Delinquencies

TransUnion’s Q4 data shows ‘correction’ in auto finance

CHICAGO - 

Brian Landau, senior vice president and automotive business leader at TransUnion, needed just one descriptive moniker to summarize the auto finance data from the fourth quarter — a correction.

The auto finance portion of TransUnion’s Q4 2017 Industry Insights Report released on Tuesday showed that while auto finance balances grew 5.5 percent between Q4 2016 and Q4 2017, this figure marked the lowest annual growth rate since a 5.3-percent rise in Q2 2012 over Q2 2011.

Despite a slowdown in balance growth, TransUnion observed a marked increase in the number of outstanding auto contracts — growing to 79.4 million in Q4 2017 compared to 75.8 million one year earlier.

“I believe it is a correction, just like whatever others in the industry might call it, because we’re starting to see not necessarily a sharp change happening with regard to originations or balances,” Landau told SubPrime Auto Finance News ahead of the report release. “It’s more of a slowdown in some parts of the credit spectrum. That to me means it’s a controlled tightening if you will.”

The TransUnion report showed originations also declined on a yearly basis for the fifth consecutive quarter, falling 4.8 percent in Q3 2017. The decline in originations was driven by an 8.2 percent yearly drop for the subprime, near prime and prime credit risk categories, though that was partially dampened by only a 0.2-percent annual decline in the prime plus and super prime risk categories.

TransUnion reiterated that originations are viewed one quarter in arrears to account for reporting lag.

Another important trend mentioned in the report included TransUnion determining that serious auto loan delinquency rates per borrower — contracts 60 days or more past due — also remained stable. The Q4 reading improved 1 basis point to 1.43 percent.

“It’s still a little too early to say whether or not we’re going to continue to see that trend. But it is a positive indicator that a correction is happening,” said Landau, while referencing that the latest rate is more than 20 basis points lower than the reading spotted during the worst of the Great Recession of 2008 and 2009.

So while some stock traders on Wall Street might cringe at the thought of a correction, Landau reiterated how in this case with respect to auto finance it’s an overall positive development.

“As we all know, finance companies have a number of different levers they can pull to match risk,” Landau said. “They can pull back on term. They can require a larger amount down at the point of purchase to reduce that (loan-to-value ratio). They can also adjust APR and the buy rate through the dealer to offset the credit risk that’s constantly changing. They’re always calibrating and recalibrating accordingly.

“The market is pretty resilient as I’ve said before,” he went on to say. “We have a number of people in the industry who have gone through a number of cycles to know what to anticipate. They’re being very proactive to any of the underlying trends they’re seeing. That’s why you’re seeing a slight tightening of underwriting policies and pricing.”

Q4 2017 Auto Finance Trends
Auto Finance Metric Q4 2017 Q4 2016 Q4 2015 Q4 2014
 Number of Auto Loans  79.4 million  75.8 million  71.1 million  65.2 million
 Borrower-Level Delinquency Rate (60+ DPD)  1.43%  1.44%  1.27%  1.19%
 Average Debt Per Borrower  $18,597  $18,391  $18,004  $17,456
 Prior Quarter Originations*  7.1 million  7.5 million  7.5 million  7.0 million
 Average Balance of New Auto Loans*  $20,909  $20,743  $20,245  $19,710

*Note: Originations are viewed one quarter in arrears to account for reporting lag. Source: TransUnion

Overall credit trends

TransUnion highlighted that the consumer credit market concluded 2017 on a high note with strong performance across multiple credit products, according to TransUnion’s Q4 2017 Industry Insights Report powered by Prama analytics.

Analysts found that most indicators point to a healthy credit market, though there are a few signals that lenders are being more active in rebalancing portfolio risk.

“Consumers continue to gain access to more credit, and balances are generally rising at a healthy clip,” TransUnion vice president of research and consulting Matt Komos said in a news release.

“For the most part, consumers are paying their debts in a timely fashion, which has been especially evident for mortgages and personal loans,” Komos continued. “This is likely a result of the strong economy, which has helped consumers manage their personal balance sheets and build confidence.”

