Two recovery industry providers aligned before 2018 to benefit their finance company clients.
MBSi Corp., a member of the Automotive Intelligence Council and provider of repossession assignment software and vendor compliance solutions, and Servicing Solutions, an organization specializing in primary and back-up servicing, announced a partnership to provide a seamless asset recovery process for auto finance companies.
“Partnering with MBSi will enhance our ability to recover our clients’ assets,” said Cesar Guzman, vice president of operations at Servicing Solutions. “Their compliance-enabled assignment management platform is an example of the type of cutting-edge technologies we are always on the lookout for, so we are very excited about how this partnership will benefit our clients.”
MBSi president Cort DeHart added, “We are excited to integrate with an industry-leading service provider like Servicing Solutions who delivers efficiencies for lenders,” said, of.
“Servicing Solutions has been easy to work with and we look forward to providing a seamless process to the collections and recovery industry by delivering assignments to qualified asset recovery professionals in MBSi’s assignment management ecosystem,” DeHart went on to say.
DeHart and MBSi will be part of the Automotive Intelligence Council hosting its first press conference during this month’s convention orchestrated by the National Automobile Dealers Association. MBSi will be joined by KAR Auction Services and Maryann Keller and Advisors.
More details about the Automotive Intelligence Council can be found here.
Members of the American Recovery Association (ARA) can leverage a new opportunity in 2019.
ARA, in partnership with Harding Brooks Insurance Agency, announced the newest benefit of the ARA membership and what the association believes is the first of its kind: a guaranteed $10,000 ($20,000 accidental death, no questions asked) life insurance policy that covers every executive member. Coverage is available for all employees at cost.
“We want to thank ARA immediate past president Jerry Wilson and Mike Peplinski at Harding Brooks Insurance Agency for putting this plan together,” ARA president Dave Kennedy said.
“This is just one example of the benefits that are possible by becoming a unified national trade association that large companies want to do business with,” Kennedy continued.
As a result of its recent unity initiative, which included a merger with Time Finance Adjusters, ARA unveiled a new membership structure set to take affect beginning this month. The deadline to sign up for ARA membership to be included in the 2019 directory is Jan. 15.
“We want to thank our new ARA members, and we invite all others to join us as one voice united for the good of the entire industry,” ARA executive director Les McCook said.
“We are embracing every stakeholder in the industry, and we’re excited about the opportunities to work together to reduce the operational costs to all sides of the recovery equation,” McCook went on to say.
There are several classes of membership available, including executive member, associate member, affiliated member and supplier associate member. Dues structures vary significantly depending on class of membership.
To learn more about membership options and to apply, go to this website.
For further questions about becoming an ARA member, send a message to ARA at [email protected].
The senior vice president of operations at Primeritus Financial Services now is the forwarding company’s first chief operating officer.
The company announced on Friday that Chris McGinness has been appointed as COO effective immediately. As chief operating officer, Primeritus highlighted that McGinness’ responsibilities will be expanded to include all of the company’s operating businesses. McGinness will continue to report to Mike Thomas, Primeritus Financial Services chief executive officer, who succeeded Scott Peters in that role as Used Car Week 2018 began.
McGinness has more than 20 years combined leadership experience in business operations and has served in numerous senior management roles across the automotive services industry. This promotion is part of the company’s commitment to ensure continuous improvement and acceleration of operational excellence.
As chief operating officer, McGinness will have the responsibility to lead in the development and execution of a consolidated operations strategy across all of the Primeritus entities.
“We are very pleased to announce Chris’ promotion to the position of chief operating officer at Primeritus,” Thomas said. “The Primeritus family now encompasses five different companies, with over 1,500 clients and 750-plus agency partners. The demand for our services has grown significantly over the last few years, and this role was created to help support our continued growth.
“As COO, Chris will oversee operations throughout the company and draw upon his more 20 years of operational and financial experience to drive performance,” Thomas continued. “We are fortunate to have Chris on our team, and his promotion to COO recognizes the many contributions he has made to our company.”
