The State of the Repossession industry: 2011
A friend asked me, “Can you explain the repossession industry?”
“Funny you should ask”, I commented, “because after reading blog after blog, and comment after comment about all the in-fighting and grandstanding that’s been going on in the repo industry lately, my knee jerk reaction was “Wow, that’s a loaded question”.
“Why is that? she asked.
“Well, for starters, repossession in general has always been a highly fragmented, mom and pop kind of industry, but it appears to quickly becoming more corporate, and those who don’t take the steps to keep up may find themselves left in the dust. We seem to be on the verge of a great deal of consolidation activity as larger players have emerged and they need market share to survive,” I said.
“In the past couple of decades, and especially in the past ten years, many of these mom and pop operations have grown, some due to a passing of the torch to a younger generation within the same family, and some due to new blood coming into our industry, and many of these “newbies” are not afraid to take the risk required to rapidly grow their organizations, ” I explained.
“Ok, so why the fighting?” She asked.
“Well, that’s the tricky part. Let’s start by looking at the players:
• Lenders- this is where it starts- these companies loan money and they range from small finance companies in your local shopping center to credit unions to small, medium and large banks as well as companies built to finance a certain manufacturers car, and these companies are called “Captive’s”. General Motors Acceptance Corporation (GMAC) was a captive that always used to finance only GM products, or sometimes other models if they were sold used off the GM dealer lot, but like many companies they got in trouble. Our Government helped them out last summer by making them an offer they couldn’t refuse; “Become a bank and be open to financing anyone, and help out Chrysler btw, and if you do that we’ll give you TARP funds and you will succeed if you follow the plan”. They followed it better than anyone expected, probably because unlike most start up banks they had the deck stacked with GMAC veterans, and their catchy marketing plan and 24 hour internet based business model came on the scene at just the right time and now they’re either on pace to pay all the money back or they’ve already paid it back, and they’re positioned to do an IPO later this year.
• Repo Companies- There’s somewhere between 2500 and 5000 companies in the US that perform this service, most are reputable, a handful are not. The larger they are the better chance they’re reputable, but even the big one’s can take part in questionable business practices at times. A few states license and regulate this industry, most don’t. Most of these companies are small, one-location mom and pop operations doing less than $500K in annual revenue. The larger one’s do in excess of fifty million in revenue, some may even double that. The larger ones cover large areas of a state, all of the state, multiple states, or in a couple cases they cover most of the country. From my experience, running a repossession company has to be one of the more difficult businesses to manage. Finding good people to work in the field is extremely difficult, and training and managing them is even tougher. Your customers who give you work: lenders and companies they use as “middle men” can be demanding, and they’re not usually very loyal, although good repo companies build “brand name loyalty” by providing above-average levels of service. The lenders clients, and people whose cars are being repossessed are rarely happy, and you’re better off avoiding the debtors at all costs, when it’s practical to do so. If you are going to own a repo company you should not have high blood pressure, you shouldn’t be afraid of working 24/7/365 and you need a good lawyer, and a mentor who knows the industry if you’re just starting out, or if you’re struggling. You also better have kick ass software these days or you’ll get left in the dust by those who do. Many people think LPR- License Plate Recognition (see below) technology will change the face of the industry. I’ve seen the industry change with forwarding and skip tracing, and LPR seems to have the same potential impact as these innovations, but as is the case in many businesses and in our lives, (think Facebook and Google) Software as a Service is what will define the future of the repossession industry and without the best software available, repo companies who don’t have it will struggle to compete with those who do, and its as simple as that.
• Repossessors- The un-sung hero’s. Most are male, most drive tow trucks, and most are pretty resourceful. These guys are performing a job that ranks right behind the repo company owner in terms of degree of difficulty. Like the company they work for, they’re paid for results, and unfortunately only certain results count, which usually means no car, no commission. There are a handful of legendary, great one’s, many good one’s and many who are mediocre or just flat not good and in many cases a liability to the company they work for, and to themselves and the general public for that matter. This is a job that requires risk, but when those risks are not calculated, things can go wrong in a hurry, and that can be deadly.