During 2017, TransUnion observed 20.3 million more accounts spanning auto, credit card, mortgage and unsecured personal loans. Analysts contend the growth is likely due to continued declines in the unemployment rate, which decreased to 4.1 percent in Q4 2017 compared to 4.7 percent in Q4 2016.

Additionally, the University of Michigan’s Index of Consumer Sentiment — a measure of consumer confidence — stood at 95.9 in December 2017, up 2 percent from December 2016.

“This demonstrates consumers have positive expectations regarding the overall economy, and we anticipate this will lead to higher consumer credit activity in the near future,” Komos said.

“While most indicators point to a fluid consumer credit economy, we are monitoring the market closely for any potential shifts,” Komos continued. “Material upticks in delinquency, interest rate increases beyond what is expected, or other unanticipated economic shocks could certainly impact the market adversely.”

TransUnion’s special website here contains more charts and details about the Q4 2017 Industry Insights Report.

Neeb takes over as CEO of ACA International

MINNEAPOLIS - 

This week, Mark Neeb officially became the chief executive officer of ACA International, the Association of Credit and Collection Professionals.

Neeb brings to the association nearly 40 years of corporate strategy experience, including 28 years specifically working in the credit and collection industry. He is intimately familiar with ACA International, having been a member for many years and serving on the ACA executive committee and as ACA president from 2011 to 2012.

Current ACA International president Rick Perr described Neeb as a high-energy executive and entrepreneur that understands the industry who will lead ACA International into the future.

“After conducting a rigorous search, it was clear to the board that Mark’s leadership and considerable experience in the credit and collection industry combined with his extensive familiarity with our great association made him the outstanding candidate for this position,” Perr said. “He has a proven track record of success throughout his career and is a perfect fit to lead our industry.”

Neeb had been the president and chief executive officer of neebEDU, a debt recovery company he founded in 2014 that exclusively focuses on the education industry.

Previously, Neeb served as the president and CEO of The Affiliated Group (TAG), a company he bought, built and sold during a period of 20 years.  The Affiliated Group is a nationally licensed receivables management firm, specializing in all facets of the revenue cycle, receivables recovery and debt portfolio management.  In previous positions he served as Audit Manager for Clifton, Larson, Allen CPA’s and as the CFO for a large receivables management firm based in Minnesota.

Throughout his career Neeb has been very active in the collections industry, at both the local and national levels. Neeb has chaired numerous national committees including the ACA Healthcare Debt Sales & Collection Services Task Force, which developed guidelines for collection agencies and healthcare facilities on best practices on the sale and collection of healthcare debt. 

From 2002 to 2007, he served as a national director of ACA International. 

Neeb also frequently speaks at industry events throughout the country.

NARS 2018 to include special repo agency owner forum

IRVING, Texas - 

It is likely agents discuss their successes and challenges during the networking times and other activities associated with North American Repossessors Summit (NARS) that’s now been conducted for a decade.

But now organizers of the industry event hosted by the American Recovery Association (ARA) and sponsored by Harding Brooks Insurance are designating a specific portion of the summit agenda so agents can share what’s happening with their operations with all registered colleagues.

NARS now will include a two-hour open forum meeting exclusively for business owners who will be able to participate in crucial discussions of the challenges and complexities repossessors currently face in order to find solutions that help lay the foundation for the future of the industry.

The theme for the 10th annual summit is “Stronger Together: Celebrating 10 years of Leadership, Education and Unity,” with a keynote by astronaut Tom Jones delivering an inspiring story of adventure, teamwork and inspiration to motivate audiences to work hard together to overcome obstacles to their own particular mission. 

This year’s schedule also includes other insightful speakers and powerful roundtable discussions, as well as other exciting events such as the sixth annual golf tournament, AT&T Stadium Tour, Harding Brooks Cocktail Party, and the Digital Recognition Network (DRN) closing party and live auction to end the summit.

The summit will be held at the Omni Mandalay Hotel at Las Colinas in Irving, Texas, on April 19-20.

Along with the open form, NARS organizers are excited about bring Jones, a veteran NASA astronaut, scientist, pilot and author.

In more than 11 years with NASA, Jones flew on four space shuttle missions that orbited the Earth. On his last flight, he led three spacewalks to install the centerpiece of the International Space Station, the U.S. laboratory, Destiny.

