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2nd Quarter 2003 Volume 3 Issue 2

Growth Continues! C&W opens Louisville office Illinois locations merge

Van Nuys, Ca–The executive management team of Caine & Weiner announced the opening of a Louisville, Kentucky full-service office and the consolidation of the Chicago offices into one location in Schaumburg, Illinois.

“We are constantly evaluating the deployment of our personnel and resources to best serve our growing client base”, commented Robert E. Caine, Chairman and CEO, “ The addition of the Louisville location and the consolidation in Schaumburg fit the criteria to give us the most effective way to meet the needs of our clients”. “With the significant growth we are experiencing”, he said, “we must also step up to our historic commitment of providing the exemplary service we have provided to our clients for three-quarters of a century. We are doing just that!”

The Louisville office opened March 3rd. Overseeing client services is Brad Schaffer, Assistant Vice President, Sales. His background includes agency sales, marketing and public relations. He is a graduate of Ohio State University.

Heading operations and collections is Dan Poloko, who has 25 years industry experience. His background includes patriotic service with the US Marine Corps. He is presently a reserve deputy sheriff in Jefferson County, KY.

On March 24th, C&W opened their 4200-square foot office in Schaumburg, Il., consolidating the Lake in the Hills and Downers Grove, Il, collection centers.

“Our Schaumburg center”, said William J. Vallecorse, C&W’s President--Central US, “Allows us to combine the team resources of two-freestanding offices. Advantages of having all the resources under one roof include; improved customer service, performance maximization and greater efficiency through workload reallocation and the re-tooling of some of our internal procedures”.

Caine & Weiner, Schaumburg, Illinois

Assisting Vallecorse, with the day to day operations of the Illinois center is Frank Dispensa, Vice President, Midwest Operations.

C&W also has full-service centers located in Buffalo, NY and Tampa, Fl. The corporate headquarters are located in Van Nuys, Ca.

“Despite a spotty US economy, we are on track to have a record year in placements and collections”, said Vallecorse. “We’re fortunate to have a terrific team at Caine & Weiner. As they say, people make the difference!”

Credit card delinquencies at new high in US.

Washington (Reuters)--Mounting job losses pushed up credit card delinquencies in the fourth quarter of 2002 to the highest level since the American Bankers Association began tracking the data in 1990.

Credit card delinquencies climbed to 4.07 percent of all accounts in the quarter, up from 4 percent in the third quarter of 2002, which was the previous high, the American Bankers Association said in a statement.

“The rise in delinquencies is not surprising given the cumulative weight of layoffs and the poor prospect for re-employment in the face of anemic job growth,” said James Chessen, chief economist for the ABA.

Consumers tend to rely on savings and credit cards to get through financially tough times and the final quarter of 2002 was such a period, Chessen said.

Rising consumer debt delinquencies add to signs that the U.S. Economic recession of 2001 and its uncertain recovery have strained the finances of many Americans.

Bankruptcies were at a record level last year. Mortgages in foreclosure also reached a record high in the last quarter of 2002, although mortgage bankers say the data shows the number of people unable to meet home loans payments have peaked. The increase in credit card delinquencies is linked to a lack of new jobs in the U.S. economy, the ABA’s Chessen said.

Fundamentals of Collection William J. Vallecorse President--Central US Each year our collection team recovers millions of dollars from delinquent debtors which otherwise would’ve been written off as a bad debt.

Although our team uses Integrated Predictive Dialers, advanced collection software, a diversity of skip tracing resources and the Internet, much of their effort relies on basic fundamentals that have been used for years.

The same fundamentals will work for you to improve your collection results!

Know the file before you call.

During your pre-call planning, determine if all payments and credits were posted to the account. Is the outstanding balance disputed? If so, was the debtor previously advised? What previous action has been taken on the account? Were promises broken?

What is the debtors modus operandi (MO)?

Debtors often use the same excuse for non-payment. When stalling for time, they rarely make a self-notation of what they said, to whom and when! Collectors, however, maintain a record of their collection efforts. It is valuable information for later referral should the debtor again become past due.

Don’t waste time discussing the debt with someone not authorized to pay.

Get the name of the person taking the message. Confirm the name of the person who pays the invoices. Ask the person taking the message when the responsible party can be reached. Find out the best time to reach the person in charge.

Leave your complete name, telephone number and ask for a call back. Have the message-taker repeat everything back.

When speaking with the debtor, identify yourself and tell them why you are calling.

At the beginning of the conversation, its vital that you establish control. This is accomplished by using titles, no first names and speaking professionally and clearly:

“Good morning, Mrs. Jones (not Nancy), I’m Mr. Cramer with the ABC company. I’m calling regarding your $1275 past due balance”

Use the “Strategic Pause”.

Nature abhors a vacuum. This “law” is used by professional salespeople and top collectors.

When used correctly, the strategic pause is far more effective than words. The pause must immediately follow the introduction (see italics). By refraining from talking, the deafening “sound of silence”

forces the debtor to react. which is the desired response--the first one to speak, as they say, “loses”.

Be courteous, control the conversation and expect the response you want.

Avoid argument and be brief. As an effective debt collector be courteous and professional at all times. At the same time you must control the discussion by taking charge (it is, after all, the debtor, not you, who owes the money). In this regard never provide the debtor with an excuse to continue holding payment.

Control the conversation by obligating them. If they require an invoice, let them know their payment will be expected once it is faxed to them. If they promise to pay ask them to provide you with their check number. Do not conclude the discussion without leaving them with an obligation.

