American Recovery Association president Dave Kennedy didn’t mince words to open a letter he delivered to the industry last week.
“We are failing — all of us,” Kennedy wrote.
Kennedy used the direct language to introduce the latest endeavor by ARA, which has been assessing, researching and creating content that the association said will make “a clear and present argument for radical change” within the pricing structures of the repossession industry to be beneficial to all parties.
ARA emphasized that repossession and recovery are essential to the entirety of the auto-finance business, which is why the association opened a series dubbed, “The Cost of COVID-19 on the Industry.”
Kennedy continued in the project introduction, “Given the current state of economic affairs and the added pressure of COVID-19, our already struggling business model has become even more difficult to navigate.
“It seems that every day, there is a new challenge and we see many good repossession companies closing their doors, unable to keep up with the ever-increasing cost of doing business. The repercussions have shockwaves throughout the industry — lenders and forwarders alike are struggling to find quality adjusters who can produce results and maintain compliance,” he said.
“It’s easy to wax poetic about the ‘good old days’ — when repossessions were simple, when compliance was minimal, when consumer complaints rarely escalated to litigation,” Kennedy went on to say. “It’s easy to hope that sweeping change will happen somewhere, sometime, eventually. It’s easy to wait for the decision makers — whoever they may be — to regulate, litigate and compensate their way to a more viable and sustainable revenue model.
“No one is coming. It’s up to us,” he added.
ARA offered a host of suggestions for repossession agents, finance companies and forwarders. The association reiterated that each of those industry segments must work together to create sweeping changes.
“Now is the time for action,” Kennedy wrote. “Now is the time to come together to ensure the survival of our industry. Now is the time to galvanize the industry and reassess our failing business model.
“Now is the time to rethink and rectify a revenue model, which will allow for repossession agencies to operate in a viable and sustainable manner. It's hard work, yes, but to slip back into complacency will be the death of our industry.”
The opening segment of this ARA project can be found on this website.
Already a training provider, RISC now is getting involved in the employment part of the repossession and recovery industries.
On Tuesday, the firm launched RepoHiring.com in an effort to helps connect collateral recovery industry employers with qualified job seekers. Free for both employers and job seekers, RISC emphasized this site is designed with the asset recovery industry in mind.
Over the past few years, RISC acknowledged the collateral recovery industry has been particularly challenged to identify and retain qualified employees.
“The old process simply wasn’t very efficient,” RISC said while noting that without a centralized resource, industry job seekers found opportunities through word of mouth, Facebook, Indeed, Craigslist or other social media.
“None of these sites were designed with the collateral recovery industry in mind,” RISC added.
RISC explained RepoHiring.com is geared to fill that gap across the gamut of roles in the repossession and collateral recovery industry including agents, lenders, forwarders, industry service providers, skip tracers, locksmiths and more.
Employers can post unlimited free job opportunities on the site in just minutes. They can also search the database of registered job seekers with public profiles.
Job seekers can create a profile and save it to apply for future opportunities. They can upload a resume or build out an employment profile.
“Once the profile is built, applying for jobs is as easy as a single click,” RISC said.
“If you’re reading this, RepoHiring.com was built for you,” the firm went on to say.
RISC noted RepoHiring.com currently serves all U.S. states with plans to expand as demand grows.
RISC said it understands the COVID-19 pandemic continues to keep the collateral recovery industry from getting back to any kind of normalcy.
In light of the challenges that repossession agencies are going through, RISC recently decided to extend its fee waiver for RISC Pro Membership, including CARS Certification Training for the fourth straight month.
The company said in a news release that billing will be on hold until Aug. 1. RISC believes the fee waiver will help current members save on monthly expenses as well as allow new members to sign-up to take advantage of free education.
“We have seen a 40% increase in membership over the last three months. This is a great sign that we are helping agencies during this hard time get the value of membership without any expense,” RISC chief executive officer Stamatis Ferarolis said.
