It might only be August, but the American Recovery Association (ARA) already has April on its radar.
ARA in conjunction with headline sponsor, Harding Brooks Insurance, announced the theme, secured keynote speakers and early bird registration details for the 11th annual North American Repossessors Summit, which is set to take place at the Omni Mandalay Hotel in Irving, Texas, on April 18-19.
Seeking to address the ever-changing business environment and to help attendees conquer the fear of change, the NARS 2019 theme has been coined: “Adapt, Conquer and Overcome: Accept the Marketplace, Face your Fears and Make Money.” The NARS planning committee swiftly and unanimously chose this theme for NARS 2019, thanks to their combined experiences from the lending, recovery agent and vendor sides of the industry.
“With the way the industry is structured today, it’s truly an ‘adapt-or-die’ situation for small business owners,” ARA president Dave Kennedy said. “The speakers and education sessions at this year’s NARS will be heavily business-focused. We want to arm recovery professionals with the tools they need to change their strategy, embrace new practices and build a business they can eventually retire from or pass on to the next generation.”
Breaking records of past summit timelines, the committee has already secured two keynote speakers: Bob Burg, motivational speaker and bestselling business author; and Mike Sarraille, a former Navy SEAL officer.
A highly acclaimed speaker and the author of "The Go-Giver", a Wall Street Journal and BusinessWeek Bestseller, Burg will deliver a three-hour business workshop at NARS 2019. Through this workshop, Burg will teach NARS attendees profitable, business-building skills they can immediately take back to their businesses. He was named one of the 30 Most Influential Leaders by the American Management Association and one of the Top 200 Most Influential Authors in the World by Richtopia.
In addition to serving 15 years as a Navy SEAL officer and five years as a U.S. Marine and Scout-Sniper, Sarraille is a graduate of the University of Texas McCombs Business School. Not only is he a leadership instructor and strategic adviser for Echelon Front, a management and consulting firm, but he’s also a recipient of the Silver Star, six Bronze Stars, two Defense Meritorious Service Medals and a Purple Heart.
According to Echelon Front, Sarraille and his fellow SEAL members in the program “creatively interweave edge-of-your-seat SEAL and Top Gun combat stories with practical leadership concepts and principles.”
Early bird registration is now open for $375, a savings of nearly 25 percent off the normal registration fee. Individuals can sign up for early bird registration at reposummit.com.
ARA members also can purchase tickets for up to four additional staff members at a rate of $250 per person. Registration for exhibiting and sponsorship opportunities for NARS 2019 will be announced and open to the public soon.
The seasonal upturn in auto defaults typically seen during the middle month of summer surfaced again based on the latest information from S&P Dow Jones Indices and Experian.
According to data through July for the S&P/Experian Consumer Credit Default Indices released on Tuesday, the auto default rate increased 3 basis points to 0.96 percent, marking the third time in the past five years that the rate ticked up from June to July.
The other two years when the metric didn’t move higher during those summertime months, analysts noticed that it stayed flat.
While the July reading is 11 basis points higher than the same month last year, it’s just 4 basis points above July 2016; one of those summers where the reading remained steady month to month.
Meanwhile, analysts found that the latest composite rate, which represents a comprehensive measure of changes in consumer credit defaults also was unchanged in July, coming in at 0.86 percent. The composite default rate has gradually fallen so far this year and is now 9 basis points lower than it was in January.
The bank card default rate dropped 15 basis points to 3.56 percent; the lowest reading recorded so far this year. Bank card default rates have now decreased for three consecutive months.
The first mortgage default rate also stayed put, remaining at 0.63 percent in July.
S&P and Experian went on to mention that three of the five major cities they track each month recorded decreases in composite default rates in July.
Miami showed the largest decrease, falling 62 basis points to 1.68 percent. The default rate for Miami increased during each of the first four months of the year before decreasing now for three consecutive months.
The default rate for Los Angeles fell 4 basis points to 0.61 percent, while the rate for New York ticked 1 basis point lower to 0.87 percent.
The default rate for Chicago was unchanged at 0.86 percent.
Dallas was the only city that watched its rates move higher as the metric edged up 2 basis points to 0.86 percent.
David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, looked to offer some clarity after seeing metrics move in a variety of directions.
