NARS2016…The Evolution of the Repossession Industry

This photo is three of the more successful women in the repo industry, and they represent many women in our industry who have made a difference. They all shared lunch at NARS and discussed the challenges each face in their respective businesses, balancing family and work, and managing the issues they face in their respective companies. They are on a mission and they have a plan, and that simple example of making new friends, sharing experiences and forming a bond is what makes industry events important to attend.

As the books close on the North American Repossession Summit (#NARS2016), I walk away with hope and optimism for the industry I’ve made my living at for the past thirty-five years. Being a Cubs fan, optimism is in my blood, so proceed with caution as I tell you my thoughts on the repossession industry and technology as a whole as it relates to servicing the back end of the auto finance industry.

NARS is THE annual event where anyone and everyone in the automotive finance repossession space converges on the Mandalay Los Colinas Omni Hotel in Irving, TX. The show is only one day, but with Dallas being the auto finance capital of the world, many come in a few days early to meet with clients, partners, and vendors to get some R&R mixed in with a couple days of camaraderie, education, networking and forward thinking discussions that are designed to help our industry.

NARS is the American Recovery Association (ARA) President Les McCook’s brainchild, or if not, he’s definitely the one carrying the flag. Les insures everyone gets their monies worth. I think the majority of us would agree its well worth the expense and the effort to attend, and hopefully it continues to grow each year. We had a nice turnout of lenders this year, and ideally going forward we can see many more attend. There is a great deal of value and insight lenders can bring, and gain, and if Les and his team continues to keep working on the agenda, educational topics, and networking opportunities between all Forwarders, Skip Companies, Repossessors (small and large), and all lenders who are pushing the work and managing these critical relationships, it’s a win for everyone.

Additionally, we’re starting to see a larger impact in the industry by a variety of technology vendors, and when you put everyone together, great things can and are happening. Given the constant regulatory scrutiny, and especially in light of the tricky waters we all have to keep trying our best to navigate, events like this are critical and should be mandatory on every lenders calendar.

The Omni is a perfect venue for the event, but next year I’m hoping the roundtables can be held in separate rooms so you can actually hear what’s being discussed if you’re unfortunate enough to be more than a few steps away from the speaker. I also have hit my limit on events I can attend at Cool River, so someone needs to get more creative next year with places to host the parties.

Another thing I noticed were the replacement of cargo shorts, cutoffs and T-shirts on conference day with slacks, cool resort wear or suit coats on a large number of the men, and smarty dressed women who looked like they meant business.   The continued evolution of the professionalism the lenders are looking for has arrived into our industry, and those behind the times may want to take note. Additionally, the advancements in technology continue to become more evident at each NARS conference, and I believe this will be the main topic of opportunity for lenders and repossession companies as we move through 2016 and head back to NARS again next Spring.

Some of the requirements from lenders, and advancements we’re seeing from technology companies in this space are game changing, in similar ways to the manner in which I’ve witnessed the game being changed in years past:

• We couldnt rely on picking locks and slamming out ignitions once computer chip and laser keys hit the scene, so no everyone has to repo with tow trucks
• We went from no phones, to pagers and pay phones to brick phones to computers in our pockets
• We used to call in orders for repo, really!…. and then we faxed them in, and then email and now we use assignment platforms
• Lenders used to be in every city, and now theyre mostly in Dallas, or otehr select regions
• Skip Companies began to hit the scene in the late 80’s
• Forwarding stepped in to manage the repossession process in the mid 90s
• Public Records data became more readily available in the mid 2000’s, replacing XX books and microfiche property records
• Skip Tracing software came on the scene in 2010, with LPR becoming prominent around the same time, and routing software came on the scene last year.
• Whats next?…..

Now we’re seeing BigData, Predictive Analytics and Automated Workflow being introduced to our industry, and we’re seeing sophisticated telephony integrated with software that contains compliance rule tracking that becomes a must have if you want to make compliant phone calls. We’re also seeing a variety of other advancements, including:

• LPR advancements that are now starting to leverage historical data on the location of where a car has been, and where its’ likely to be seen if you don’t find it where it’s supposed to be at
• Tow Trucks have improved from sling trucks and bench seats with cigarette burn holes to vehicles you prefer to take your old lady out on a date with, they’re that cool, efficient, and luxurious in many cases

• Skip Tracing software that builds a checklist of steps that should happen on every skip account at an early stage of the skip process to help manage the process versus having everyone do it “their way”, which is hard to describe, let alone manage, especially when everyone performing the job for you is not Sherlock Holmes

• Routing software that can fully automate the direction an agent goes when working to insure efficiency in the field.This allows repossessors to run deals versus spending time looking at deals to choose what to work; working deals that make no sense to working deals based on historical and predictive data analytics

• Technology that will eliminate repeated and worthless field updates. Geo-stamping the address when its actually ran, forcing an automated update back to the lender so they can verify the agent really ran the deal and didn’t fib about it.
  • The levels of compliance that software provides lenders when they can interact with compliance through technology creates many opportunities we’ll see become realities in the coming year.
  • If you read all the restrictions placed on repo agents and how they work assignments by a large, leading subprime lender who got slapped pretty hard by the CFPB and as a result released a new agent contract last week, you know why this is a game changer.