• Forwarders- These are companies who receive all or a portion of a lenders repossession assignments and their job is to manage the repossession process. This includes picking a repo company they contract with and assigning the account to them for repo. They’re supposed to assign accounts only to companies that are licensed (if applicable), insured, and reputable, with the key word being “supposed to” as for some reason many lenders don’t do a very good job of insuring their Forwarding companies are using only reputable repossession companies. After the Forwarder assigns the account to the repo company, they follow for the progress through a series of written updates and phone calls between the forwarder and the repo company. Once the account is repossessed, or after the account closes due to the customer paying, or something else happening including the car not being located, the forwarder bills the lender for their services when that result is positive (repo or paid) or if the unit is not located there is usually not a bill generated; this is called contingency, one of a handful of “four letter words” in the repo industry. In addition to the repossession fee from the company they hire, Forwarders also charge a handling fee on the assignments they successfully conclude. This sub-industry within the repo industry has gone from barely a blip on the radar when we started American Recovery Service in 1994 to a major force in the industry where as many as 40-50% of all repossession assignments now are assigned to forwarding companies. The model has also changed, for the worse in my opinion, and many forwarders don’t use reputable companies to send work to, and for some reason many clients don’t seem to care who the forwarder uses to represent their company, which I think is crazy. The most dangerous job a bank is responsible for is likely repossession, so one would think they would want to insure the person doing the job and representing the bank is a professional, licensed, insured, reputable, trained repossessor. That’s not the case too many times, and if you Google “repo death” you’ll find examples of what happens when it goes south, and in many of these cases there is a Forwarding company involved.
• Skip Tracing Companies – When the finance company doesn’t know where to assign the account for repossession, they hire a skip tracing company like Find John Doe, or dozens of other companies like this who do the same thing; locate people who are trying not to be found. Back in 1988 when we started Skipbusters, I’d never heard of a skip tracing company and I’m not sure if there were any out there. I thought of the idea when I worked at Chrysler a few years earlier. I’d been sent to different branches to find people who had loans that those branches were trying to stop from charging off. The only option we had back then were finding these people ourselves or utilizing repossession companies and some were great at finding anyone, but for some reason we weren’t allowed to pay repo companies for skip tracing, or if we did it was limited to like $75. I’d heard the reason was the repo guy got caught with his hand in the cookie jar too many times and they didn’t trust them to bill for skip tracing as sometimes they’d charge for skip work and they really didn’t do anything that warranted a fee. Nowadays, skip tracing is a big industry, and a big part of the repossession process, and in many cases they also perform the same service as a forwarder when they coordinate the repo process for the lender.
• Skip Tracers – aka Investigators, these are the people who are good at finding people. They utilize public records and information they gather from a lenders notes, from a credit application the debtor filled out when they bought the car, and they gather info through the Internet. Then they contact friends, relatives, neighbors, landlords, ex-places of employment and a variety of other sources, or leads, as they attempt to gain pieces of information on where the customer and/or collateral are located. They are also skilled negotiators, as many times they will make contact and convince the debtor to surrender their unit.
• License Plate Recognition Technology Companies – This is a somewhat new concept, high speed cameras mounted on tow trucks and cars that scan thousands of plates a day. The scanned plate and its GPS location are downloaded into a computer and then the unit is either repossessed right there on the spot, or the lender is notified and asked to pay a fee for the location of the unit. I’m not sure how the second part bypasses laws like the one in California that says its illegal to do this:
(j) Soliciting from the legal owner the recovery of specific collateral registered under the Vehicle Code or under the motor vehicle licensing laws of other states after the collateral has been seen or located on a public street or on public or private property without divulging the location of the vehicle. The fine shall be one hundred dollars ($100) for the first violation and two hundred fifty dollars ($250) for each violation thereafter.
• Transporters – These are the companies who pick up the vehicles from the repossession yard after they’re repossessed, but they’re just bit players in this story.
