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Are You Buying a Repo Service Or A Repo Result?

Jul 12, 2018 • UncategorizedComments Off on Are You Buying a Repo Service Or A Repo Result?

This is a guest article from Mike Levison, CEO of ALS Resolvion.

Over the years, repossession and skip tracing services have come to be viewed somewhat as commodities by many in the lending community.  As such, outside of compliance, the primary focus around the management of these services has been costly.  After all, since these services are available through multiple providers, why pay more than what the low-cost provider is willing to accept?

This downward pressure on costs has resulted in the service providers having to reduce resource allocation, in several key areas, in order to maintain an acceptable margin on the business.  In many cases, this strategy ends up costing the lender more in the form of higher charge-offs, higher priced deep skip services, etc.

However, some lenders have realized that even small differences in recovery rates can translate into big gains in net dollars recovered even if the cost of the repossession was slightly higher.

When recovery fees are driven down to rock bottom levels, the service provider (whether a direct agent or a forwarder/skip company) is typically forced to undertake one or more of the following:

  • Reduce the labor allocation devoted to the portfolio
  • Reduce payment to the agent/driver
  • Reduce the amount and quality of the data purchased from third-party providers

Let’s look at each of these issues in a little more detail:

Labor Allocation

In the case of forwarders or skip service providers, typically administrators or skip tracers are assigned to work a specific group of cases.  The labor pool allocated to these functions is a significant part of the provider’s overall cost structure.   When a lender pushes for rock bottom fees, inevitably queue sizes get increased in order to reduce labor cost.  The more cases an investigator has to work, the less time that can be spent on each and recovery rates usually suffer.

Repossession Agent Fees

When margins are very tight due to low fees, the forwarder/skip provider is also limited as to how much can be offered to the recovery agency.  In our case, those fees range from $275 on the low end to $375 on the high end.  You can bet there is a big difference in the amount of effort the agent puts into the $375 cases than the $275 cases.

The repo agency faces the same dilemma since they also work primarily on a contingent model. On low fee cases, they will inevitably have to reduce the number of times an address is run, reduce the fee to the driver….or both.

This is a real issue in today’s world where the agent ranks have thinned over the past few years due to rising costs and compliance requirements.  Fewer agents, combined with rising delinquency rates, means that agents are in a good position to pick and choose where they put their resources and you can be sure that they do just that.  Wouldn’t you?

Reduced Data Purchases

When it comes to locating missing cars (outside of LPR technology) it is all about finding good addresses and contact numbers.  Fortunately, there are many data sources out there that provide information.  The cost can be anywhere from free to several dollars per report.  As you might expect, the more expensive reports often (not always) contain the better/more current information.  However, the service provider must be very careful on how and when the best data sources are used.  For instance, a $6.00 report on a portfolio that generates a 20% recovery rate will add $30 in cost per recovery just for that report.  Combine that with a low fee schedule and it makes it very difficult to utilize that data source.

All of these “adjustments” that are required to deal with low margin business absolutely make a difference in recovery rates, charge offs, auction values, etc..

Financial Impact

Let’s take a look at a couple of different analysis of the trade off between higher recovery costs and higher recovery rates.

The analysis below illustrates the additional “lift” in recovery rates that is required to offset a $50 difference in recovery costs.

As you can see, based on these assumptions, the service provider would only have to generate less than one additional recovery for every 100 assignments to offset the cost of paying $50 more on all recoveries.  This does not even take into consideration the value of avoiding the charge off.

Note: The below analysis is designed to illustrate two issues:

  1. The extremely small (1/4 of 1%) additional recovery rate that would have to be achieved to offset an additional $50 recovery fee
  2. The additional value ALSR believes it will generate based on the higher recovery rate we believe we can achieve

Of course, the net benefit between higher costs and higher recovery rates is significantly impacted by auction values.  Some portfolios deal in collateral that often has little more than scrap value when recovered and some have average values in excess of $25,000.  The table below illustrates the financial gain, under different auction value scenarios, if recovery rate increases just 5%.