“There are some conflicting trends behind the continued stability in consumer credit default rates,” Blitzer said. “Default rates for mortgages and automobile loans have varied very little in the last five years. Defaults on bank cards are more volatile.
“Despite continued growth of outstanding debt across all three categories which is outpacing wage gain, debt service ratios — the proportion of income needed to cover monthly borrowing costs — are flat to down,” he continued. “One explanation for the stable auto and mortgage default rates is that the share of new loans continues to go to the most credit worthy borrowers since climbing sharply in 2008-2010.
“Bank card default rates have moved more than usual in recent months,” Blitzer went on to say. “Growth in overall retail sales combined with gasoline prices that are generally higher and more volatile than last year is boosting borrowing.
“Consumer sentiment remains quite high but is not rising, and sales of both new and existing homes are roughly flat in recent months. These two trends suggest slower borrowing growth and possibly some stability in bank card default rates,” he added.
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.
For the first time since last fall, the auto default rate remained flat on a sequential basis.
According to data through June released this week by S&P Dow Jones Indices and Experian, last month’s reading came in at 0.93 percent; the same as what analysts pinpointed for May. Analysts also noticed the rate stayed put last October and November when the reading sat at 1.11 percent.
Elsewhere within the update associated with the June S&P/Experian Consumer Credit Default Indices, the composite rate — a comprehensive measure of changes in consumer credit defaults — decreased 3 basis points from the previous month to 0.86 percent.
The bank card default rate dropped 13 basis points to 3.71 percent.
The first mortgage default rate also declined by 3 basis points to 0.63 percent.
Reviewing the data by market area, three of the five major cities analysts track each month recorded decreases in composite default rates in June.
Miami generated the largest decrease, falling 47 basis points to 2.30 percent.
The default rate for New York ticked 4 basis points lower to 0.88 percent, while the rate for Chicago dipped by 2 basis points to 0.86 percent.
Los Angeles and Dallas both showed higher default rates. Los Angeles was 3 basis points higher in June at 0.65 percent, and Dallas came in 4 basis points higher at 0.84 percent.
David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, pointed out that June marked the second consecutive month when default rates for all credit types dropped or remained the same. However, each of the rates is still higher than they were 12 months ago.
Similarly, Blitzer mentioned the 47-basis point drop for Miami was the largest single-month drop for a market since June 2013, yet its default rate still remains elevated compared to levels seen last year.
“The favorable economic conditions consumers enjoyed in the last few years are confirmed by more than the current low levels of consumer credit default rates,” Blitzer said. “Unemployment was falling to 4 percent or lower, inflation barely crept up after touching zero in 2015, and real (inflation adjusted) earnings rose as wages outpaced inflation.
“The ratio of household debt service to disposable income stayed close to the lowest levels in three decades,” he continued.
“The Federal Reserve’s reaction to the low unemployment rate was to raise interest rates to deter any increase in inflation. In the last month, the year-over-year rise in the consumer price index moved clearly above 2 percent, and the Fed again raised its benchmark rate, the Fed funds rate, by a quarter percentage point,” Blitzer went on to say.
“Oil prices are rising and may push inflation higher. Weekly unemployment claims continue to drop, pointing to a further decline in the unemployment rate,” he added. “These trends explain why the markets are expecting further rate increases from the Fed. Today’s favorable consumer economy may be slowly shifting towards higher interest and inflation rates.”
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.
Primeritus Financial Services is looking to be the forwarding company of choice for finance companies that have more than just cars and trucks in their portfolio.
Primeritus recently announced the acquisition of Capital Recovery Group (CRG). Based in Tucson, Ariz., CRG is a recovery solution company dedicated solely to the powersports community.
CRG, founded by Nic Spallas, Adam Jones and Dennis Louderback, is the seventh acquisition by Primeritus since 2012. The company’s most recent move came a little more than a year ago when Primertis purchased Global Investigative Services, then a Rockwell, Texas-based provider of vehicle skip-tracing services, equipment recovery and investigative services for the finance industry.
“We are very selective when considering potential acquisition targets, evaluating many different aspects of the company,” Primeritus president and chief executive officer Scott Peters said.
“We were very impressed when we talked to the team at CRG and knew right away that this would be a great addition to the Primeritus family of companies,” continued Peters, who is among the cast of experts and executives already on tap to be a part of Used Car Week, which begins on Nov. 12 in Scottsdale, Ariz.
