Auto Finance News
  • Home
  • News
  • Features
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Webinar
    • Harnessing AI & Machine Learning to Address Vehicle Affordability Issues
    • Webinar Library
  • Podcast
  • Powersports
  • Big Wheels Data

No products in the cart.

Subscribe
  • Capital & Funding
  • Compliance
  • Risk
  • Technology
  • Best Practices
  • Compliance Monitor
Log In
No Result
View All Result
Auto Finance News
  • Home
  • News
  • Features
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Webinar
    • Harnessing AI & Machine Learning to Address Vehicle Affordability Issues
    • Webinar Library
  • Podcast
  • Powersports
  • Big Wheels Data
BIG Wheels
Log In
No Result
View All Result
Auto Finance News
No Result
View All Result

Coming Unhooked: The Growing Disconnect Between Lenders and Repo Agents

Marcie BellesbyMarcie Belles
December 31, 2018
in Features, Risk Management
Reading Time: 5 mins read
0
© Can Stock Photo / viperagp

With auto loan delinquency rates rising, it would seem to be a good time to be a repossessor. But that’s not the case. Tow truck and vehicle insurance prices are climbing; license, bond, and other compliance-related costs are increasing; technology spending— to boost internal efficiencies and maintain a competitive edge — is growing.

Meanwhile, lenders seeking to reduce loss-mitigation costs are trimming repossession fees. Combined, these factors have put the squeeze on repossession companies and led hundreds of agencies to shut down. That’s bad news for the auto finance industry.

The effects of repo agencies’ intensifying struggle to build profits will reverberate through the auto finance industry, said Michael Levison, chief executive of repossession management firm ALS Resolvion.

“The most important key to your loss-mitigation effort is a healthy repo agent community,” Levison told lenders at the Innovations in Recovery Summit sponsored by ALSR in September. “Without that, our success rates are going to fall. Prices are probably going to go up.” Lenders and repossession companies, however, are starting to reevaluate the way they work and experimenting with new business models.

A Rocky Landscape 

Every year for the past decade, expenses have climbed for repossession firm Absolute Recovery. Trucks have become more expensive, diesel fuel prices have risen, and insurance has become harder to get. “The cost to run a repo business has gone up exponentially,” Brent Hulderman, owner of Charlotte, N.C.-based Absolute Recovery, said at the recent repossession and skiptracing event. “Our costs have gone [up] double, triple over the past few years.”

Compliance requirements, too, have become stiffer and technology investments more vital to these firms. “To run more efficiently and actually make money at our business, we put a ton of money in technology,” said Michael Pletz, owner of Pittsburgh-based A.L. Recovery. “We spend thousands and thousands of dollars on compliance, because [a compliance violation] could put us out of business.”

Despite these rising costs, fees paid to repo agents are shrinking as lenders seek efficiencies in their loss-mitigation departments. “As our costs keep going up, repossession fees have not,” Hulderman said. “We really do need more money to compensate.”

Revenue growth at repo services companies has been slowing, too, in recent years. Whereas revenue increased 6.5% in 2013 and another 12.8% in 2014, it slowed to 1.2% in 2015, according to market research company Statista. Projected revenue growth in 2020 is expected to drop to 0.6%. In the past five years, the number of repossession services companies in the U.S. has declined 3.1% to 11,007, and the number of people employed at those businesses has dropped 1.3%, according to research company IBISWorld.

Levison pointed out that the hundreds of agencies that have gone out of business in the past couple years are a “real risk to our business and to this industry long-term.”

Adopting an Indirect Model 

© Can Stock Photo / dmitrimaruta

Though recovery agents seek more one-on-one interaction, lenders are increasingly embracing an indirect structure to assign repossessions. In the forwarder model, as it’s called, lenders parcel out repo and skiptrace assignments to management companies with hundreds of agents in their networks.

Hyundai Capital America, for one, has migrated to a forwarder model from a direct-agent model. “Unfortunately, what drove us to [the forwarder model] was the lack of technology,” said Marco Villarreal, the captive’s recoveries operations manager. “We’re still working on the infrastructure to be more nimble as far as our recoveries and who we partner with.”

Ideally, Villarreal would prefer a hybrid model that would allow the captive to set up champion-challenger testing to evaluate forwarder-versus direct agent performance. But Hyundai is still 18 months out on its system conversion, “so that prohibits us from what we want to do,” he said.