McGinness began his management career at ADESA where he served as the controller prior to taking on the role of general manager of its auction in Sacramento, Calif. His management experience spans a variety of operational functions including remarketing, transportation and repossessions.
Prior to entering automotive industry, McGinness was a senior accountant with Perry-Smith, a large regional accounting firm in Sacramento.
The relentless drive to reduce repossession related costs while, at the same time meeting the demands/expectations of regulators, may be catching up with us. As one of the largest repossession management firms, we stay very close to the dynamics of the marketplace and we have become concerned about the current situation and even more concerned about the potential impact in the future.
There are several dynamics that are affecting the current agent environment. First and foremost, the cost of operating has increased significantly in recent years. The investment that agencies have had to make in technology and compliance are really significant. Unfortunately, there has been little opportunity to pass on those costs. Some have managed to adapt well. Many others are just barely hanging on. Rarely does a week go by where an established agency somewhere does not close its doors. That trend is likely to continue.
The result is that the agent ranks have thinned and the high cost of entry/compliance makes it very difficult for new companies to enter. Add to that the emerging trend of agency consolidation (i.e. Location Services) and increases in cases emanating from the huge origination volume in recent years and you get the picture. Beyond the short-term operational impact, the situation may also leave the industry unprepared for the likely growth in repossession cases that will come from the inevitable slowing of the economy.
So, what does this mean to the lenders and their forwarding/skip partners? First, we may not have the density of agent network that is really needed to optimize recovery performance. Without going into a long explanation, suffice it to say that fielding a large enough agent network to have at least three agency options for any given assignment is important to performance management. A potentially bigger impact, which we are already starting to see, is that the better agents are choosing the business that they accept and, even within the business they accept, very conscious decisions regarding resource allocation are being made.
Who is grading who?
As a forwarding company serving many large lenders, we are used to getting score carded by our clients and we are used to score carding the performance of our agents. These scorecards are used to determine business flow to us and the agent. What we are not used to is getting a scorecard from our agents with guidance on which client portfolios are meeting profitability requirements and which are not. Granted, this trend is in its early stages but we see it growing and industry leaders, trade associations, etc. are actively educating their brethren on the merits.
The bottom line, repossession agencies have the data and volume of business to determine where it makes sense to deploy their resources and where it does not.
Understanding their metric
It is important to understand how the savvier agents are evaluating our portfolios because it gives important insights into how certain decisions we are all making may affect the success of our repossession efforts.
While there are a variety of different approaches, the metric that seems to be getting the most traction (and frankly makes the most sense) is “revenue per assignment.” This simple but elegant metric takes into consideration all of the key drivers including recovery rates as well as all ancillary revenue such as key cutting, storage, personal property handling, redemption related fees, etc. All of these elements work together to give the agent a true view of the client's business. It is not all about the repo fee.
For example, the issue of personal property and redemption related fees has been a very hot topic over the past year because of Consumer Financial Protection Bureau scrutiny. There is no question that the issue needed to be standardized by the lenders. Some lenders have understood the implication of setting costs and have set parameters that pretty clearly meet the “reasonableness” standard required under most state laws while, at the same, time providing reasonable compensation to the agent for the services. However, others have taken the position that “less is better” in the eyes of the regulator and they have mandated very little or no fees are allowed. For agents that use the revenue per assignment metric, this position is penalized heavily in the metric and you can bet that recovery rates are also impacted as a result.
The table below illustrates the issue across four different scenarios. Clearly, under the revenue per case metric, the most profitable client can be the one with the lowest fee, if the recovery rate is good and the other parts of the equation are reasonable. However, combine a low fee with a low recovery rate and the business just won’t make sense for the agent to put much effort into.