Assumptions

  • 250 1st placement cases per month
  • 35% vs. 45% recovery rate
  • $50 increase in recovery fee

If you would like to see a more detailed analysis based on the specifics of your portfolio, just let us know and we will prepare.

Summary

Cost is an important variable in the repossession management process, but pushing costs too low can produce a diminishing return.

Mike Levison, CEO of ALS Resolvion – Mike has over 30 years of senior executive experience in the financial institution marketplace. Prior to joining ALSR in 2010, he served a CEO of Remark Americas, an international insurance brokerage firm for 8 years. Prior to ReMark, he served as CEO of Coverdell & Company from 1987 – 2002. Mike is a graduate of the University of Georgia School of Finance.

Register for the July 2018 Webinar

Jul 10, 2018 • ARA News and EventsComments Off on Register for the July 2018 Webinar

Juan Bryant delivers a webinar version of his popular NARS 2018 roundtable about effective communication in the digital age.

From text and email to phone calls and face-to-face conversations, there are more channels of communication today than ever before. But even though we have so many ways to talk to each other, it’s become very easy for meaning and intention to get lost in translation.

In this month’s ARA webinar, Juan brings fresh life to his “Verbal Judo” presentation NARS 2018. Not only will he cover the current best practices for face-to-face encounters and electronic communications so that people understand what you’re saying, he’ll also teach us how to use the “diffuser” technique.

Thursday, July 12th
1:00 p.m. CT / 2:00 p.m. ET

*Members who attend this webinar session will receive an ARA certificate upon completion*

The American Recovery Association provides a free continuing education webinar series for recovery and remarketing professionals. This monthly one-hour webinar series offers education about the latest recovery laws and regulations, compliance policies, industry issues, and more. These presentations are geared towards owners, managers, employees, and field agents.

As an ARA member, you must register online for this webinar using your personal e-mail address so that you receive your certificate of completion. In the event that computer sharing is necessary for your office, please provide a list of employee names and email addresses in an excel spreadsheet to tricia@americanrecoveryassn.org.

If you have any questions or feedback about our continuing education webinar series, please contact ARA Home Office at 972-755-4755 or homeoffice@americanrecoveryassn.org.

Register for the June 2018 Webinar

Jun 21, 2018 • ARA News and EventsComments Off on Register for the June 2018 Webinar

Register for the June 2018 Webinar

Doug Duncan of Talent Value will discuss 4 simple steps for finding and hiring great people.
You have a business to run. You shouldn’t have to spend time worrying about whether or not your employees will show up, how they will perform, or if they’re trustworthy. Learn how to avoid wasting your time on lackluster candidates and recruit the best for your business.

Register Online

Thursday, June 28th
1:00 p.m. CT / 2:00 p.m. ET
*Members who attend this webinar session will receive an ARA certificate upon completion*

American Recovery Association provides a free continuing education webinar series for recovery and remarketing professionals. The one-hour webinar offers education about the latest recovery laws and regulations, compliance policies and industry issues. This presentation is geared specifically towards owners and managers. ARA members must register online for the webinar with individual email addresses to receive a certificate of completion. If computer sharing is necessary, please provide a list of employee names and email addresses in an excel spreadsheet to tricia@americanrecoveryassn.org.

If you have any questions or feedback about our continuing education webinar series, please contact ARA Home Office at 972-755-4755 or homeoffice@americanrecoveryassn.org.

Member Highlight: Karen Rogers

Jun 7, 2018 • ARA Member SpotlightComments Off on Member Highlight: Karen Rogers

This month, we’d like to recognize Karen Rogers of A.R.B. of Louisiana Inc., Lafayette. Karen has been in the repossession business for over 19 years, serving as operations manager of A.R.B. of Lousisiana Inc. She has been a member of the American Recovery Association for three years.

Under her guidance, her staff has helped raise funds for Red Nose Nose Day 2018, an organization that works to end child poverty. Red Nose Day is a simple yet powerful, visible, and playful way to bring people together and break down barriers. It serves as a reminder of the power of laughter.

Because of people like Karen, Red Nose Day was able to raise more than $145 million dollars for their cause this year.