Last year, Wells Fargo Auto replaced its hybrid model with a forwarder model, on the heels of an effort to centralize 57 regional locations. “It helped us have some consistency and make it easier to be able to manage the relationship,” said Javier Solis, the bank’s vice president of third-party performance and strategy. “It doesn’t take away as far as the compliance requirements, but it allowed us to have better conversations, being able to monitor departments at a different level. Imagine trying to have that performance conversation for 400 direct agents.”

Wells Fargo is evaluating the results of the shift. “We’re just a year into it,” Solis said. “We’re still learning. We’re still developing. Ultimately, we want to make sure that what we do is protect our customer.”

While captives and national banks tend to rely on forwarder models, smaller lenders are more likely to employ a direct-agent structure. United Auto Credit, for one, splits its recovery assignments between forwarders and repo agents. “We’re not that big, so we’re a mile wide and an inch deep across the country,” said Vice President of Servicing Mike Duke. “For a lot of the country we can’t build a relationship, because we have one repo in [a small city like] Farmington, New Mexico. We would need a forwarder.”

Duke prefers a direct-agent model, though, because it allows for more stringent compliance oversight. “I would like to have a little more control over the compliance that we have on these vendors,” he said. “We’re going to get dulled down by whatever the forwarder’s compliance program is.” Also, the direct relationship allows for some give-and-take with agents.

“In those relationships, I can pay my agent more and, sometimes, I can demand a little bit from the agent,” he added.

© Can Stock Photo / mikdam

Managing the Relationship

While lenders keep a tight rein on recovery metrics, repo agents have also cracked down on the accounts they are willing to work. “We used to accept every assignment that came down the pike,” said Jeremy Cross, president of Kennett Square, Pa.-based repo agency International Recovery Systems.

“We don’t anymore. There is a crisis right now of agencies. Agents are dying left and right. We can’t take every assignment. The higher the average revenue per assignment, the happier we are.”

North Richland Hills, Texas-based Hide and Seek Recovery has also become more particular about which assignments it will accept. “We pay attention to whatever efforts are going to be required post-recovery,” said General Manager Sara Patterson. “Are we going to have to transport it? Are we going to have to take additional pictures? Is there more compliance stuff that’s required? Is it something that we have to put extra people on to make sure that we can get the condition report uploaded within [the required amount of time]?”

Beyond the nitty-gritty, though, Cross at International Recovery Systems has the bigger picture in mind for the company’s forwarder and lender clients.

“We want a partner, we don’t want a boss,” he said. “Having that personal relationship is key — not just for me, but for my staff.” Additionally, funding speed is of utmost importance to Cross. “The next [consideration] is, How fast do we get paid, and how much do we get paid?” Cross said. “How valuable is that client? You want to be a priority to your agents? Make yourselves a priority.”

Cross and Hulderman encouraged lenders and forwarders to call their agents periodically and to be clear about expectations. For instance, Chase Auto Finance provides Cross with a scorecard every month. “The vendor manager calls us once a quarter and does a review,” he said. “‘This is how you did: You did a good job here; you didn’t do such a good job there. How can I help you improve?’ Have that communication. Manage your metrics, from your scorecards.”

That competition drives repo agencies to improve. “If I see on a scorecard that another [agency] is right there on my heels, you better believe that I’m pushing to make sure that we’re better next month,” Hulderman said. “Competition makes everyone better.”

Ultimately, the health of the recovery market will hinge on lenders and agencies working together, ALSR’s Levison said. “If we just take the attitude that that’s their problem, we’re going to end up regretting it,” he said.

Editor’s note: This story was orignally featured in the December issue of Auto Finance News magazine. 

Tags: als resolvionChase AutodelinquenciesfeatureHyundai Capital AmericarecoveryrepossessionsWells Fargo
Previous Post

5 Innovative Auto Finance Moves of 2018

Next Post

Risk Factors to Watch in 2019

Related Posts

Risk Management

Used-vehicle floorplan to see uptick ahead of tariffs

May 21, 2025
Bruce Newmark hosting a panel with Robert DeJarnette, VP of Risk Management at Consumer Portfolio Services, Charlie King the Chief Technology Officer at Arivo Acceptance, Eduardo Perez the Chief Customer Officer at Tricolor, and Scot Seagrave the Chief Executive Officer at FinBe USA during Auto Finance East Summit 2025 in Nashville, Tenn.
Risk Management

Subprime lenders see opportunity in recession talks  

May 20, 2025
Inside A Flo Electric Vehicle Charger Assembly Facility
Risk Management