• Auctions – After the unit is repossessed the debtor is sent a letter and they have a right to pay off the unit, and in some cases they can get it back by paying the past due payments. If they don’t reinstate the loan or pay it off, the unit is transported to a private auction and it’s sold.
• Repossession and Collection Software Companies – In 1998, I wrote a business plan that detailed the development of a repossession software to allow clients and repossession companies an internet portal to send and receive assignments, to update accounts, to process repossessions, to coordinate the transportation of the unit to auction and to document the sale process. Prior to that, I’d been involved in some enhancements of a repossession software called eTracker, and I’d used one of the first repossession software’s called Pro’s, but as of 1998, we were just barely starting to email assignments and updates, so the internet was not on anyone’s radar as a way to manage the repossession process. We ended up selling our company in 1999 to a different company than the company I wrote the business plan for, but a few years later the idea I’d written about came to be in a software built by one of the principals and it became the dominant software in our industry; RDN. There have been others written since then, and some have gained market share, and now, thirteen years later, we’ve finished our own software called masterQueue, and we’re preparing to bring it to market in the Spring. We believe it has the potential to change the face of the lending, repossession, forwarding and skip tracing industries, and most of all, I hope it can help repossession agencies manage their businesses more efficiently, because if anyone deserves a break it’s the repo guys. We’ve also written over a dozen interfaces with other software companies and were hoping that other software companies in our industry will follow our lead in working with each other, as no one wins when we don’t all cooperate and work together, and hopefully RDN will also interface with us to make everyone’s job easier.
Showing posts with label repo business. Show all posts
Showing posts with label repo business. Show all posts
Monday, February 28, 2011
Tuesday, September 29, 2009
Repossession assignments and fine wine; a case study
The Auto Finance summit is convening in a couple weeks, and while I unfortunately won't be able to attend, I have replied to a question by the organizer of the event who asks what challenges does the auto finance industry face as we enter the 4th quarter of 2009.
Here is my reply:
A huge challenge lenders continue to face is in regard to assessing and managing risk; i.e. high risk loans on their books that go delinquent.
I have been on the cutting edge of the back end of our industry for nearly thirty years, and when you ask about challenges and solutions, I believe I have identified the challenges many lenders face on the back end, and I have worked very hard and invested a significant amount of my own capital to come up with a solution that can assist lenders, and one that can reward, instead of punish, the solid repossession companies, which is the direction I unfortunately have seen our industry headed in the two and a half years since I got back into it.
We have been working diligently to create an opportunity through a software product that assesses and manages risk, and we will be launching it in 2010. We have an immediate interest in adding one lender to our team of three external financial institution beta test users in Q4 2009. There is no cost to the lender during testing, and if our software works as we project, it can save a lender millions of dollars in annual losses.
As the person who started the first exclusive Skip Tracing company for the auto finance industry in 1988 in SkipBusters, and the first forwarding company to handle more than 50,000 assignments a year in American Recovery Service in 1993-94, I have re-entered this industry after my five year non-compete expired, and my goal was to create a software product that could assist lenders to identify, and better manage, their high risk accounts.
We have finished our internal beta testing of the new software and in a 90 day contest against two of the largest skip companies in the country, working a captive lenders oldest, most difficult charged off skip accounts, we won this contest handily. The results are a direct reflection of the power of our new software. In this 500 file per company contest, we've more than doubled the amount of repossessions the 3rd place company has gotten, and we've gotten 40% more repossessions than the second place company. We also helped our client get twice as many accounts paid in full than the second place finisher, with the last place finisher getting zero paid in full. These paid in full accounts are a direct reflection on the work done by our approved and contracted outside repo agents as they get paid a close fee when a customer pays, and they are not working on a strictly contingent basis.
As a comparison, we also beat these same two skip tracing companies in the last contest that ended July 1st, but we only were using the new software for the last 30 days, and in those last 30 days, we came from last to first to win by 10%, which happened as soon as we started using our new software.