She was also a huge help at the NARS 2017 and 2018 live auctions and everyone in her office finds her a joy to work with. Thanks for being a great ARA member and inspiring all of us with your charitable works, Karen! We’re lucky to have you.

ARA and NAF Association Team Up To Find Solutions To Compliance Issues

Jun 5, 2018 • NewsComments Off on ARA and NAF Association Team Up To Find Solutions To Compliance Issues

Fort Worth, Texas, June 05, 2018 – The American Recovery Association (ARA) and the National Automotive Finance Association (NAF Association) are excited to announce the results of their first joint effort to establish a minimum compliance standard for third-party repossession vendors.

Jack Tracy, Executive Director of NAF Association and Dave Kennedy, President of ARA

Together with a working group of NAF Association bank and finance company members, the leadership of ARA has sought to address the lack of standardization of compliance programs by setting forth the following goals:

  1. Create a set of baseline criteria for NAF Association members to use in the oversight, management, and auditing of recovery agents.
  2. Produce a standard list of compliance requirements for recovery agents to help them satisfy all of their clients.
  3. Streamline the process of 3rd party management for recovery agents specifically, resulting in lower costs for all parties.

“We want to create a significant solution for both sides of the auto-lending and recovery industries,” said Jack Tracy, executive director of NAF Association, “I look forward to our continuing relationship and mutual problem-solving.”

The resulting baseline standards encompass the key areas of vendor compliance:

  1. Owner / Business Regulatory Reviews
  2. Training
  3. Policies & Procedures
  4. Vendor Site Visits

“Achieving efficiency in the compliance and education platforms will be a monumental accomplishment for the industry and is something we have been striving to achieve for so long,” said Dave Kennedy, president of ARA, “It will eliminate costs and enable both sides to better utilize human resources. I am confident that, by working together, our associations can develop more programs that create major cost efficiencies for both memberships.”

For more information about ARA, its partnerships, and its member benefits, please visit repo.org.

 

About National Automotive Finance Association

The National Automotive Finance Association (NAF Association) supports its members and the industry with education, research, and information. Programs include Annual Below-Prime Auto Finance Conference; workshops and webinars; annual Below-Prime Automotive Financing Survey; Standards of Financial Reporting; and Code of Responsibility for the industry.

About American Recovery Association, Inc.

American Recovery Association (ARA) is the world’s largest association of recovery and remarketing professionals. ARA members specialize in locating and repossessing collateral on behalf of lending institutions, including banks, savings institutions, finance companies, credit unions, rental/leasing companies, and auto, truck, and equipment dealers. ARA is a nonprofit association whose members serve 27,000 national and international cities. All members are certified independent business operators. For more information, call 972.755.4755 or visit the website at www.repo.org.

Register for the May Webinar – Analytics & Repossession: The True Cost of a Repo

May 22, 2018 • ARA News and EventsComments Off on Register for the May Webinar – Analytics & Repossession: The True Cost of a Repo

American Recovery Association offers a free monthly webinar as part of its new continuing education series to help recovery and remarketing professionals stay plugged into the most current industry rules, regulations and compliance requirements.

This month, Jeremy Cross of International Recovery Systems Inc. will be giving the presentation he shared at NARS 2018 on using analytics to determine the true cost of a repo. He shares valuable knowledge and implementable tips to help you grow your business.
Register at the link below:

Analytics & Repossession: The True Cost of a Repo

presented by
Jeremy Cross of International Recovery Systems Inc.

 
Register Online
Wednesday, May 30th
1:00 p.m. CT / 2:00 p.m. ET
*Members who attend this webinar session will receive an ARA certificate upon completion*

American Recovery Association provides a free continuing education webinar series for recovery and remarketing professionals. The one-hour webinar offers education about the latest recovery laws and regulations, compliance policies and industry issues. This presentation is geared specifically towards owners and managers. ARA members must register online for the webinar with individual email addresses to receive a certificate of completion. If computer sharing is necessary, please provide a list of employee names and email addresses in an excel spreadsheet to tricia@americanrecoveryassn.org.