Note: Revenue per case of $125 per case is required to meet margin objectives
| |
Monthly |
Recovery |
Repo |
Average Storage |
Average PP/Redem |
Revenue Per |
| |
Cases |
Rate |
Fee |
Per Repo |
Per Repo |
Case |
| |
|
|
|
|
|
|
| A |
10 |
15% |
$350 |
$10 |
$30 |
$93 |
| B |
10 |
40% |
$300 |
$10 |
$30 |
$160 |
| C |
10 |
50% |
$275 |
$10 |
$60 |
$208 |
| D |
10 |
30% |
$300 |
$10 |
– |
$100 |
The implication is pretty clear. Portfolios that offer the agent the opportunity to earn a reasonable margin will get the attention and resources. The ones that don’t … won’t.
Mike Levison is the chief executive officer of ALS Resolvion. More details about the company can be found at www.alsresolvion.com.
On the heels of landing a trio of clients as well as an enhanced relationship with Digital Recognition Network (DRN), Consolidated Asset Recovery Systems also added to its executive team.
Consolidated recently announced that it has named Jeff Rau as national software sales director for the IBEAM platform. In this role, Rau will promote and support the growing demand for IBEAM, which is used by finance companies, forwarders, consignors and repossession agencies to manage repossession and remarketing tasks.
“I am pleased to be a part of this rapidly growing technology company,” said Rau, who came to the company after most recently serving in a role with Del Mar Recovery Solutions.
“The IBEAM platform offers features and capabilities that I have not seen in other software products,” Rau continued. “Their focus on providing a single platform, single solution strategy for the entire workflow, from repossession through remarketing, is unique within the industry and provides efficiencies along with potential cost savings over disjointed technology approaches.”
IBEAM (Internet Based Electronic Asset Management) can provide a single platform used by finance companies to manage multiple forwarders and consignors through the IBEAM Global Marketplace, a comprehensive software solution that can provide detailed analytics and dashboards to manage both the repossession and remarketing process along with all ancillary services.
Additionally, for organizations that want to manage direct relationships, IBEAM can offer real-time communications with repossession field agents and auctions.
“We are pleased to have Jeff join our team,” said Terry Groves, senior vice president and co-founder of Consolidated. “His experience in the banking, technology and forwarding industries offers our clients an insightful perspective on how best to leverage technology in support of their repossession and remarketing initiatives.”
Intellaegis, which does business as masterQueue, announced today during Used Car Week it has named a new operational strategist.
The debt collection software company has named former Ally executive vice president Bill Ploog to its management team.
Ploog joins Intellaegis investor, chief strategist and former CoreLogix co-founder Steve Schroeder, as well as John and Perla Lewis, co-founders of the masterQueue platform, on the team that has been tasked with overseeing the company’s 2019 expansion plans.
Ploog, who spoke at Used Car Week on Monday, brings 33 years of experience driving operational improvements in the industry, including 22 years in executive positions. At Ally, Ploog worked to transform the company’s collections organization to successfully handle substantial non-prime and subprime growth in Ally's $84 billion portfolio, overseeing a staff of 2000.
According to the masterQueue release announcing the news, Ploog also spearheaded the concept and operational expansion of SmartAuction.
"As the probability of a past due account becoming a repossession or a total loss increases with each additional payment becoming past due, I am thrilled to help masterQueue expand its offering. masterQueue makes early stage, no contact collections a much easier process in the race against time to resolve account delinquency," said Ploog.
John Lewis added, “Being an entrepreneur can be a lonely job, but when you have the opportunity to work alongside talented and genuine people like Bill, its awesome.
“I've also had the pleasure to work with and be mentored for years by one of the most successful fintech entrepreneurs, Steve Schroeder, and by the chairman of our board and former Exeter Finance chief executive officer Mark Floyd. When you add in our CISO (chief information strategy officer) and partner Jack Merry who has been with us overseeing security since day one, and at a time when security is more challenging than ever, I am so lucky to be surrounded by such a strong executive team…” he continued.
In addition to adding Ploog to the exec team, the team at masterQueue, a Used Car Week sponsor, also announced this week it has been chosen as a Top 3 Finalist for the Sacramento Regions Most Innovative Software competition.