Jones has spent 53 days working and living in space. A graduate of the U.S. Air Force Academy, Jones piloted B-52D strategic bombers, earned a doctorate in planetary sciences from the University of Arizona, studied asteroids for NASA, engineered intelligence-gathering systems for the CIA, and helped NASA develop advanced mission concepts to explore the solar system.    

Jones is the author of several current space and aviation books, including Sky Walking: An Astronaut's Memoir, which was named one of its five best books on space by The Wall Street Journal.

Jones' awards include the NASA Distinguished Service Medal, four NASA Space Flight Medals, the NASA Exceptional Service award, the NASA Outstanding Leadership Medal, the NASA Exceptional Public Service award, Phi Beta Kappa, the Air Force Commendation Medal, and Distinguished Eagle Scout.

The Main Belt asteroid 1082 TomJones is named in his honor.

“Dr. Tom Jones is truly an American hero and we are greatly honored to have him speak at this year’s NARS,” ARA president Dave Kennedy said. “His inspiring story will give attendees a better perspective on the dedication needed to overcome obstacles in our industry, the rewards of good teamwork and determination, and how to encourage and motivate themselves personally and professionally to continue to push their businesses and our industry towards success.”

Registration is currently $450 and will increase by $100 after March 15, so attendees are encouraged to register before the regular registration deadline. To register, visit reposummit.com.

Sponsorship opportunities also are still available by calling (972) 755-4755 or sending an email to info@americanrecoveryassn.org.

TFS gives Kaizen Award to Millennium Capital and Recovery

HUDSON, Ohio - 

One forwarding company evidently is performing “The Toyota Way.”

Millennium Capital and Recovery Corp. closed 2017 with a bang by earning the prestigious Kaizen Award from Toyota Financial Services (TFS).

The Hudson, Ohio-based firm was recognized for its continuous innovation and pursuit of excellence in the recovery and skip-tracing spaces.

The award was presented at Toyota Financial Services’ 2017 Supplier Summit at Toyota’s new 2.1 million square-foot North American headquarters in Plano, Texas, on Nov. 27.

In the remarks leading up to the announcement about Millennium, James Kimmons, supplier relationship manager, and Leonieze Brewer, supplier relationship senior analyst, both for Toyota Financial Services noted several key points of distinction for Millennium Capital and Recovery, including:

• Millennium’s constant pursuit of improvement, and never being complacent

• Millennium’s leadership in bringing new ideas forward ahead of the industry, including Millennium’s forward-thinking ComplianceFIRST no-fee-to-consumer model

• Millennium’s revolutionary revamping of the redemptions process with focus on consumer satisfaction

• Millennium’s dedication to real-time dashboards and analytics

“We are very honored to receive the prestigious Kaizen Award from Toyota Financial Services. Toyota’s recognition of our commitment to continuous improvement means so much to everyone at Millennium,” said Jayne Bronchetti, president of Millennium Capital and Recovery.

“It is a privilege to be a partner with such an outstanding organization as Toyota Financial Services,” Bronchetti added.

Kaizen is the concept of “continuous improvement” with a focus on improving all functions and involving all processes and employees from the assembly line workers to the chief executive officer.

Toyota is famous for adopting and perfecting kaizen. Known as “The Toyota Way,” it is a system designed to provide the tools for people to continually improve their work, consisting of two core principles: continuous improvement and respect for people.

PAR North America promotes 3 executives

CARMEL, Ind. - 

Coming on the same day KAR Auction Services named a new president at ADESA, another business unit within the company made a trio of promotions.

PAR North America, a leading U.S. provider of vehicle transition services with coast-to-coast solutions for recovery management, skip-tracing, remarketing and title services, announced the promotion of several key leaders.

PAR North America highlighted these promotions are aimed at accelerating PAR’s growth and the development of innovative compliance solutions for PAR customers. The moves include:

—Jose Delgado has been promoted to senior vice president, sales and business development.

—Jessie Herdrich has been promoted to vice president, compliance and operations.

—John Sibbitt has been promoted to vice president of operations.

“Jose, Jessie and John bring decades of deep industry expertise and a shared commitment to innovation and delivering exceptional customer service. This new leadership structure at PAR will not only position our own company for growth, but will help our customers and business partners succeed,” PAR North America president Lisa Scott said.