These results are not a reflection on our two competitors as both are leaders in the skip tracing industry and I'm sure they do a fine job overall, in fact, I personally trained the owner of one of those companies when he used to work for me. These results do show that when utilizing the proper software, you can increase your efficiency and if you're a lender using this in a pre-charge off environment, you can reduce your losses significantly.
How many of you are on an old legacy software platform that isn't much better than using a green screen when it comes to measuring and analyzing data?
How many of you cringe when you or your collection managers need to deploy resources from your internal IT department?
Those are some of the major challenges our industry faces today, at least from what I've seen through the interaction I've had with some of the largest lenders in the industry in the past two years. I've created a back end solution for this problem, and so far, the results are positive.
In addition to these internal challenges facing lenders, they also are facing new challenges posed by two relatively new industries, and one older industry; Skip Tracing, Forwarding and Repossession.
When we started Skip Busters in 1988, there were no skip companies that exclusively handled skip tracing on delinquent auto loans. Now there are dozens, and its a several hundred million dollar a year industry. While this helps lenders, it also opens them up to risk as they now have outside vendors working their files by phone, and between FDCPA, SOX, GLB and many other federal and state laws, plus ID Theft issues, this is now a greater risk to lenders who outsource this work then they've ever faced. Due to this, you need a solid software program that analyzes and manages this risk. If your customers ID is compromised at a vendor level, you need specifics answers and metrics to back up those answers, otherwise, the liability and exposure you and your vendor face can be in the hundreds of thousands to millions of dollars range.
When we started exclusively managing the repossession process for VW Credit on a national basis in 1993, Manheim had just closed its doors on a division they had started a few years earlier that did the same thing. There were a few other industry leaders from the repossession industry, i.e. Minnesota Repossessors, who had gained market share through trust in terms of direct repossession assignments as we had done with Skip Busters, and through our No Calif repo companies; River City Auto Recovery.
As a result of our growth, we were starting to get requests from clients to help them manage their national needs. The industry had grown from individual branches to large, national call centers, and the managers of these places were now facing new challenges in identifying their best repo companies on a national level, and not as they used to on a local level. Almost immediately after we started seeing success, ADT got in and soon they were purchased by Manheim, and many others followed suit on what we were doing for VW Credit, and then for a number of large, new sub-prime lenders; managing their repossessions.
They now call it Forwarding, a term I never really liked as it implies there is little or no skill involved. Our idea was to "manage" the process by paying the repo company a fair price, and then we would charge a flat service fee based on our work. We charged a $75 mark up back then. Nowadays, you'll be hard pressed to find anyone doing over 20% of their forwarding work for less than a $100 mark up per repo.
When I got back in the industry in 2007, I was shocked to see how much traction the forwarding business had gained, and I was also shocked by what it had done to the industry. Most forwarders now make their money on the mark up they get by charging the lender as much as possible, and by paying the repo agent as little as possible. This raises the stakes to the finance company significantly, and it's not just the cost of the insurance claim, it's now also the exposure on CNN they may someday get, something every lender would be more concerned with if they could see what's really happening on their repo assignments placed with most forwarders.
Repossession management was a good idea, and it still is on a limited basis, but only when lenders hold the forwarder liable for their actions and when they audit them to insure their practices are within the best interests of the lending institution. Are all their outside repo agents contracted? Do they have proper insurance? Do they drug test their employees and do the repo agents they hire hold their employees to certain standards? Do they perform background checks and do their agents? Do they allow repo companies to use independent contractors versus hiring employees? Do they get out of their truck to kick in a deal, or is it not worth it because they are being paid on a contingent basis and there is no commission for the repo man when he tries to help the lender resolve the account, unless its through repossession.
"Oh, but we pay our guys $25 on every deal they close".
Show me the documentation.