Get specific promises and follow-up

If the debtor agrees to pay, nail them down with specifics--amount, date, payment method (check, credit card, Internet payment, etc.) Before concluding the conversation, summarize the agreement.

Follow-up on the exact day promised--no sooner, no later. Precision follow-up sends a clear message that you are on top of the matter and that reciprocity is expected!

Be persistent and create a sense of urgency.

The squeaky wheel gets the grease. Most debtors aren’t credit criminals and are often besieged by several collectors. If you are out of sight, you are out of the debtors mind.

I

March is record month for C&W! Adverse economic conditions in other countries and the turbulence resulting from war in Iraq and against terrorism continues to plague the global economy. Despite the soft economy, C&W reports 1st quarter collections set a company record, battling through the economic conditions by utilization of our national resources and commitment to our PIF2 recovery program.

“Every unit within our collection team exceeded their monthly goals and produced the highest quarterly collections for our clients--ever”, said Steve Simon, Director, Client Services. “We’re delighted to send them large trust checks from our office”.

The national client service division increased new assignments of 24% from the 1st quarter, one year ago. The arrival of several US-based international companies, continued patronage from our valued clients and emphasis on core values were named as reasons for the increase in placements.

Have you visited our website lately?

www.caine-weiner.com

Home mortgages are turning into cash machines By Jonathan Clements The Wall Street Journal

Your home is supposed to be your castle, but lately it’s looking more and more like the local bank.

As cash-strapped homeowners struggle to make ends meet, the house has morphed into the all-purpose financial solution, providing money for home improvements, vacations, car purchases, college costs and more.

To be sure, tapping your home’s value is one of the best ways to borrow money. Still, I worry that the plundering of home equity is getting out of hand.

Mortgaging Your future: Investment experts talk about “good debt” and “bad debt”. Mortgage debt? That's the best debt you can have. Not only are the interest rates reasonable, but also your mortgage interest is usually tax deductible.

Indeed, financial advisers often suggest clients borrow against their homes to pay off more-costly debt, such as the balance on their credit cards. That’s almost always a smart move. Credit-card interest isn’t tax deductible and the interest rate charged by your credit-card company might be double the rate of your mortgage.

In fact, if you need to borrow money for any major expense, arguably your best is some sort of home-equity loan. Similarly in the past, I have often suggested that folks set up a home-equity line of credit, which they can then tap in a financial emergency.

Seem sensible? Unfortunately, while some home equity may be attractive an an occasional source of cash, there are signs homeowners are overdoing it. For instance, Boston’s AEW Capital Management calculates that home buyers in late 2001 were borrowing an average 67.3 % of a home’s purchase price, compared with 41.3 % two decades earlier.

Home owners don’t seem to be in any rush to rid themselves of this debt.

Washington, DC--On March 19th the U.S. House of Representatives passed long-awaited legislation to make it harder to file bankruptcy. The senate hs yet to introduce a similar bill. Bankruptcy reform has been debated on the hill on and off for the last few years without any consensus until now. It was almost passed last year by the House, however, a rider to the bill stemming from abortion clinic violence ultimately caused it to be scrapped.

For the 12-month period ending December 31,2002, figures released by the Administrative office of the U.S. Courts reported bankruptcy filings totaled 1,577,651, a 5.7% increase from the 1,492,129 filings one year earlier. Fourth quarter filings of 2002 were 395,129 up 8.3% from the 364,921 filings reported for the same quarter one year ago.

The increased filings are not surprising. In recent years many businesses and individuals have filed bankruptcy, using it to avoid repaying their creditors.

The concept of bankruptcy, which can be traced back to biblical times, was conceived by creditors to provide a “fresh start” to cash-strapped debtors, by excusing their debts every seven years.

Although financial hardship resulting from job loss and illness may sometimes lead to bankruptcy, evidence shows that many filings were by credit criminals and others with no intention at the outset of repaying their creditors. Hence many financial service companies, including banks, credit card issuers and retailers have lobbied since 1997 for bankruptcy change and reform.

Although lawmakers from both parties have been in favor of legislation some Democratic opponents say it is unfair to low-income workers. Tougher laws, say some Republicans, are needed to stop the abuse of the bankruptcy system by those who can afford to repay their debts.

Those opposed to bankruptcy reform feel that it would adversely effect the wage earners at the bottom of the economic scale as bankruptcy often results from health issues and job loss.

Poor Credit and Insurance Losses Linked

A study released from the Bureau of Business Research at the University of Texas at Austin shows a “statistically significant” relationship between a persons’ credit history and tendencyto incur losses on an auto insurance policy. In general, lower credit scores were associated with larger incurred losses, reported the study, which Texas Senator William Raliff commissioned in June 2002 to examine the relationship between credit scores and incurred losses.

The practice of using credit histories to adjust insurance rates has stirred controversy across the country. Legislators in Kansas, Nevada and Texas are exploring curbs on the practice. In January, the state of Washington issued a change in insurance rules forbidding the use of a persons credit history to judge risk.

The 10 percent of policy holders with the lowest credit scores had loss ratios about 53 percent highest than expected. Overall, all three groups with the lowest credit scores had claim losses above the targeted loss ratio. The 10 percent of policyholders with the highest credit scores Had loss ratios about 25 percent lower than expected.

House passes long-awaited bankruptcy legislation