“A key focus of this new PAR leadership team will be fortifying our compliance capabilities to deliver the next generation of integrated compliance products and services,” Scott added.

In his new role, the company indicated Delgado will focus on expanding PAR’s product portfolio and accelerating the company’s growth strategy. Delgado previously served as vice president of operations, sales and client relations at PAR and will build a new team dedicated to product and service development, client relations, and enhancing the overall PAR customer experience.

PAR added that Delgado will also play a pivotal role in researching new growth areas, creating business development strategies and expanding the company’s geographic footprint.

Herdrich has been with PAR for more than 10 years, most recently overseeing the company’s compliance function. The company noted that Herdrich’s leadership skills and extensive knowledge of business and industry regulatory requirements will help address the industry’s heightened focus on compliance and security.

In her new role, Herdrich will expand PAR’s compliance department and create innovative new product and service offerings that meet these growing and rapidly evolving regulatory compliance requirements for customers.

The company said that Sibbitt leads PAR’s recovery and skip departments and will take on additional responsibility for establishing consistent and efficient business processes. These operational improvements will help the company be more efficient and deliver greater value to its customers.

For the previous six years, Sibbitt oversaw the company’s agent network and recovery strategy teams.

MBSi welcomes Fountaine as director of business development

PHOENIX - 

MBSi Corp. welcomed a top executive from another firm in the recovery industry to its company team this week.

MBSi, one of the loyal sponsors of Used Car Week and a leading provider of repossession assignment software and vendor compliance solutions, announced that John Fountaine has joined the MBSi team as director of business development. 

With more than 15 years in the financial services industry, most recently as the president of Pathfinder Services, formerly PRA Location Services, MBSi highlighted that Fountaine has developed a deep understanding of the challenges repossession vendors, national forwarders and auto finance companies face daily and the scope of solutions and services that will improve their bottom lines and overall industry performance.

In this role, Fountaine will be focused on developing new service offerings made available in the Recovery Connect app exchange platform.

“John has been a respected strategist and operating executive within the financial services industry for many years, and we are excited to have him onboard to strengthen and broaden the perspectives of our leadership team,” said Cort DeHart, corporate strategy manager at MBSi.

“John has always had a strong appreciation for the challenges facing individual recovery companies, and we look forward to working with him to bring new opportunities to the agent community,” DeHart continued.

“We are dedicated to creating best-in-class compliance and recovery management technology and having John onboard helps us do just that,” DeHart went on to say.

Auto defaults close 2017 on stable track

NEW YORK - 

For the fourth time in the past seven years, the auto portion of the S&P/Experian Consumer Credit Default Indices closed the calendar with the default rate holding steady or ticking a bit lower on a sequential basis.

S&P Dow Jones Indices and Experian reported on Tuesday that December’s auto loan default rate fell 1 basis point compared to November to settle at 1.10 percent.

With a similar year-closing pattern in place, analysts noted that the latest auto default rate is within 5 basis points of the highest reading since March 2012. That stretch also included the lowest default rate S&P Dow Jones and Experian have recorded going back a decade as the June 2017 reading of 0.82 percent bested the previous low by 3 basis points.

Meanwhile, analysts indicated the composite rate — a comprehensive measure of changes in consumer credit defaults — edged 2 basis points higher on a sequential basis in December to come in at 0.91 percent.

The two other major credit segments S&P Dow Jones and Experian watch for the composite reading moved higher in December. The bank card default rate rose 16 basis points to 3.44 percent. The first mortgage default rate increased 2 basis points to 0.68 percent.

Like in auto, analysts noticed that first mortgage default rates have been stable, remaining within a 20 basis point range for nearly two years. However, bank card default rates, in contrast, recorded their largest monthly increase since May 2017.

Turning next to a look by location, S&P Dow Jones and Experian found that all five major cities saw their composite default rates rise in December.

Chicago posted the largest increase, rising 6 basis points to 1.15 percent. Dallas recorded an increase of 3 basis points to 0.85 percent, while New York was 2 basis points higher in December at 0.95 percent.