Primeritus Financial Services said that with the acquisition, CRG will undergo a name change. The new company will be known as Find Track Locate.
“CRG has an excellent reputation within the powersports industry. We look forward to working with their team to enhance their service offerings and continue to drive innovation, compliance and efficiency for CRG’s and Primeritus’ clients,” Primeritus senior vice president of operations Chris McGinness said.
“While Primeritus has a presence in the powersports market, this acquisition allows us to grow our footprint significantly in this arena.” McGinness continued
Louderback, who is CRG VP and general manager, added, “We are delighted to join Primeritus which is the leader in the recovery, skip tracing and remarketing services industries.”
“And we look forward to moving our company toward a new level of quality and service,” Louderback went on to say.
Auto defaults dropped last month for the third consecutive month as the May reading now has settled below the 1-percent mark for the fourth year in a row.
According to data through May released by S&P Dow Jones Indices and Experian, the auto finance default rate dropped 6 basis points from the previous month to land at 0.93 percent. It’s been a steady downward move since the year-high of 1.09 percent recorded in February and now sits at its lowest level since last July.
The composite rate of the S&P/Experian Consumer Credit Default Indices — which represents a comprehensive measure of changes in consumer credit defaults — decreased 3 basis points from last month to 0.89 percent.
The bank card default rate ticked down 2 basis points to 3.84 percent
The first mortgage default rate also declined by 2 basis points to 0.66 percent.
Analysts highlighted three of the five major cities saw decreases in composite default rates in May.
Chicago and Dallas each dipped 2 basis points to 0.88 percent and 0.80 percent, respectively.
The May default rate for Miami came in at 2.77 percent, which was 1 basis point lower than the previous month.
The rate for New York increased 2 basis points to 0.92 percent, while the rate for Los Angeles rose 3 basis points to 0.62 percent.
David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, gave a wide-ranging assessment of what the data means and what trends might be surfacing.
“Consumers continue to pay their bills on time,” Blitzer said. “With the economy turning in good numbers with low unemployment, low inflation and gradually rising wages, consumer credit default rates are flat to down.
“Consumer borrowing has recovered from the financial crisis,” he continued. “Mortgage debt outstanding fell 12.6 percent from its early 2008 peak to the bottom in 2014; now it remains roughly 6.1 percent below the peak. Outstanding debt on bank cards dropped 18 percent from a May 2008 high to a low in May 2011. Subsequently, it recovered and is now about 1 percent higher than the peak seen 10 years ago.
“Borrowing for auto loans peaked in early 2005, before the financial crisis, then hit its low point in 2010 and has experienced a strong rebound. Currently, outstanding auto loans are almost 40 percent above the 2005 level,” Blitzer went on to say.
“Looking ahead, there may be some concern about how long the moderate default rates can continue,” he added. Savings as a percentage of disposable income is declining. At the current level of 3 percent, it is near the low point seen in the boom before the financial crisis. While inflation remains low, wage growth is not very high, and home prices are rising two to three times faster. Any rapid rise in defaults will wait for the next recession, whenever it comes.”
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.
A new Fitch Ratings report shared results of internally conducted stress tests that likely won’t please recovery managers, but these findings nevertheless cannot be ignored by any finance company, regardless of size.
Fitch explained that falling used-vehicle values and swelling supply are set to continue at least through next year, which will lead to worsening recoveries and heightened performance pressures for both auto loan and lease ABS.
Losses have been slowly trending higher since 2016, though, “The prospect of higher defaults becomes more tangible if increased competition, a decline in sales and looser underwriting standards converge,” Fitch director Margaret Rowe said.
“Incentives and original equipment manufacturer spending is also up in each of last three years and may further weaken used vehicle values, which will make managing vehicle production levels more critical over the next two years,” Rowe continued.
The intensifying wholesale market pressures will not be enough to dent Fitch’s rating outlook for auto ABS, which remains positive for this year thanks to growing credit enhancement levels, swift amortization and Fitch's through-the-cycle loss proxy approach.
Auto lease securitizations are further protected by including more conservative securitization mark-to-market Automotive Lease Guide (ALG) residual values. Fitch expects upgrades on subordinate note tranches to continue in 2018, particularly for more seasoned transactions.
Nonetheless, Fitch stress-tested its rated auto ABS with two separate hypothetical scenarios to examine potential rating implications if used vehicles fall more precipitously and supply continues to swell.