• Telephony products that give the office and the field staff click-to-dial capabilities with full caller ID and cell vs landline number scrubbing to know who you’re calling before you make the call, to record and store the call in the account notes for easy compliance and training review, and more importantly, technology that tells the user if you are you allowed to even call that number versus the myriad of regulatory compliance laws each state and our federal Gov’t have put in place.
  • These rules keep coming at us with the same intensity of Mike Tyson in his prime.
  • Based on something as simple as the lender or the first skip company already called the brother, you are not supposed to call the same guy back, but how do you know not to call?
    • The problem is if someone else at a different company calls the same brother and the lender doesn’t tell them not to make that specific call to that number, or the lender doesn’t mandate everyone works in the same software so everyone knows what’s happening in a system that can be monitored and enforced through a tracking system built to do exactly that, then the CFPB will keep lining their coffers with massive fines to the lenders until they realize they’re serious about these rules and the enforcement of them.
      • The answer is NOT to tell the skip companies and repossessors to stop making calls, but it is to make sure they work in a platform that tracks that.
    • Remember, the lender is responsible for the second vendor to call the brothers number, or the POE when its not supposed to be called, or the second call to the customer in Massachusetts, and the lender is responsible to insure that call doesn’t take place, which is no small task to build into a software platform, and finally just now we’re seeing lenders mandate what software their data can reside in, more on that in a minute..
    • Trust me, I know all this firsthand because we built it into masterQueue with our valued partner BellesLink Technology, the telephony industries leading expert in my opinion.

So as you can see, our industry is evolving, and it will continue to innovate, consolidate, and evolve, which are all healthy signs of an industry moving forward.

The last thing I will leave you with is something no one is really talking about yet, and that’s software consolidation. Everyone would like to work in one system, but given the tools needed to do all aspects required to validate compliance, assign, locate, repossess, transport and remarket each vehicle, and given the depth of the compliance, security and regulatory requirements that now must be followed, we are starting to see things change in terms of integration and lender requirements when it comes to software their customers PII resides in, or software their trusted vendors work in. The game has evolved to “trust, but verify”. This an interesting juncture as we await the arrival of the CFPB into our industry in a direct manner that focuses on repossession and skip tracing, in addition to debt collections.

We saw a lender client of ours recently kill their deficiency collection outsourcing program cold, and the main reason was the fact they didn’t feel they could spend the money needed to inspect, audit and certify every different software platform all their vendors used, which is where their customer data was residing. Many of these platforms were one-off, stand-alone proprietary systems only that vendor used.

Our client further explained the margins of success between vendors was quite close, and definitely better than the lenders internal processing of the same services. He said in years past, outsourcing versus working the accounts in house would normally continue, except for the fact that when their internal auditing process was quoting them a couple hundred grand to audit each individual vendors one-off platform, they knew they needed a different plan.

The expense to audit each individual software containing the banks customer PII included costly Code Reviews, Penetration testing, and reviewing thousands of pages in compliance policies and procedures and then calls, meetings and site visits to insure the policies were all actually being done. When they found out that money went right into their budget as a new expense line item, they quickly realized outsourcing no longer made sense as there we’re so many different platforms the vendors were using that had to be audited.

They then looked at their options:

• Find one software that more than one vendor used and only allow vendors to work in that one platform as they would only have to audit one, or maybe two platforms, i.e. iRepo and RDN for repo assignments
• Moving all efforts in house and eliminating outsourcing – not likely to happen in our industry as I personally believe Forwarding and Skip are here to stay
• Putting the files in a drawer and doing no deficiency collections as it may not be worth the expense and the risk – again, they have to repo the cars as the losses are too high not to.

They ended up choosing a combination of solutions that included:

• Writing off low deficiency monies owed, putting those files in the drawers and writing off the loss. Due to CFPB mandates saying lenders are responsible for the lifecycle of the loan, even in debt they sell, they told me that cant even sell the debt any longer as theyre responsible for the debt buyers actions.
• Building a scoring system to see which accounts were more likely to be able to be collected, writing off the ones they deemed uncollectible based on historical results, and then building an internal team to work in one system that was a system they could also require their vendors to work in, cutting off many vendors and consolidating down to only a few vendors, who now  all work in the same software platform.

Right now, there are a lot of systems in the Auto Finance space where lenders customer data resides, and there are still companies who are not paperless and agents who still work off paper assignments on clipboards. I see this as the single largest game changer coming in the next six to twenty-four months, and I believe the example of what happened to one lender in the deficiency collections space will be similar to what we see in the auto finance debt collection and the related niche auto finance software space.

Unless you like fighting Mike Tyson, its best to find a way to move forward with technology if you are a repossession agent, or you will be shut out soon.

If you are a lender, take responsibility and stop allowing your staff to arbitrarily send out multiple addresses per repo assignment with no effort to confirm if they are valid or not. Come to NARS, bring your staff as it’s an affordable and educational show, and get to know the players in the industry. Ask them what can you do to help build a better relationship with their company, and what can you do to help our industry. After all, these guys are risking their lives for you and your company, plain and simple.

Hope to see more of you next year at #NARS2017.

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