The default rates for Los Angeles and Miami both rose 1 basis point from November to 0.77 percent and 0.98 percent, respectively.

David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, offered his regular assessment of the latest data, mentioning first that the default rate on bank cards has been rising consistently since December 2015.

“Continued low unemployment and low inflation, rising home prices and stock market gains combined with gains in consumer confidence to support strong gains in retail sales in the last four months of 2017,” Blitzer said. “However, the same expansion in consumer spending is now appearing in the bank card default data.

“The data are also showing some changes among the five cities tracked in this release,” he continued. “Chicago has now experienced the highest consumer credit default rate for three months running. For a long time, Miami’s default rate was the highest across the five cities. The first mortgage default data dominate the city-level default indices.

“During the financial crisis, Miami experienced large declines in home prices which led to an increase in the mortgage defaults. As Miami home prices have recovered, its overall consumer credit default rate is no longer an outlier,” Blitzer went on to say.

Jointly developed by S&P Indices and Experian, analysts noted the S&P/Experian Consumer Credit Default Indices are published monthly with the intent to accurately track the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien and second mortgage lien.

The indices are calculated based on data extracted from Experian’s consumer credit database. This database is populated with individual consumer loan and payment data submitted by lenders to Experian every month.

Experian’s base of data contributors includes leading banks and mortgage companies and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.

Top 10 states for 60-day delinquencies in Q3

COSTA MESA, Calif. - 

Recovery professionals often see the greatest saturation of 60-day delinquencies within states near or along the Gulf of Mexico.

While a pair of those states constituted two of the top three as tracked by Experian Automotive, the state that registered the highest 60-day delinquency rate as of the third quarter actually sits against the Chesapeake Bay.

According to Experian’s latest State of the Automotive Finance Market report, Maryland led the nation with the highest 60-day day delinquency rate at 1.63 percent.

Gulf Coast states Louisiana and Mississippi weren’t far off that pace at 1.35 percent and 1.37 percent, respectively.

Here is the complete top 10 as Experian reported:

1. Maryland: 1.63 percent
2. Mississippi: 1.37 percent
3. Louisiana: 1.35 percent
4. New Mexico: 1.04 percent
5. South Carolina: 1.03 percent
6. Georgia: 1.02 percent
7. Alabama: 0.99 percent
8. Texas: 0.93 percent
9. Nevada: 0.86 percent
10. (Tied) Arkansas, Florida and North Carolina: 0.85 percent

November auto defaults hold steady

NEW YORK - 

In the midst of the holiday break, analysts from S&P Dow Jones Indices and Experian released an update on auto finance defaults through November.

Fortunately, what they spotted shouldn’t give the industry an unwanted jolt to start regular business operations again now that it’s 2018.

The auto finance portion of the S&P/Experian Consumer Credit Default Indices stood at 1.11 percent in November, remaining unchanged compared to the previous month. The reading did represent an 11 basis point rise year-over-year, leaving the mark at its highest point since December 2013.

Meanwhile, the composite rate — which represents a comprehensive measure of changes in consumer credit defaults — decreased 1 basis point on a sequential basis in November to settle at 0.89 percent.

The bank card default rate also was unchanged at 3.28 percent as the first mortgage default rate decreased one basis point from October to 0.66 percent.

Analysts noted first mortgages are the only category to report a lower default rate versus one year ago. Due to higher default rates in bank cards and auto loans, the composite default rate showed a 2 basis point increase over this period.

Looking at the largest markets analysts track, S&P and Experian indicated that three of the five major cities saw their composite default rates rise in November.

Los Angeles and Dallas posted the largest increases, with Los Angeles moving up from 0.72 percent to 0.76 percent and Dallas rising from 0.78 percent to 0.82 percent.

Chicago also reported an increase, ticking up 1 basis point to 1.09 percent.

The default rate for New York fell 7 basis points to 0.93 percent, and the rate for Miami dropped 9 basis points to 0.97 percent.

“Default rates on bank cards and auto loans held steady while the first mortgage default rate pulled back slightly in November,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

“Since both auto loan and bank card defaults have trended up for much of 2017, this is favorable. First mortgage default rates are flat to down so far in 2017. The patterns across the five cities highlighted here are mixed, though Miami remains slightly above the others,” Blitzer continued.

