White Paper

Background

For the past several years, the number of defaulted loans has increased at a significant rate. The assets associated with these loans that have required repossession have therefore also increased. Several factors contribute to this, including:

the recession our nation is currently experiencing,
nearly a decade of high fuel costs,
high job turnover and unemployment rates, and
in many cases, reduced opportunity for ‘extra’ earnings such as a second job or overtime which the debtor formerly relied on to make their monthly commitments.
for homeowners, there has been a loss of home equity and a greater number of foreclosures.
consumer confidence levels have declined.

Both lenders and buy-here-pay-here companies have had to place a higher percentage of the portfolios out for repossession.

The Problem

Once the decision has been made to repossess a vehicle, both lenders and buy-here-pay-here dealers are finding common problems that are actually exasperating the situation. These issues are not unique but are the rule in today’s repossession market.

A) Repossession Agents and equipment are finite commodities and the marketplace is competitive. In order to maximize profits, Agents are working the accounts and spending resources for the assignments they perceive to be the easiest to recover. As in any industry based on supply and demand, costs are naturally going up.

B) Agents who in the past did not charge close fees are now demanding compensation to offset their increasing costs. How does the lender validate the updates to ensure they are not simply to justify the fee charged and that the assignment was truly worked?

C) Due to the glut of assignments in our industry, customer service and response time from Agents has been compromised; yet Agents continue to accept assignments beyond what they can handle effectively. As a direct result, the Agents become unresponsive to Lender needs. Cancellations and holds are many times ignored or missed. And, too often, units that should have not been recovered are picked up in error.

D) The occurrences of wrongful repossessions are increasing with the overall number of assignments. This happens when the agent becomes overloaded and does not have the staff available to properly administer their assignments. Many times telephone calls and emails are missed placing accounts on hold or canceling them for payment.

E) While new technologies such as GPS and License Plate recognition are making their way into the industry, all repossessions still follow the same basic rules. The asset needs to be picked up and the agent still needs to do the job correctly and in a timely manner to show success. Agents consider the workload the same if these products are in use or not.

F) Lenders are using internal resources who are trained to be customer service representatives and collectors to skip trace and help coordinate with their repossession agents. This approach has several inherent problems:

These employees, while providing quality work in their normal positions, do not specialize in the recovery end of the business and have limited or no knowledge of skip tracing. Therefore, they are inefficient at best, and ineffective, at worst.
These resources have been taken from their primary responsibilities, which generally involve handling or processing inbound payments and handling customer issues. As a result, their primary position also suffers.
Credit law is stringent. Because the employee has not been specifically trained in the legal responsibilities of accessing regulated or otherwise protected data, the possibility arises of data breaches or inappropriate disclosures of customer or skip tracing data, especially when giving an employee access to national-level consumer information databases.

G) Some lenders are using brokers to help shift the burden off their internal staff, however, most of the employees of these companies are neither trained in the repossession nor the skip tracing industries, and can be ineffective in working difficult cases. Worse, most have limited knowledge of the lending side of the industry and training is limited in how their success, or lack thereof, affects the bottom line of their clients. The majority of these companies are simply software companies with a presence on the web presenting themselves as industry professionals. In reality, many are simply keeping a list of cases rather than actually working those cases. Generally, Recovery and Cure rates are not used as a measure of success. Instead, by merely providing a place for the agent to post case notes, which may or may not be real, they show a level of activity and attempt to create a perception of results. This logic is flawed and obviously detrimental to the Lender.

The Solution

Full Service Repossession Management is the key to bridging the gap between Agents and Lenders. This approach differs substantially from forwarding for many reasons, including:

The employees managing the cases normally come from inside related industries and/or are trained from the beginning to those standards. These professionals, generally referred to as Admins, specialize in locating and recovering collateral.
Companies involved in Repossession Management generally have the resources needed to effectively handle a full range of skip tracing and locating requirements, including having access to industry-specific data sources.
Repossession Management companies often work closely with independent agents (some of whom are members of National Associations), in many areas of the country, and develop strong working relationships to achieve fast results. Brokers often work from directories of agents without truly developing relationships or even ratings of the agents they work with, which leads to slow or no recovery. Repossession Management companies, on the other hand, normally have done all the ‘leg work’ needed to give the agents good data which enhances the recovery percentage and speed of recovery.
A recovery is not the only positive result that can arise when a professional Admin is working your cases. Often, an Admin is able to reach out to the customer and persuade them to resume payments on the loan, which is normally a better result for the Client than the repossession. Skilled, professional Admins are not simply monitoring the progress of an assignment but actively participating in making sure a positive result is achieved.

The Selection of a Management Company

In selecting a quality Repossession Management vendor, the lender or buy-here-pay-here dealer most do his or her due diligence to make sure they are contracting with a service that understands the industry needs and is professional on all levels. Some of the criteria that should be used when conducting your search are as follows:

What is the background of the management running the company? Do they come from the banking, collection or recovery industry? Or, are they new to the field and learning on the job? When choosing your vendor, check references on the management and the company. Learn to recognize someone who has legitimate knowledge of the industry versus someone who does not.
2. Do they charge close or cancel fees when no value has been provided? Certainly no company is going to work for free! At the same time, do not allow a vendor to run up charges and fees for a service that has not provided results. When choosing a Repossession Management vendor, you need to have a clear understanding of how they quantify results and what will trigger a fee.
3. Is skip-tracing included? What is the value of a management firm if they are not attempting to locate the customer? Your organization should not pay the additional fees for a management company if they are not providing a value-added service, the most important being skip-tracing. No company will skip-trace indefinitely at no-charge, but basic Repossession Management should include basic skip-tracing at no-charge. Make sure this is in your agreement!
4. What size company needs Repossession Management? Repossession Management works well for all size companies. It allows small companies to compete with the larger firms for the best services because the Repossession Management company achieves economies of scale with your assignments combined with other companies. It also allows small companies to utilize the services of professionals that they could not employ on their own. For larger companies, the Repossession Management companies allow resources to do what they do best – collect dollars! Larger companies will also see payroll and repossession costs go down while repossession rates go up. Salvage losses will be mitigated no matter the size of the company.
5. How is their customer service? As with any third-party vendor, make sure they are courteous on the telephone and have live people responding to your call. Many Repossession Management companies have bitten off more than they can chew! Their employees are overloaded and when you are able to reach someone, many times they do not understand what your need is. Repossessions must be handled with great care and errors can be costly! Make sure the company you are dealing with are there to cancel or hold accounts in real-time.
6. Do they certify their agents? Remember, Repossession Management companies are not the same as repossession agents. Part of their service should be to certify the agents they are using. This process should include verifying licenses, when required, and insurance. Also, make sure the Repossession Management company will indemnify your firm for any errors.
7. Do they provide other services? Chances are if using a Repossession Management company, you will have the need for other services such as skip-tracing, collections, remarketing and information databases. Check if the company has these services or not. At the end of the day, it will be easier for you to deal with a company that has ancillary services available that you will most likely need and use.
8. Is their portal user-friendly? This one is extremely important! Everyone is at different skill-set levels when it comes to using a computer. The portal or interface the Repossession Management vendor uses should be one that can be used easily by every employee from the computer literate to the employee that has been with your organization from before computers were on every desk. Remember, a service is only as good as it is easy to use!
9. Who is responsible for wrongful repossessions? That would depend on the circumstance. When dealing with a Repossession Management company they will usually offer a window of time when they will take responsibility of communicating to the agent to hold or close an assignment. Generally, if you notify a management firm during these hours, they will indemnify your firm for any wrongful repossession. It should be noted that it is your company’s responsibility to communicate to the management firm holds and cancels just as you would with a repossession vendor.

Repossession Management

American Lending Solutions

American Lending Solutions is a company whose ownership comes from the industries which make up the different aspects of Repossession Management. We have collectively over 100 years of experience in Automotive Financing, Collections, Skip-Tracing and Recovery of Assets. To put it simply: we understand what it takes to be successful and know the true test of success is positive result: Recovery or Cure.

We have carefully selected our staff of experienced people who have proven track records in their respective fields. ALS has several supervisors who have spent at least ten years each in related industries. Our administrators who deal with the repossession agents have dealt with recovery companies before. Our collectors have experience working with everything from prime to deep sub-prime automotive paper. Skip-tracing is never subcontracted and is performed by employees who have knowledge how to find an asset first and a customer second. These employees are trustworthy and data breaches are never a problem.

Unlike many of our competitors, basic skip-tracing is included in our contingent repossession service. We understand that you are paying for a value-added product and you should receive a service that is superior to what can be performed in your own offices.

We have incorporated policies and procedures which are designed to help to resolve even the toughest loans that are submitted for recovery. Our proven track record is as follows:

Category Positive Result Rate

Prime First Placements                        80%
Prime Second Placements                  60%
Sub-Prime                                               75%
Charge-Offs                                            45%

And the best part of dealing with ALS? Our repossession management services for the most part are contingent. We believe in being paid for results, but we do not believe in charging your company when your situation has not improved from the time of the assignment. Working with ALS is a nothing to lose/all to gain relationship.

ALS also has many other services available to you that can potentially help you mitigate losses you might currently be experiencing. These products include: Complex Skip-Tracing, Proprietary Information Portal (Infoport™), Replevin Management, Loan Servicing, Deficiency Collection and Remarketing. ALS can put together a custom package to fit your company’s needs.

ALS is unique in the industry as the only Repossession Management of its type that can provide all these services at a reasonable price with proven results!

Competition Comparisons

We are proud of our track record and what we can offer to our clients! We encourage you to research ALS and its competitors and see the differences for yourself. On the following page are some side-by-side comparisons with two repossession management competitors.

Quick Comparison	American Lending Solutions	Competitor One	Competitor Two
Agent Close Fees	Contingent	Contingent	Yes
Cancel Case Fees	None	Case Close Fee	Case Close Fee
Basic Skip-Tracing	Included	Additional Charge	Not Available
Complex Skip-Tracing	In-House - Contingent	In-House - Close Fee	Sub-Contracted - Contingent
Results Judged By	Recoveries and CURES	Agent Updates	Agent Updates
Case Input	*Portal, RDN or File**	Portal, RDN or File	Portal or File
Administrators	Industry Experts	Clerical	Clerical
Support	24/7	8-6 Mon - Fri	8-6 Mon -Fri
Collection Service	Yes	Not Available	Not Available
National Auction Partner	Yes	Yes	Yes
Replevin Management	Yes	Not Available	Yes
National Information Portal	Yes	No	No
Door-Knocks	No	Yes	Yes
Agent Certification	Yes	Yes	Yes
Ownership Industry Experience	Yes	Yes	No

*- Recovery Database Network