"When we launched at Finovate in 2011, we knew if we could automatically gather unstructured skip tracing data and add structure in the form of AI and workflow around the use of the data, we could create a compelling platform to automate the historically manual, time consuming skip tracing process. Although we're in the early stages of AI in debt collection, we're honored to receive this recognition alongside some amazing local innovators," John Lewis said.
And speaking of awards, masterQueue lead software developer Sean Downey will also be honored during the Auto Remarketing 40 under 40 awards luncheon at Used Car Week on Thursday.
masterQueue's chief information strategy officer Merry had this to say about Downey’s honor: "Sean has been with us eight years, and he oversaw the difficult transition of our development team seamlessly moving the masterQueue platform from its original lead developer to being under Sean's control, which is no small feat for a platform with well over a million lines of code.
“His being recognized as one of the top developers in the auto finance industry is well deserved. The timing of this award being presented at Used Car Week, a day prior to the release of the most significant feature to date in masterQueue, the new callQueue, is appropriate,” he continued.
The company described callQueue — the first version of which was released over a year ago — as a feature in the masterQueue Software-as-a-Service platform that provides data gathering automation and big data organization with State and Federal regulatory calling compliance, working to eliminate a manual process tedious for collection departments. The tool is designed to streamline the ability for lenders working to establish contact with customers who are behind in payments, and allows them to offer assistance to the customer before the loan goes too far delinquent.
AI and data analytics company Digital Recognition Network (DRN) announced on Thursday that rather than go to trial on the issue of damages, Location Services and DRN have agreed on a settlement after Federal Court ruled in DRN’s favor.
Location Services LLC has paid DRN $325,000 on behalf of itself and DigitalDog Auto Recovery, following a district court ruling on Oct. 5 that found that Location Services “willfully and intentionally” interfered with DRN’s contract with DigitalDog.
On top of the settlement payment, Location Services and DigitalDog agreed to certain restrictions on their use of LPR technology and data for the remainder of DigitalDog’s one-year non-compete. These include that Location Services will refrain from operating or using any LPR system to collect LPR data in California, and DigitalDog will refrain from operating or using any LPR system to collect LPR data anywhere until after May 11, 2019.
The original lawsuit was brought to contest the the validity of a one-year non-competition provision in DRN’s contract with DigitalDog, which runs through May 11 of next year.
SubPrime Auto Finance News reported on the ruling in favor of DRN back in October, which was based on three key findings:
- That DRN’s one-year, non-competition contract provision is valid and enforceable;
- that DigitalDog Auto Recovery breached its contract with DRN;
- and that Location Services LLC tortiously interfered with the contract.
After the court’s ruling last month, the only issues that remained to wrap up the proceedings were the recoverability of damages and attorneys’ fees by DRN and the appropriate scope of injunctive relief to which DRN was entitled.
“I insisted that the $325K be paid immediately in one lump sum by Wednesday, and it was…" said Todd Hodnett, executive chairman and founder of DRN, in a news release.
“This result is a vindication of DRN’s approach to building a market where everyone – lenders, providers and affiliates – works together to grow the industry and move it forward. When we work together, using transparent ethical business practices, everybody wins. We are pleased with the result and are ready to move forward and continue to help grow this market for all participants,” he concluded.
As Used Car Week kicked off this Monday in Scottsdale, Ariz., Primeritus Financial Services announced a new chief executive officer. Mike Thomas has been named CEO, and the move is effective immediately.
Thomas succeeds Scott Peters in the position, who joined Primeritus in 2015 and led the company through a period of rapid growth.
Peters recruited Thomas as the company’s chief information officer and senior vice president of operations in 2015. In his previous position, Thomas focused on developing the company’s long-term technology and operational strategy.
“It is a tremendous honor to have been groomed by, and to be able to succeed my long-term mentor, Scott Peters, and I look forward to building upon the foundation of success he has created,” said Thomas. “There is no limit to where we can take Primeritus with our ongoing focus on continuous improvement and building better customer and vendor relations.”