Blitzer closed his analysis by touching on unemployment and wages — two economic trends that can greatly impact how auto financing performs.

“The overall economy is ending 2017 on a strong note with very low unemployment, modest inflation and real GDP up better than a 3 percent annual rate in the second and third quarters,” Blitzer said.

“At the same time, the savings rate — personal savings as a percentage of disposable personal income — is slipping as spending rises faster than income for most Americans. As recently as October 2015, the savings rate was 6.3 percent; in October 2017, it was halved to 3.2 percent,” he continued.

With spending rising faster than wages, the savings rate is likely to drop further, and consumers will be forced to increase their borrowing. Whether wage growth picks up, spending slows, or default rates climb remains to be seen,” he went on to say.

4 new enhancements to Spireon’s GPS solution

IRVINE, Calif. - 

Spireon rolled out four enhancements to its GoldStar GPS solution on Wednesday designed to help mitigate risk and enhance repossession and recovery activities of large buy-here, pay-here dealerships and finance companies that originate contracts with subprime customers.

The company also added a new, nationwide impound lot database, prebuilt into the platform, and available for both GoldStar Pro and GoldStar Enterprise customers.

“Non-prime auto lenders face expensive and time-consuming challenges in servicing loans, communicating with buyers, managing risk, and recovering vehicles when necessary.  These challenges are amplified when dealing with a high-volume of vehicles across multiple dealers and branches,” said Brian Deeley, director of product management at Spireon.

“GoldStar Enterprise is specifically designed to manage high-volume operations and streamline business workflows across different branches, divisions and partners,” Deeley continued.

GoldStar is now available in three versions to suit customers of all sizes.  Small BHPH dealers can use entry-level GoldStar Basic for vehicle location monitoring, payment reminders, and recovery.  GoldStar Pro adds predictive reporting and customizable integration features for more complex dealerships.  New GoldStar Enterprise extends the features of GoldStar Pro with workflow tools to streamline the management of multi-tiered operations, including:

—Sub-accounts for dealer partners: Finance companies can provide account access to dealers they finance, enabling them to use GoldStar's secure, online portal to manage and monitor vehicles under contract.

—Request installation service: Finance companies can place GPS installation requests on behalf of their dealers or delegate their dealers to make their own requests in the portal.  Automated workflows will notify and schedule the Spireon installation team on behalf of the finance company and will also notify the finance company when the installation is completed.  

—Device ordering and activation: Device orders can be placed via web portal by the finance company on the dealer’s behalf, or delegated to their dealers for self-service ordering. Post installation, finance companies can ensure devices are reporting correctly and vehicle information is entered into the system correctly before funding loans.

—Asset groups: Enables grouping of the device/vehicle population into subsets by dealer branch, assigned collection agent, or portfolio.  Asset groups can allow finance companies to limit vehicle data to a specific set of users, preventing access to information for vehicles outside the group, which is also available in GoldStar Pro.

Spireon also has added a new Impound Lots feature to GoldStar Pro and GoldStar Enterprise, which can alerts dealers and finance companies when vehicles have been taken to an impound lot. 

The company insisted the feature includes the largest pre-built database of impound lots in the nation, with ongoing additions to the repository on a regular basis.  GoldStar users can submit additional local Impound Lots to the system using a simple online button. 

“Tow yards will typically wait 10 to 14 days before notifying us that one of our vehicles has been in their impound lot.  Depending on the city, fees can range from $50-$115 per day.  By sending alerts to us within a day instead of weeks, the new Impound Lots feature in GoldStar could save us thousands of dollars every week,” said Laverne Davidson of LD Motors.

Reggie Ponsford, Spireon's senior vice president of sales for automotive solutions, added, “Our objective with GoldStar is to provide early warning signs of potential defaults, allowing dealers and lenders to engage early and help customers stay in their vehicles and stay on payment schedules.

“Proactively communicating with customers based on GoldStar’s predictive analytics has resulted in significant cost savings for our customers, and in many cases, allowed them to collect three to four more payments per loan on average,” Ponsford went on to say.

To learn more about GoldStar Enterprise and other GoldStar features, visit www.spireon.com/goldstar-gps-vehicle-tracking.