I challenge you CEO's out there reading this to pull a report on the average amount of days your repossession assignments are assigned to the agent they are currently with, forwarder or direct. If it's higher than two weeks on average you have a problem. Accounts need to be moved through queue's, followed up on, and managed to the point where there is always some form of forward progress. I don't mean the type of backward progress we see in our end of the industry when a collector runs a bureau or a public records report and throws the last three, or six addresses reported for the customer at the repo agent to run "and kick in hard", making the repo agent do the work the collector or skip tracer should, and can do with a couple phone calls to verify first if the address is good or not. Those are the challenges a lender faces, and if you have a high charge off percentage, you might want to start by analyzing those trends and numbers.
High risk accounts need to be identified and worked diligently, or they will become more difficult with age in the same manner a fine wine becomes better with age, by sitting around and aging. The difference is your customer is driving and causing your collateral to lose value with every mile whereas your wine is sitting in a wine cellar aging gracefully, increasing, noty decreasing in value.
Many forwarding companies do a good job, but if they're paying a tow jockey with marginal, if any insurance a $175 repo fee and then charging the client a $475 repo fee so they can make their margin that they're losing because 50% of their deals are being worked on a contingent basis, the client, and the successful repo agent who doesnt get the deal are the one's taking it in the shorts, not the forwarder. I"m not saying a repo agent needs to get paid on every close, but they should expect to get deals with verified addresses, one address at a time (two if there is a POE) and if they resolve that address in a positive manner, they should get something for their effort. This allows you to move the account to the next queue, and by doing so, you are addressing and not pushing aside your risk.
Forwarding, as it currently is being used, and from what I've seen, is not good for the finance industry, yet accounts are assigned to Forwarders thousands of times a day. Forwarders now control a material portion of the repossession assignments, which is scary when you see how most of them are operating their companies. That's a challenge lenders face, and the solution is to re-establish direct relationships with solid repo companies they identify, and then use software and training to manage the process. I know why Outsourced Repossession Management made sense in the 90s, but as I see how it's evolved, I believe it has trended in the wrong direction and that's a challenge lenders who use Forwarders face.
Some things were meant to be outsourced, and while early stage collections on an account that is not a high risk is a good idea, outsourcing the management of your entire repossession portfolio without a clear understanding of the relationship between the Forwarder and the repo agent and the metrics behind that to verify what you are being sold is accurate, its a recipe for disaster. I think the assignment and verification of specific pieces of your portfolio like impounds and assignments in remote locations is an idea worth paying a mark up for, but there is no reason to pay the mark up to a guy pushing the paper when you can, and are better off, making those decisions yourself.
If you are a lender and agree with some of what I've said and would be interested in speaking with me about becoming a beta test user for our software, please contact me at 916 730 3335 or jlewis@FindJohnDoe.com
OK JJ, now you can ask your programmers to limit the replies to people's posts to xxx characters. Sorry for rambling about a subject I'm passionate about, but this industry has been good to my employees, my family, and to my wife and I, and if we can somehow give something back, we're hoping it can be through the technology we've created with the software we've written that's based on thirty years of experience as a lender, a vendor, and an outsider who is now back in.
John Lewis
President
FindJohnDoe.com
Here is my reply:
A huge challenge lenders continue to face is in regard to assessing and managing risk; i.e. high risk loans on their books that go delinquent.
I have been on the cutting edge of the back end of our industry for nearly thirty years, and when you ask about challenges and solutions, I believe I have identified the challenges many lenders face on the back end, and I have worked very hard and invested a significant amount of my own capital to come up with a solution that can assist lenders, and one that can reward, instead of punish, the solid repossession companies, which is the direction I unfortunately have seen our industry headed in the two and a half years since I got back into it.
We have been working diligently to create an opportunity through a software product that assesses and manages risk, and we will be launching it in 2010. We have an immediate interest in adding one lender to our team of three external financial institution beta test users in Q4 2009. There is no cost to the lender during testing, and if our software works as we project, it can save a lender millions of dollars in annual losses.
As the person who started the first exclusive Skip Tracing company for the auto finance industry in 1988 in SkipBusters, and the first forwarding company to handle more than 50,000 assignments a year in American Recovery Service in 1993-94, I have re-entered this industry after my five year non-compete expired, and my goal was to create a software product that could assist lenders to identify, and better manage, their high risk accounts.