Used Car Week attendees can hear from the new Primeritus leader during a forwarding-focused panel discussion later today, which includes Thomas, as well as leaders from Millennium Capital & Recovery Corp., ALS-Resolvion, PAR North America, Consolidated Asset Recovery Systems and Del Mar Recovery Services.
KAR Auction Services today announced it has boosted its asset recovery capabilities with the purchase of Clearplan.
Based in Reno, Nev., Clearplan is a digital platform for recovery agents, drivers, forwarders and lenders that acts as a centralized, mobile “cloud-based hub” for repo workflow and logistics management.
KAR shared in a press release announcing the news that the move ramps up KAR’s Software-as-a-Service capabilities, which also include Recovery Database Network (RDN).
“KAR is focused on leveraging the best in digital technology to help our customers operate more efficiently and effectively,” said Peter Kelly, KAR’s president of digital services. “Clearplan quickly established itself as a market leader by developing a data-driven, user-friendly communications platform. By integrating Clearplan with our existing capabilities, we will be able to offer smarter, faster and more convenient solutions that serve the entire asset recovery ecosystem.”
A little background on Clearplan: The company was launched back in 2014 with the goal of streamlining the vehicle asset recovery process.
Today, the platform works to connect thousands of recovery agents to more efficiently list, log and track vehicle recovery activity.
The acquisition is highly complementary, KAR said, to it’s RDN subsidiary, which provides software and data solutions to the repossession industry.
“We are thrilled to extend and strengthen our partnership with RDN by becoming part of the KAR Auction Services organization,” said Justin Zane, Clearplan co-founder and president. “We look forward to serving our shared customers and delivering the next generation of innovative, technology enabled solutions to our industry.”
Clearplan will retain its Nevada headquarters and become part of KAR's digital services group of companies.
At Used Car Week, we caught up with Kelly, Zane and RDN's Michael Briggs to talk about the purchase for an episode of the Auto Remarketing Podcast, which can be found below.
What Locations Services believes is the recipe for success in the repossession and recovery industries includes taking executives from an array of well-known companies such as Ally Financial, PAR North America and Remarketing of America and fueling them with the funding resources from Delaware Street Capital.
The result has been a busy year that’s included acquisitions and blending together a leadership team with its sights set on broad-based coverage across all 50 states, with repossession trucks owned and operated by Location Services.
Former Ally Financial executive Lee McCarty was named chief executive officer one year ago. A few months later, another former Ally executive joined McCarty. Eric Gerdes came aboard and was recently named Location Services president and chief operating officer.
Between McCarty and Gerdes, they possess nearly 60 years of auto finance experience.
With, Delaware Street Capital backing them, McCarty, Gerdes and members of the Location Services team have embarked upon an aggressive strategy to transform the auto finance loss mitigation outsource industry.
Along with trucks ready to be deployed nationwide, another company goal is to become the industry’s first vertically integrated, national direct, loss mitigation outsource provider.
“While Eric and I were at Ally, we often talked about how nice it would be if we could leverage one provider for our loss mitigation outsource strategy and partner with a company that truly had a national presence. We are on our way to making that a reality,” McCarty said.
Gerdes added, “I have always had great empathy for the repossession agent in the truck. The increased demands placed on the repossession agents and the critical role they play in the recovery process is really quite daunting. We want to make life easier on ‘Chuck in the Truck,’ by allowing them to have the best pay, training, safety, security, career path, benefits and overall support possible.”
The strategy of Location Services and Delaware Street Capital ended up on the radar of industry veteran Chad Latvaaho, owner of Repossessors Inc., out of Maple Grove, Minn.
“Our company has had long-term relationships with several major banks, credit unions and finance companies. When Eric and Lee approached us about their vision, it made a lot of sense as I had familiarity with them and knew what they stood for,” Latvaaho continued.
“It also made sense for Location Services as we cover 12 states, and we fit nicely into their nationwide coverage objective,” Latvaaho continued. “Delaware Street Capital and Location Services were genuine from the beginning with their commitment to the repossession industry, and that sold us.”
As a result of becoming part of the company portfolio, Latvaaho will stay on with Location Services as co-owner and regional vice president.