Under Fitch’s “moderate” scenario (a roughly 20 percent trimming to recoveries), analysts determined there would be no rating deterioration for both loan and lease ABS.
Under the “severe” stress scenario (a 50-percent reduction), however, analysts indicated subprime auto loan ABS could see one- to two-notch downgrades for their subordinate tranches. Analysts added high investment-grade ratings in both asset classes would see little to no impact and remain stable under this scenario.
“Subprime subordinate tranches show greater potential for multiple compression and downgrades given their reliance on excess spread,” Rowe said. “That said, downgrades would likely be concentrated to the most junior subordinated notes of a subprime deal in the most severe scenario.”
The report titled, "Supply & Severity: Will Swelling Used Vehicle Supply Impact Auto ABS Ratings?" is available at www.fitchratings.com.
The compliance education and training offerings from Recovery Industry Services Company (RISC) just became much more robust.
On Tuesday, RISC announced the acquisition of Recovery Standard Training, which is curriculum created and maintained by Hudson Cook.
Officials highlighted the program will soon be added to RISC’s CARS certification and continuing education programs. Hudson Cook will continue to support and update the Recovery Standard curriculum and provide oversight and updates to the CARS curriculum, ensuring third-party vendors and lenders are kept up-to-date with the latest government regulations.
“We are excited about this transaction, which represents unification of robust education curriculum offered to the collateral recovery industry,” RISC founder and chief executive officer Stamatis Ferarolis said.
“The course material and software platform developed by Recovery Standard adds extensive value to RISC’s industry leading CARS certification program,” Ferarolis continued. “This acquisition helps standardize vendor training and certification allowing repossession companies, national forwarders and lenders access to the most comprehensive option for ongoing compliance training.”
Ferarolis went on to stress that auto finance companies expect third-party vendors to meet ongoing compliance standards while ensuring agents are annually trained and comprehensively vetted.
The addition of Recovery Standard Training, which comes one year after RISC’s acquisition of Recovery Compliance Solutions’ vendor vetting services, reinforces RISC’s commitment to consistently offer the best-in-class vendor vetting and compliance training.
Recovery Standard Training materials will be added to RISC’s CARS continuing education program over the course of the next three months. In addition, RISC will add a new course for finance companies, covering skip tracing, cyber security and repossession agent scenarios.
“I am pleased to join forces with RISC to deliver the most up-to-date compliance curriculum for third-party vendors and automotive lenders. RISC’s advocacy for professional repossession demonstrates a commitment to compliance, much like our mission at Recovery Standard Training, making it a clear choice to move forward with this opportunity and bring more unification to the collateral recovery industry,” said Brad Shrader, chief executive officer of Recovery Standard Training.
It’s taken five years, but federal officials are seeing an improvement if consumers faced a financial emergency roughly equal to one payment on their vehicle installment contract.
The Federal Reserve Board’s latest Report on the economic well-being of U.S. households indicated four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money. Officials pointed out this level is an improvement from half of adults in 2013 being ill-prepared for such an expense.
The report released this week goes on to mention that economic well-being has generally improved over the past five years. The project noted that 74 percent of adults reported they were doing at least OK financially in 2017 — up 10 percentage points from the first survey in 2013.
Even so, officials acknowledged notable differences remain across race, ethnicity, education groups and locations, and many individuals still struggle to repay college loans, handle small emergency expenses and manage retirement savings.
The report derived from the Fed’s fifth annual Survey of Household Economics and Decision-making (SHED) and examined the economic well-being and financial lives of Americans and their families. During November and December 2017, more than 12,000 people participated in the survey. They described their experiences on a wide range of topics, including income, employment, unexpected expenses, banking and credit, housing, education and retirement planning.
Among the new topics covered in this year’s report is the relationship between the opioid epidemic and local economic conditions, which could certainly impact whether a contract holder stays current or falls into delinquency.
The Fed discovered one in five adults personally knows someone who has been addicted to opioids, and those who do have somewhat less favorable assessments of economic conditions. Still, more than half of adults exposed to opioid addiction say that their local economy is good or excellent, suggesting a role for factors beyond economic conditions in understanding the crisis.