If you have any questions or feedback about our continuing education webinar series, please contact ARA Home Office at 972-755-4755 or homeoffice@americanrecoveryassn.org.

Member Highlight: Marcelle Egley

May 3, 2018 • ARA Member Spotlight1 Comment

This month we’d like to recognize Marcelle Egley of ABA Recovery Service in San Diego. Marcelle has always been an active and vocal ARA member and now we’re proud to welcome her as our newest board member!

Two weeks ago at the ARA Convention, our members voted for her to serve on our board of directors and we are very excited to work with her.

Marcelle has proved herself time and time again to be a powerful force in the repossession industry. As the president of the California Association of Licensed Repossessors, Marcelle has fought for the repossessors in her state, including working hard to lobby against state legislation that would hurt California business owners and professionals. She has also been a huge help in planning the last several North American Repossessors Summits as a member of the NARS planning committee. We have no doubt she will be a valuable asset to our board!

Celebrating Our Superb Sponsors for NARS 2018

Apr 11, 2018 • ARA News and EventsComments Off on Celebrating Our Superb Sponsors for NARS 2018

Get Ready for the Industry Event of the Year

NARS 2018 is set to be one for the books. From the stadium tour and golf tournament to our networking parties and live auction, all the great events we have planned for the 10th Annual NARS wouldn’t be possible without the support of our wonderful sponsors.

Headline & Cocktail Party Sponsor

We’re thrilled to welcome back Harding Brooks Insurance as our Headline and Cocktail Party sponsor this year. The Harding Brooks Cocktail Party will be held from 5 p.m. to 7 p.m. on Thursday, April 19th. This event will provide excellent networking opportunities for you to get to know both the Harding Brooks representative and your fellow NARS attendees. It’s an event you won’t want to miss!

Closing Party Sponsor

We’d like to give a special thanks to this year’s Closing Party sponsor, Digital Recognition Network (DRN), for making this special event possible. After two jam-packed days of education, collaboration, and networking, the Closing Party is something NARS attendees always look forward to. The DRN Closing Party will begin at 5 p.m. on Friday, April 20th, following the Business Owners Meeting.

Lunch Sponsor

Lunch this year is sponsored by our friends over at XINSURANCE. What is NARS without ample opportunities for networking? The best and brightest of the repossession industry will be there to rub shoulders with, so make sure you use this lunch to your advantage!

We’d like to extend our sincerest thanks to all of the sponsors for NARS 2018:

Harding Brooks Insurance

Digital Recognition Network

ARA

XINSURANCE

MVTRAC

CLEARPLAN

PAR North America

High Tech Locksmiths

Recovery Manager Pro

Premier Adjusters, Inc.

Dynamic Towing Equipment and MFG 

Recovery Database Network

ARA Board of Directors

Norman-Spencer

Falls Lake Insurance Companies

Triton Claim Management, LLC

Loss Prevention Services

S.C.A.R.

ARB of Louisiana

First Credit Resources, Inc.

Minute Man

American Recovery Service

Recovery Columbus

AGR Recovery Specialist.

NARS 2018 is the can’t-miss industry event of the year. To see the full schedule, click here. Haven’t registered yet? Don’t worry- there’s still time! Get your ticket here.

AMERICAN RECOVERY ASSOCIATION SELECTED FOR EXCLUSIVE PARTNERSHIP WITH BRIDGECREST

Mar 14, 2018 • NewsComments Off on AMERICAN RECOVERY ASSOCIATION SELECTED FOR EXCLUSIVE PARTNERSHIP WITH BRIDGECREST

ARA announces partnership with Bridgecrest on training, vendor vetting

Irving, Texas, March 14, 2018 – The American Recovery Association (ARA), the world’s largest association of recovery and remarketing professionals, is excited to announce a new partnership with Bridgecrest. As part of this agreement, ARA will assist Bridgecrest in their vendor vetting, training and monitoring program.

“We are honored to be chosen as the exclusive training program by Bridgecrest and are happy to help reduce the cost burden on vendors,” said Dave Kennedy, President of ARA. “We still believe repossessors should only have to choose one training service, but until our compliance program is accepted by everyone, we are determined to provide the best value.”