Charging installations drop as Trump ramps up attacks on EVs

May 20, 2025
Next Post
© Can Stock Photo / ajfi

Risk Factors to Watch in 2019

Stay Informed with Our Newsletters

PowerSports Finance

The Roadmap Podcast

ABOUT US

HELP CENTER

ADVERTISE

PRIVACY TERMS

ADA COMPLIANCE

CODE OF JOURNALISM ETHICS

Manage Cookie Consent

EXECUTIVES OF THE YEAR

AUTO FINANCE EXCELLENCE AWARDS

MAGAZINE ARCHIVE

INDUSTRY GLOSSARY

facebook linkedin twitter podcast podcast
© 2025 Royal Media
No Result
View All Result
  • Home
  • News
    • All News
    • Capital & Funding
    • EVs
    • Technology
    • Management
    • Powersports Finance News
    • Risk Management
    • Sales & Marketing
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Features
    • Latest Issue
    • Features
    • New Tracks
    • Car Culture
    • Staffing Shuffles
    • Under The Hood
    • Spotlight
    • Issue Archive
  • Webinar
  • Podcast
  • Big Wheels Data
  • SUBSCRIBE
  • Log In / Account

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Home
  • News
    • All News
    • Capital & Funding
    • EVs
    • Technology
    • Management
    • Powersports Finance News
    • Risk Management
    • Sales & Marketing
  • Events
    • Auto Finance Summit East
    • Equipment Finance Connect
    • Auto Finance Summit
    • PowerSports Finance Summit
  • Features
    • Latest Issue
    • Features
    • New Tracks
    • Car Culture
    • Staffing Shuffles
    • Under The Hood
    • Spotlight
    • Issue Archive
  • Webinar
  • Podcast
  • Big Wheels Data
  • SUBSCRIBE
  • Log In / Account

THIS WEBSITE USES COOKIES

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “I CONSENT”, you consent to the use of ALL the cookies.

Cookie settingsI CONSENT

Review our Cookie Policies
.
Manage Cookie Consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
34f6831605sessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
a64cedc0bfsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
cookielawinfo-checkbox-advertisement1 yearSet by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
crmcsrsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
JSESSIONIDsessionThe JSESSIONID cookie is used by New Relic to store a session identifier so that New Relic can monitor session counts for an application.
LS_CSRF_TOKENsessionCloudflare sets this cookie to track users’ activities across multiple websites. It expires once the browser is closed.
LSKey-c$CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
CookieDurationDescription
__cf_bm30 minutesThis cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
_zcsr_tmpsessionZoho sets this cookie for the login function on the website.
663a60c55dsessionThis cookie is related to Zoho (Customer Service) Chatbox
e188bc05fesessionThis cookie is set in relation to Zoho Campaigns
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga2 yearsThe _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gid1 dayInstalled by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
CONSENT2 yearsYouTube sets this cookie via embedded youtube-videos and registers anonymous statistical data.
vuid2 yearsVimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
CookieDurationDescription
__Host-GAPS2 yearsThis cookie allows the website to identify a user and provide enhanced functionality and personalisation.
_dc_gtm_UA-1038974-31 minuteUsed to help identify the visitors by either age, gender, or interests by DoubleClick - Google Tag Manager.
_fbp3 monthsThis cookie is set by Facebook to display advertisements when either on Facebook or on a digital platform powered by Facebook advertising, after visiting the website.
fr3 monthsFacebook sets this cookie to show relevant advertisements to users by tracking user behaviour across the web, on sites that have Facebook pixel or Facebook social plugin.
test_cookie15 minutesThe test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies.
VISITOR_INFO1_LIVE5 months 27 daysA cookie set by YouTube to measure bandwidth that determines whether the user gets the new or old player interface.
YSCsessionYSC cookie is set by Youtube and is used to track the views of embedded videos on Youtube pages.
yt-remote-connected-devicesneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt-remote-device-idneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt.innertube::nextIdneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
yt.innertube::requestsneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
CookieDurationDescription
caf_ipaddrsessionNo description available.
citysessionNo description available.
countrysessionNo description available.
gnt_eidsessionNo description available.
gnt_eu6 hoursNo description
iamcsrsessionZoho (Customer Support) sets this cookie and is used for tracking visitors (for performance purposes)
systemsessionNo description available.
traffic_targetsessionNo description available.
Save & Accept
Powered by CookieYes Logo