“This year’s survey finds that rising levels of employment are translating into improved financial conditions for many but not all Americans, with one third now reporting they are living comfortably and another 40 percent reporting they are doing ok financially,” said Federal Reserve Board Governor Lael Brainard. “Even with the improvement in financial outlook, however, 40 percent still say they cannot cover a $400 emergency expense, or would do so by borrowing or selling something.
“We learned that about one in five adults knows someone with addiction to opioids or painkillers; whites are about twice as likely to have such exposure as blacks and Hispanics; and exposure does not vary much by education level or by local economic conditions,” Brainard continued.
The Board’s SHED data looked at how individuals are managing their finances and making decisions vital to their financial lives and futures. Alongside the economic gains observed since the Great Recession, this report also noted challenges faced by people who are trying to piece together multiple jobs or who are struggling to establish emergency savings.
Among the report’s other key findings:
— Individuals of all education levels, races and ethnicities have shared in the economic expansion over the past five years, although reported well-being remains lower for racial and ethnic minorities and those with less educational attainment.
— Most workers are satisfied with the wages and benefits from their current job and are optimistic about their future job opportunities. Even so, challenges including irregular job scheduling remain. One in six workers have irregular work schedules that they did not request, and one in ten receive their work schedule less than a week in advance.
— Many adults are struggling to save for retirement, and less than two-fifths believe that they are on track with their savings. While preparedness for retirement increases with age, concerns about inadequate savings are still common for those nearing retirement.
The entire report can be downloaded here.
Auto finance defaults are back below the 1-percent level for the first time this year, halting a stretch above that level dating back to last August.
This week, S&P Dow Jones Indices and Experian released data through April for the S&P/Experian Consumer Credit Default Indices, and the auto segment dropped 6 basis points on a sequential basis to land at 0.99 percent.
During the past 12 months, the reading has been as high as 1.11 percent, which came last October. The most recent time analysts spotted the metric below 1 percent was last August, when it was 0.95 percent.
The default reading is repeating its cyclical pattern now that it’s dropped for three consecutive months, something S&P and Experian have reported for the past four years. In 2015, 2016 and 2017, the cycle softened to its low point in June, when readings dipped to 0.85 percent, 0.91 percent and 0.82 percent, respectively.
Meanwhile, turning back to the April data, the composite rate — which represents a comprehensive measure of changes in consumer credit defaults — decreased 4 basis points to 0.92 percent.
The first mortgage default rate also declined by 4 basis points to 0.68 percent.
Analysts added the bank card default rate rose 8 basis points to 3.86 percent. They pointed out bank card default rates have been higher or unchanged for seven consecutive months, and now are at their highest level since June 2012.
Furthermore, S&P and Experian watched how four of the five major cities included in the report enjoyed decreases in composite default rates in April.
Chicago had the largest drop — down 14 basis points to 0.90 percent.
The default rate for Dallas fell 9 basis points to 0.82 percent, while the rate for New York declined 5 basis points to 0.90 percent.
The rate for Los Angeles edged 1 basis point lower to 0.59 percent.
Miami was the only major city that experienced an increase in default rates, spiking 65 basis points to 2.78 percent.
Analysts noted that the composite default rate for Miami has increased to its highest level in more than five years, while default rates have remained stable for the other four major cities.
David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, shared more context about what all of the latest metrics mean.
“The overall economic picture is positive, with continued moderate growth, a further decline in unemployment to below 4 percent, and quite strong consumer sentiment,” Blitzer said. “Inflation remains at or below 2 percent, a level where most consumers tend to ignore small or periodic price increases.
"Among a wide range of economic indicators, there are two that hint of possible future concerns for some consumers,” he continued. “First, wage gains have not accelerated as the economy has improved. Average hourly earnings are rising at a 2.6 percent annual rate, only slightly faster than inflation. Second, home prices are increasing by 6 percent annually with some regions seeing even larger gains. Neither of these has affected consumer credit defaults so far.”
Blitzer also mentioned that consumer borrowing is expanding as the economy continues to grow.
“Revolving credit — borrowing through bank and credit card accounts — is growing at about the same pace as the overall economy,” Blitzer said. “Mortgage debt outstanding is rising at a similar pace.
“Non-revolving loans, including auto loans, are growing faster than the overall economy,” he continued.
“As today’s modest default levels show, current debt levels are manageable. The fear is that when the next recession comes, debt levels will have climbed far higher, while personal savings will have remained modest at best,” 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.
