

Mark: So funny. I was checking in on a new client that said the same thing about the elves. But I can assure you, there’s no magic in problem solving. It’s about focus, listening to your prospects, the hard work that goes into building the process, and executing all of it to support our customers for the long-term.

We have a long history of document management, specifically focusing on managing content within a document, and a workflow that executes the document creation and delivery processes. Hundreds of little elves are expensive, and they have to sleep you know.

 

Robert: This is true. Well you know this industry is going to be dealing with a lot of changes this year with the new FDCPA rulings.  Letter content will definitely be affected. With your focus on content management, this may not be a big deal for your customers.

Mark: We’re really not overly concerned about delivering the outcome our customers are looking for. We’ve seen some of the content requirements and formatting suggestions. It’s still pretty fluid. Like our document template. But we’re ready.

 

Robert: You mean the letter templates your customers use?

Mark: I mean THE template that all our customers use. There’s a difference. And the Pagus differentiator actually. We use what we call a Fluid Template that’s born from the idea of “mass customization”.  Rob, we have a lot of customers that have very extensive letter libraries. To manage thousands of individual letter templates is unthinkable in the world we live in.

 

Robert: Wow. What is a Fluid Template? That’s sounds interesting.

Mark: Interesting? I guess. But for the collection world, it’s definitely pretty powerful. This template concept was originally designed with speed in mind-solving the problem of time as we already talked about.  But the collection world has equally important problems to solve – and that’s staying compliant.

So when you look at the total scope of this “problem to solve”, our focus shifts from managing a client’s individual letters, to managing a client’s letter library. Its really not until you make this shift in thinking, can you really attack this problem.  We can make letter changes and set up new letters faster then anyone, but IF they’re not 1,000 % accurate, it doesn’t mean anything.

 

When you deconstruct a letter and break it down into its core components, you have pieces of content. Content like letterhead, a debtor address, a debt summary, a letter body, regulatory content, and state disclosures. What you also have is a lot of content that’s shared between letters- for example, letterhead and state disclosures- every letter has them. You also have content that’s shared across specific letter types like an Initial Demand, an Intent to Deposit, or Settlement. These letter types might vary slightly from client to client, but for the most part, they’re the same.

So by cataloging the pieces of content, whether they’re unique or shared, the composition engine knows what pieces to grab and what holes to put them in based on the letter code. And this allows the one Fluid Template to handle all of a clients’ letters. Makes sense?

 

Robert: Mark, this makes complete sense. Kind of brilliant.

Mark: It was actually pretty obvious.  To be honest, this is where I see most of the industry’s problems lie and why so many collection attorneys wait so long for a letter change from some vendors. Some of our clients told us that they could wait weeks for some changes. Think about, let’s say a firm adds an attorney to a letterhead and has 100 letters under management. The thought of having to edit 100 letters is madness. It takes a lot of time. You can see it takes weeks for this. Pagus does this job in 1 minute and it’s the best example of how we solve the problem of “time”.

But when it comes to compliance, it’s even more significant. Leaving a new attorney off of a letter that was missed will be very different then leaving off a new piece of language required by the new FDCPA guidelines. That’s definitely gonna cost something.  So we manage the compliance language the same way.  If language is shared, every letter that is coded to get his language is updated. Not only is it done in a few minutes. It’s a job that get’s completed accurately. Obvious right?

Robert: Yea obvious to you. For this industry though looks like a gamechanger. So Pagus is on their way to disrupting the collection industry?

Mark: I hope so. Not to sound cliché, but it’s still about the lifetime value we create with our clients. With so many changes coming down the pike, we’re paying close attention to everything and focusing on making these important jobs seamless. There’s a lot to think about for us. Our goal is to give our clients one less thing to think about.

An Interview With Craig M. Geisler

 

 

 

An Interview With Craig M. Geisler; President of Cherrywood Enterprises, LLC

 Robert: Being the fact that you are the President of Cherrywood Enterprises, and you are a buyer and seller of charged off debt files; what is the state of the debt buying marketplace in 2019?