We have finished our internal beta testing of the new software and in a 90 day contest against two of the largest skip companies in the country, working a captive lenders oldest, most difficult charged off skip accounts, we won this contest handily. The results are a direct reflection of the power of our new software. In this 500 file per company contest, we've more than doubled the amount of repossessions the 3rd place company has gotten, and we've gotten 40% more repossessions than the second place company. We also helped our client get twice as many accounts paid in full than the second place finisher, with the last place finisher getting zero paid in full. These paid in full accounts are a direct reflection on the work done by our approved and contracted outside repo agents as they get paid a close fee when a customer pays, and they are not working on a strictly contingent basis.
As a comparison, we also beat these same two skip tracing companies in the last contest that ended July 1st, but we only were using the new software for the last 30 days, and in those last 30 days, we came from last to first to win by 10%, which happened as soon as we started using our new software.
These results are not a reflection on our two competitors as both are leaders in the skip tracing industry and I'm sure they do a fine job overall, in fact, I personally trained the owner of one of those companies when he used to work for me. These results do show that when utilizing the proper software, you can increase your efficiency and if you're a lender using this in a pre-charge off environment, you can reduce your losses significantly.
How many of you are on an old legacy software platform that isn't much better than using a green screen when it comes to measuring and analyzing data?
How many of you cringe when you or your collection managers need to deploy resources from your internal IT department?
Those are some of the major challenges our industry faces today, at least from what I've seen through the interaction I've had with some of the largest lenders in the industry in the past two years. I've created a back end solution for this problem, and so far, the results are positive.
In addition to these internal challenges facing lenders, they also are facing new challenges posed by two relatively new industries, and one older industry; Skip Tracing, Forwarding and Repossession.
When we started Skip Busters in 1988, there were no skip companies that exclusively handled skip tracing on delinquent auto loans. Now there are dozens, and its a several hundred million dollar a year industry. While this helps lenders, it also opens them up to risk as they now have outside vendors working their files by phone, and between FDCPA, SOX, GLB and many other federal and state laws, plus ID Theft issues, this is now a greater risk to lenders who outsource this work then they've ever faced. Due to this, you need a solid software program that analyzes and manages this risk. If your customers ID is compromised at a vendor level, you need specifics answers and metrics to back up those answers, otherwise, the liability and exposure you and your vendor face can be in the hundreds of thousands to millions of dollars range.
When we started exclusively managing the repossession process for VW Credit on a national basis in 1993, Manheim had just closed its doors on a division they had started a few years earlier that did the same thing. There were a few other industry leaders from the repossession industry, i.e. Minnesota Repossessors, who had gained market share through trust in terms of direct repossession assignments as we had done with Skip Busters, and through our No Calif repo companies; River City Auto Recovery.
As a result of our growth, we were starting to get requests from clients to help them manage their national needs. The industry had grown from individual branches to large, national call centers, and the managers of these places were now facing new challenges in identifying their best repo companies on a national level, and not as they used to on a local level. Almost immediately after we started seeing success, ADT got in and soon they were purchased by Manheim, and many others followed suit on what we were doing for VW Credit, and then for a number of large, new sub-prime lenders; managing their repossessions.
They now call it Forwarding, a term I never really liked as it implies there is little or no skill involved. Our idea was to "manage" the process by paying the repo company a fair price, and then we would charge a flat service fee based on our work. We charged a $75 mark up back then. Nowadays, you'll be hard pressed to find anyone doing over 20% of their forwarding work for less than a $100 mark up per repo.
When I got back in the industry in 2007, I was shocked to see how much traction the forwarding business had gained, and I was also shocked by what it had done to the industry. Most forwarders now make their money on the mark up they get by charging the lender as much as possible, and by paying the repo agent as little as possible. This raises the stakes to the finance company significantly, and it's not just the cost of the insurance claim, it's now also the exposure on CNN they may someday get, something every lender would be more concerned with if they could see what's really happening on their repo assignments placed with most forwarders.