Latvaaho was also a co-owner of Auto Approve, an auto refinance company, that was also acquired by Location Services. Latvaaho’s Auto Approve business partner and co-founder is former PAR North America president and chief executive officer Jerry Kroshus.
Kroshus and Latvaaho started Auto Approve less than two years ago and experienced great momentum out of the gate.
“We are thrilled to be a part of the Location Services team and overall game plan,” Kroshus said. “I started my career with GMAC 30 years ago just like Lee and Eric, so we have a common bond.
“I have been very impressed with the entire Delaware Street Capital/Location Services organization and am excited about the future,” Kroshus added.
Kroshus is also a co-owner and was named chief client relations officer for Location Services. He will be intimately involved in the strategic growth and development of Location Services client relationships.
“Adding Chad and Jerry to our organization is a real positive for us,” McCarty said. “Chad is very well respected in the recovery world and has that entrepreneurial spirit. Like all of our agencies, Chad recovers high volumes in a highly compliant manner and has a massive coverage area.
“Jerry has an incredible reputation,” McCarty continued. “He possesses strong industry relationships and has a terrific track record. He has been very successful throughout his career and we look for to continued success in his new role in Location Services.”
Rounding out the recent acquisitions for Location Services include
— Ron Keys of ARS from Florida
— Chuck Palazzolo of CARS from southern California
— Michael Eusebio of Digital Dog Recovery from northern California
— Emory White of Moxkor, formerly Remarketing of America
Similar to Kroshus and Latvaaho, all four of those individuals will remain with Location Services as owner operators and regional executives.
“I can’t say enough about the experience, dedication and genuine commitment each of our regional executives bring to the table,” McCarty said.
“Each of these individuals are passionate about remaining the very best in the industry, and they are committed to our vision to become the premier national direct loss mitigation outsource provider,” he continued.
“We are definitely raising the bar in this industry, which will drive unparalleled efficiency, effectiveness and compliance rigor for our auto finance clients and their customers,” McCarty went on to say.
Eusebio, Palazzolo and Keys, all seasoned operators in the repossession industry added, “The opportunity to join the Location Services team could not have come at a better time. We were already in the mode of building a large direct agency after announcing RedLine Adjusters at NARS, bringing CARS, ARS and DigitalDog together as one company.
“After listening to Lee and Eric explain their vision and meeting the Delaware Street Capital team, it was an easy decision to join the national team,” Eusebio, Palazzolo and Keys went on to say. “With the leadership team pulled together by Location Services, we are refueled to meet the challenges presented to the loss mitigation industry.”
Additional senior leaders at Location Services include:
— Jeremiah Worthington as chief transformation officer
— Jim Smith as chief risk, data and analytics officer
— Shawn White as chief compliance officer
— Jose Esparza as operational vice president
— Jay Lowy as operational vice president
— Dan Johnson as operational vice president
“We have assembled a dream-team of talented and experienced auto finance executives, which definitely differentiates Location Services in this industry,” McCarty said. “We are positioned well for future growth and remain focused on driving value to our clients, through our consistent and compliant national footprint.
“As we push forward with our national strategy, it is critical that we have the right leaders, consistent and compliant processes, and we remain true to our clients,” he continued.
“Based on the steps taken thus far, the leadership team we have assembled and our near-term plans, I couldn’t be more excited about the future of the auto finance outsource industry,” McCarty went on to say.
On Tuesday, Location Services will be hosting two 30-minute meet-and-greet sessions at Used Car Week 2018 at the Westin Kierland Resort and Spa in Scottsdale, Ariz. One session begins at 10:45 a.m. and the other at 11:45 p.m.
McCarty and Gerdes will introduce the Location Services senior leadership team, and they will also provide a high-level overview of Location Services national strategy and product offerings, which include auto loan refinance, skip-tracing, license plate recognition, recovery, locksmith services, transportation, remarketing, account administration, title processing and product cancellations.
Andy Bluhm and David Heller from Delaware Street Capital also will attend and be present to answer questions.