“We will continue to monitor how markets are doing and consider additional waivers if the financial strain continues,” Ferarolis added.
RISC Pro is a membership for agents that have set their company’s compliance status as a high priority for managing their business.
In addition, RISC Pro gives its members unlimited access to all of RISC’s CARS training programs, Driver Safety Training, business templates, worksheets and more.
Learn more about RISC Pro at https://www.riscus.com/AgentServices/riscpromembership.
PAR North America launched centralized title warehousing and electronic title processing services that the business unit KAR Global said is in compliance with all state regulatory requirements.
PAR explained its title services can save customers additional staffing and storage costs and provide confidence that needs are met in a timely, efficient and compliant manner.
“At PAR, we’ve created a more efficient, convenient experience for our clients with expanded and innovative services to meet all their needs,” PAR president Lisa Scott said in a news release distributed on Thursday.
“Our warehousing service relieves customer pain points while ensuring adherence to all regulatory requirements,” Scott continued. “Plus, our electronic title processing service gives customers digital access to titles across North America, anytime day or night—offering customers the most seamless, all-encompassing solution in the industry.”
PAR acknowledged title warehousing and processing is a manual, paper-driven process for auto finance companies, so the company has streamlined and centralized these services.
Now, PAR can work on behalf of its customers to process and warehouse vehicle titles during the financing, recovery, auction and resale of a vehicle. PAR will store, process and send vehicle titles directly to the consumer while providing full transparency and digital access to title images at any time 24/7.
“The team at PAR works very closely with our clients to provide strategic solutions and deliver benefits and value beyond typical vehicle transition services,” Scott said. “Plus, we stay connected and in lockstep with the National Titles Solutions Forum to monitor the most up-to-date changes in state titling requirements.”
PAR’s title services are just one segment of the company’s full repossession lifecycle management solutions. The title services group can deliver more than a dozen solutions to customers, from repossession, redemption, corrected and duplicated titles to tracking, history, storage and transfer of equity.
PAR is a leading U.S. provider of vehicle transition services with coast-to-coast solutions for compliance tracking, recovery management, remarketing, skip tracing and title services. PAR leverages its corporate family connections under the KAR Global umbrella to provide unique end-to-end solutions to more than 400 clients nationwide.
For more information about PAR and its new title management services, visit https://parnorthamerica.com/.
This week, Resolvion announced the launch of its new client success team.
The skip-trace and repossession management firm explained the objective of this new initiative is to provide a more holistic and seamless approach to ensuring that client specific requirements are being properly coordinated and met as well as to generally make it easier to transact with the company.
The client success team is led by senior vice president of client services Claudia Plascencia and includes seasoned client success directors and quality audit Representatives. Their role is to serve as a primary point of contact on overall relationship issues and coordinate action across the multiple departments that touch the client relationship.
“Customers are vital to our business, so focusing on them and their success with our products/services helps with retention. When customers are happy and succeeding, it benefits our entire organization” Plascencia said in a news release.
Resolvion chief operating officer Scott Darling added, “this service is different than what we have been providing to clients.
“We need to be the leaders in the area of communication, both with clients and more importantly consumers,” Darling went on to say. “Our client success department helps us do that.”
For more information about Resolvion’s client success team, contact Plascencia at [email protected] or call (760) 431-6014.
As part of our collection of podcasts originating from Used Car Week 2019, Nick Zulovich caught up with Anne Holtzman and Suzi Straffon from Allied Solutions.
The executives from Allied Solutions recapped not only what transpired in the world of recoveries this year, but they also looked ahead toward what the industry might be facing in 2020.
To listen to this episode, click on the link available below.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
While some overall metrics in the U.S. auto loan asset-backed securities (ABS) sector demonstrated seasonality, S&P Global Ratings also spotted some improvements in recoveries for both prime and subprime.
According to its latest report, U.S. Auto Loan ABS Tracker: August 2019, analysts noticed prime recoveries improved to 58.99% in August from 58.50% in July and from 58.32% in August of last year. S&P Global Ratings determined subprime recoveries increased to 42.78% in August from 42.25% in July and from 41.05% last August.