Repossession management was a good idea, and it still is on a limited basis, but only when lenders hold the forwarder liable for their actions and when they audit them to insure their practices are within the best interests of the lending institution. Are all their outside repo agents contracted? Do they have proper insurance? Do they drug test their employees and do the repo agents they hire hold their employees to certain standards? Do they perform background checks and do their agents? Do they allow repo companies to use independent contractors versus hiring employees? Do they get out of their truck to kick in a deal, or is it not worth it because they are being paid on a contingent basis and there is no commission for the repo man when he tries to help the lender resolve the account, unless its through repossession.
"Oh, but we pay our guys $25 on every deal they close".
Show me the documentation.
I challenge you CEO's out there reading this to pull a report on the average amount of days your repossession assignments are assigned to the agent they are currently with, forwarder or direct. If it's higher than two weeks on average you have a problem. Accounts need to be moved through queue's, followed up on, and managed to the point where there is always some form of forward progress. I don't mean the type of backward progress we see in our end of the industry when a collector runs a bureau or a public records report and throws the last three, or six addresses reported for the customer at the repo agent to run "and kick in hard", making the repo agent do the work the collector or skip tracer should, and can do with a couple phone calls to verify first if the address is good or not. Those are the challenges a lender faces, and if you have a high charge off percentage, you might want to start by analyzing those trends and numbers.
High risk accounts need to be identified and worked diligently, or they will become more difficult with age in the same manner a fine wine becomes better with age, by sitting around and aging. The difference is your customer is driving and causing your collateral to lose value with every mile whereas your wine is sitting in a wine cellar aging gracefully, increasing, noty decreasing in value.
Many forwarding companies do a good job, but if they're paying a tow jockey with marginal, if any insurance a $175 repo fee and then charging the client a $475 repo fee so they can make their margin that they're losing because 50% of their deals are being worked on a contingent basis, the client, and the successful repo agent who doesnt get the deal are the one's taking it in the shorts, not the forwarder. I"m not saying a repo agent needs to get paid on every close, but they should expect to get deals with verified addresses, one address at a time (two if there is a POE) and if they resolve that address in a positive manner, they should get something for their effort. This allows you to move the account to the next queue, and by doing so, you are addressing and not pushing aside your risk.
Forwarding, as it currently is being used, and from what I've seen, is not good for the finance industry, yet accounts are assigned to Forwarders thousands of times a day. Forwarders now control a material portion of the repossession assignments, which is scary when you see how most of them are operating their companies. That's a challenge lenders face, and the solution is to re-establish direct relationships with solid repo companies they identify, and then use software and training to manage the process. I know why Outsourced Repossession Management made sense in the 90s, but as I see how it's evolved, I believe it has trended in the wrong direction and that's a challenge lenders who use Forwarders face.
Some things were meant to be outsourced, and while early stage collections on an account that is not a high risk is a good idea, outsourcing the management of your entire repossession portfolio without a clear understanding of the relationship between the Forwarder and the repo agent and the metrics behind that to verify what you are being sold is accurate, its a recipe for disaster. I think the assignment and verification of specific pieces of your portfolio like impounds and assignments in remote locations is an idea worth paying a mark up for, but there is no reason to pay the mark up to a guy pushing the paper when you can, and are better off, making those decisions yourself.
If you are a lender and agree with some of what I've said and would be interested in speaking with me about becoming a beta test user for our software, please contact me at 916 730 3335 or jlewis@FindJohnDoe.com
OK JJ, now you can ask your programmers to limit the replies to people's posts to xxx characters. Sorry for rambling about a subject I'm passionate about, but this industry has been good to my employees, my family, and to my wife and I, and if we can somehow give something back, we're hoping it can be through the technology we've created with the software we've written that's based on thirty years of experience as a lender, a vendor, and an outsider who is now back in.
John Lewis
President
FindJohnDoe.com
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