ARA seeks to be a viable industry solution to the high cost of vendor training. This partnership is a major benefit to Bridgecrest’s current vendor network, as it significantly reduces the financial burden placed upon them.

For more information about ARA, its partnerships, and its member benefits, please visit repo.org.

About Bridgecrest

Bridgecrest Acceptance Company is a licensed third-party servicer, servicing loans for DriveTime and other affiliated finance companies. For more information on Bridgecrest Acceptance Company, please visit bridgecrest.com.

About American Recovery Association, Inc.

American Recovery Association (ARA) is the world’s largest association of recovery and remarketing professionals. ARA members specialize in locating and repossessing collateral on behalf of lending institutions, including banks, savings institutions, finance companies, credit unions, rental/leasing companies, and auto, truck and equipment dealers. ARA is a nonprofit association whose members serve 27,000 national and international cities. All members are certified independent business operators. For more information, call 972.755.4755 or visit the website at www.repo.org.

MVTRAC Commits to 3 Year NARS Sponsorship

Mar 7, 2018 • ARA News and EventsComments Off on MVTRAC Commits to 3 Year NARS Sponsorship

MVTRAC agrees to sponsor Annual NARS Golf Tournament and Hole-in-Prize for 3 Years

IRVING, Texas – March 7, 2018 – The North American Repossessors Summit (NARS), an industry event hosted by the American Recovery Association (ARA) and headline sponsor Harding Brooks Insurance, is pleased to announce a three-year partnership with MVTRAC to sponsor the annual NARS Golf Tournament and Hole-in-One grand prize.

The 2018 event will take place on Thursday, April 19 with a 7:30 a.m. shotgun start at the beautiful Dallas Cowboys Golf Club. For $200, NARS attendees will have the opportunity to play at the world’s only NFL themed golf club. This price includes: golf balls, a GPS, a golf cart, buffet style breakfast and lunch, plus any non-alcoholic beverages.

The tournament, hosted by the American Recovery Association, is an opportunity to network with various professionals in the recovery and remarketing industry.

“Our partnership with NARS through sponsoring their flagship Golf Tournament and associated Hole-in-One Giveaway aligns perfectly with MVTRAC’s dedication to providing the premier benefits for the recovery industry,” said Luke Smith, President of MVTRAC. “We’re excited to be able to support the industry as a whole through our multi-year commitment to this event.”

When registering, you can sign up as an individual, four-person scramble, or four-person scramble with a client. Register for the golf tournament here.

This year’s golf hole sponsors include AGR Recovery SpecialistsARB of LouisianaARB of Louisiana LafayetteCalifornia Association of Licensed Repossessors,Council of Repossession ProfessionalsGotcha RecoveryNational Locating & RecoveryAutomobile Recovery Bureau, HoustonAll Cities RecoveryRocky Mountain Repossessors AssociationExperianCertified Agents Specialist AssociationPremier Adjusters, Inc. & Texas Pride, and Repossessors, Inc.

“We’ve had great experiences with MVTRAC in the past and we’re thrilled to have locked them in as our golf tournament and hole-in-one sponsor for the next two years,” said Dave Kennedy, president of ARA. “You’d be surprised at how much goodwill can be developed during a round of golf with a client, which is why we continue to look forward to the tournament each year.”

NARS 2018 will be one for the books, hosting more than 600 professionals from the collateral recovery and remarketing industries to gather and network. This year’s speaker lineup includes Dr. Tom Jones, scientist, author, pilot, and veteran NASA astronaut, as well as other industry professionals who will focus on open and collaborative discussions about the future of collateral recovery and remarketing.

About North American Repossessors Summit

The North American Repossessors Summit (NARS) is a 2-day conference for professionals in the recovery and remarketing industry from across the country to come together to address key issues impacting their industry and businesses. NARS provides an open and collaborative environment for all recovery industry professionals to address challenges and complexities in the industry and lay out the foundation for the future. The summit welcomes recovery specialists belonging to every type of professional organization and association across the country. For more information, visit www.reposummit.com.

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