Craig: That’s a good question, Robert, and that seems to be on everyone’s mind since the beginning of the year.  From my perspective, we are in a market of constant change.  Ever since the major banks decided to stop selling their charged off loans, buyers have been looking at alternative sources to buy debt.  The first and most obvious market was the auto industry.  With the abundance of charged off deficiencies and availability of backup documentation, it was an obvious source for files.  Now, the market is rather saturated with auto paper.  Plus, many of the sellers, don’t have all of the necessary paperwork needed to file suit.  It can be tricky. Then, there seemed to be a shift into the consumer loan space with Cashcall, then LoanMe, and some of the other consumer lenders, it was good paper with good docs. Then, with the creation of the CFPB and what seemed to be an abuse of power in early 2012, many buyers just got out of the industry all together.  Now that there seems to be a clear description of what the CFPB is looking for with violators, there appears to be a cautious approach to buying.  So, we at Cherrywood Enterprises began looking at the commercial aspect of the industry.  First, as mentioned in our last article, commercial loans follow the guidelines of the UCC code, with no jurisdiction for the CFPB.  That creates a safe feeling for buyers.  So, I see that being a big industry for buyers and sellers alike going into 2020.

    Robert: Tell me a little about Cherrywood Enterprises.  What separates you from other buyers and sellers?

Craig: Well, Cherrywood Enterprises has been my growing baby since 2012 when my brother and I created the company.  I had been with 3 other buyers/sellers since 2007 and I found faults with how they ran their operations on many aspects.  Some had trouble finding good files, while others didn’t offer good post sale support.  Some were extremely technically advance and had a great platform, while others didn’t really seem to embrace their buyers as the bloodline of the company.  They were regarded as just buyers and they would get the post-sale docs anywhere from 2 weeks to 2 months after the sale, even when they had the docs in house.  I never got that.  The first thing we implemented was an obvious “customer first” format.  What that meant was, without our buyers and sellers, we were nothing.  Reputation had to be everything.  So, if we told you that you would get the docs within 48 hours, we moved heaven and earth to do so.  Chain of title was the first priority post sale.  We asked some of our buyers what the most frustrating part of the debt buying marketplace was, and the majority said it was the inability to get the chain of title and backup docs in a timely manner.  That became our number one focus, and still is to this day. 

Then, we implemented an advertising and marketing platform to reach out to small to regional banks, credit unions, auto lenders, and commercial lenders.  We created marketing campaigns that would reach those sellers who didn’t know that their charged off loans were worth anything and educating them on the process.  That became quite the task, as many of those sellers didn’t like the pricing that their loans were worth.  So, it became an educational call, and a sales call.

Last, was the ability once we received the files, was getting the Bill of Sale from the seller immediately upon funding the deal.  Of all of our processes, that was the easiest, but apparently seemed to be difficult for other sellers to get to their buyers.

Robert: That’s good to hear, but the main thing our readers are probably thinking is, what about pricing on all of these different kinds of files?

Craig: That’s what its all about…pricing.  Well, obviously, with each different type of asset class, comes different kinds of pricing.  There are many aspects of what these files are priced at.  There’s geography, age, backup docs, how many times the accounts had attempted to be collected on and by how many agencies, verbiage in the docs that allows for attorney fees and whether or not there is arbitration.  Unfortunately, there isn’t one set of pricing for each asset class.  The best answer I can offer is a range on where I have seen files go for this year.  For charged off, in stat files, I have seen them go anywhere from 1%- 13%, and for out of statute paper, anywhere from 5 basis points on up to 80 basis points.  Of course, all of that is depending on the criteria I had mentioned above.

Robert: Fair enough.  Now, where do you see our industry going in the future with regards to the kind of paper and pricing?

