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Strengthening Onsite Liquidation Processes for a Federal Regulator

Strengthening Onsite Liquidation Processes for a Federal Regulator

A federal agency responsible for the oversight of credit unions expanded the responsibilities of its asset recovery team to include onsite support during liquidations. We developed a formal framework for their onsite liquidation processes, which streamlined their operations, reduced reliance on institutional knowledge, and enabled audit-ready documentation.

Challenge

A regulatory agency that oversees federally insured credit unions had traditionally limited the involvement of its asset recovery division to post-liquidation activities; however, this role expanded to include onsite and pre-planning support during liquidation events.

While initial efforts successfully defined the planning phase, there was a significant operational gap: No standard process existed for the asset recovery team’s onsite responsibilities—tasks such as asset inventory, loan record reconciliation and coordination with third-party servicers. Without formal guidance, these activities varied by event and individual, introducing risks to audit readiness, continuity and compliance.

Solution

To address these challenges, the project team launched phase two of the initiative, with the goal of helping the group build a standardized, fully documented onsite liquidation process. The solution included:

 

  • Job aids, checklists and templates: A suite of job aids, checklists and templates guide analysts through tasks such as file inventory, loan reconciliation, review of collection practices, and securing of other real estate (ORE). Step-by-step checklists ensure consistency and quality control, while structured templates enable easy tracking and auditability of inventories and reconciliations.

 

  • Risk & control alignment: We mapped operational risks across all three phases of the asset recovery process: preplan, onsite and post-liquidation, aligning internal controls with policies and procedures and delivering audit-ready documentation standards.

Outcome

The project resulted in the agency’s first formalized onsite liquidation process, bringing substantial operational improvements:

  • Consistency in onsite operations. Analysts now follow repeatable, step-by-step guidance that bridges pre-liquidation planning and post-liquidation actions. This enables execution by less experienced staff, reducing dependency on institutional knowledge.

 

  • Audit-ready documentation. The use of structured checklists and templates helped ensure transparency and compliance with regulatory standards. Workpapers produced during onsite activities are easily transferable for audit, lien release and asset research purposes.

 

  • Improved risk management. The creation and use of the SOPs and job aids embedded risk mitigation and internal controls into operations, reducing the likelihood of error during critical liquidation phases.

 

  • Scalability for future liquidations. The deliverables were designed to be modular and reusable, reducing ramp-up time for future liquidation events regardless of complexity.

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