The upbeat movements for recoveries countered collateral performance demonstrating seasonal weakness in August, and subprime delinquencies reaching their highest August level since 2009.
Analysts reported U.S. prime credit net losses increased by 3 basis points both month-over-month and year-over-year to land at 0.58% in August. Subprime losses jumped 57 basis points month-over-month to come in at 8.78% in August. The reading also represented a rise of 13 basis points from August of last year.
After netting out three deep subprime issuers, S&P Global Ratings explained that modified subprime losses increased by a smaller amount — 27 basis points month-over-month to register at 6.64% in August. On an annual basis, analysts pointed out the modified index improved year-over-year from 6.92% in August 2018 and stood at the lowest August level since August 2015.
S&P Global Ratings went on to mention the prime 60-plus-day delinquency rate remained nearly stable at 0.42% in August compared with 0.41% in July and 0.40% in August of last year.
The subprime 60-plus day delinquency rate remained stable at 5.25% in August compared to last month, whereas it increased from 5.02% in August 2018.
“This is the highest August level since 2009, and we believe it is due largely to the greater concentration of deep subprime loans being securitized,” analysts said in a news release.
On a modified basis, after netting out three deep subprime finance companies, S&P Global Ratings added that the subprime modified 60-plus day delinquency rate increased to 3.82% in August from 3.75% in July and 3.48% in August of last year.
The Financial Accounting Standards Board (FASB) looked to reinforce its position concerning the upcoming mandates placed on banks, credit unions and finance companies in connection with reserving for losses, emphasizing the changes can be implemented without incurring “significant costs.”
Last week, FASB issued a proposed Accounting Standards Update (ASU) that included amendments designed to address issues raised by stakeholders, which have triggered proposals by federal lawmakers who are looking to delay these significant accounting changes.
To recap, the Financial Accounting Standards Board (FASB) is looking to ensure that financial institutions have solid measures in place to ensure they have appropriate reserves for any future losses based on the life of each auto loan. As a result, the board has instituted its new Current Expected Credit Loss model (CECL).
The new model will require higher levels of loan loss reserves and lead to changes in lending practices and portfolio management. It will also require a significant amount of data capture, analysis and modeling to meet the implementation deadline of Dec. 15.
According to the update, FASB sought to address four issues along with sharing a summary of its amendments and proposals. The rundown included:
Issue No. 1: Negative allowance for purchased financial assets with credit deterioration
Summary: The proposed amendments would clarify that an entity should include expected recoveries of the amortized cost basis previously written off or expected to be written off in the valuation account for purchased financial assets with credit deterioration (PCD). The proposed amendments also would clarify that recoveries or expected recoveries of the unamortized noncredit discount or premium should not be included in the allowance for credit losses.
Issue No. 2: Transition relief for troubled debt restructurings
The proposed amendments would provide transition relief by permitting entities to adjust the effective interest rate on existing troubled debt restructurings (TDRs) using prepayment assumptions on the date of adoption rather than the prepayment assumptions in effect immediately before the restructuring.
Issue 3: Disclosures related to accrued interest receivables
The proposed amendments would extend the disclosure relief for accrued interest receivable balances to additional relevant disclosures involving amortized cost basis.
Issue No. 4: Financial assets secured by collateral maintenance provisions
The proposed amendments would clarify that an entity should assess whether it reasonably expects the borrower will be able to continually replenish collateral securing the financial asset to apply the practical expedient.
“The amendments in this proposed update include items brought to the board’s attention by stakeholders. The proposed amendments would clarify, correct, and improve the guidance related to the amendments,” board members said. “Therefore, the board does not anticipate that entities will incur significant costs as a result of these proposed amendments.
“The proposed amendments would provide the benefit of improving the consistent application of GAAP by clarifying guidance that already exists within GAAP,” they added.