Craig: Well, I don’t have a crystal ball, so its just my best guess. If you look statistically over the last 10 years, pricing has pretty much stayed the same, except for the pricing of fresh credit card files coming direct from the issuer.  Those accounts have been increasing in price over the last 8 or 9 years due to the fact that there just isn’t much of that product out there.  The old laws of supply and demand apply.  Everything else, auto consumer loans, judgments, commercial, etc. I can only assume they will stay in the range they have been, unless we see less and less of that type of asset class.  It appears that auto deficiencies, with the recent uptrend in charge offs in the auto industry, will continue to be accessible and in large supply.  The 3 asset classes I see gaining in popularity is commercial, mortgage deficiencies, and medical.  All 3 are still relatively new to the marketplace and not in bulk supply.  We are still learning about the nuances of each, and how they can be better collected or sued upon.

Robert: Interesting. How do you see Cherrywood Enterprises evolving as these new asset classes increase in popularity?

Craig: Well, we have already ramped up our marketing to include commercial and medical debt issuers. Buyers still have a lot to learn about the best ways to not only collect on these, but in filing lawsuits, as well.  For instance, we have always heard that large balances; those in excess of $10,000, have a high probability of declaring bankruptcy.  Yet, in many of the commercial files, the balances exceed $20-40,000 in balances.  So, while they may still declare bankruptcy, many do not in an effort to save their business. 

With medical, traditional collection efforts simply don’t work in trying to collect on these accounts.  You can’t go into a call with a mentality of being the big bad collector.  There is HIPAA compliance that needs to be followed, and the collector need to take more of a sympathetic approach to the debtor.  I hear that more often, a softer approach to medical debtors is the way to go. 

With mortgage deficiencies, I always thought these would be the most difficult loans to collect on.  The debtor already lost their house, what’s the motivation for them to pay?  The answer? Many consumers care about their credit scores again, and while maybe they lost their house, they still have dreams of buying a house again down the road.  Maybe the debtor lost their job and simply couldn’t pay their mortgage, or they went through a divorce?  There are many reasons why they fell behind, but these are the kind of debtors that can turn things around within 12-18 months and want to buy a house once they fix their credit!

Robert: Many good points to ponder.  Last question. Tell our readers about the Cherrywood Enterprises and the recent success stories that have made you proud about being the owner of your company?

Craig: That’s a good question.  There are many.  We recently brought on a young man to be our Vice President of Business Development.  His name is Hunter Godfrey.  He had the tough task of reaching out to credit unions and banks in an effort to sell their charged off files to us.  This requires making hundreds of cold calls, emailing thousands of emails to these sellers, and taking a LOT of “no’s”.  We have all been there at one stage in our careers, but he stayed with it…. hoping for his first deal, and then he finally got it!  He and his girlfriend are buying their first house, so it was good to see his hard work and efforts pay off.

Also, we were working with a credit union that we had a good rapport with last year, and they decided to hold off on selling.  We were disappointed, but we understood.  Last month, they finally got back in touch and we were able to work out a nice deal with them.

Also, we work with a lot of new buyers…. first time buyers.  Some had been burned in the past by bad brokers in the industry.  Not only were we able to get them good files, but we helped them find a good agency to place the files with, and they made their investment back within the first 4 months of placing the accounts.

All of these stories have helped us establish a good buyer and seller base and create customers for life!  That is the mantra we have adopted for Cherrywood Enterprises.  Each deal allows us to create customers for life, and we intend to do our part to keep them.  We work 8-10 hours a day, so each customer kind of becomes like an extended family.  We talk about spouses, kids, vacations, family firsts, and even sad moments that we all experience.  I truly LOVE what I do and the people we work with!  I couldn’t imagine doing anything else with my career.  That’s what we at Cherrywood Enterprises are all about, and it comes across in our dealings with people every day.  I am proud to be the owner of Cherrywood Enterprises!

 

Robert Pinchuck Interviews Phil Duff On Nearshore Collections

1. First of all, Phil, tell me the difference between Outsourcing, BPO and Near Shoring. Which is best for debt collection? Duff replied, “Great question, Robert. Outsourcing is the practice of handing over control of public services to private enterprises. BPO or Business Process Outsourcing is defined as a subset of Outsourcing that involves contracting the operations and responsibilities for a particular business process to a third-party service provider and Near Shoring is defined as relating to the transfer of a business operation to a nearby country.