Repo Run

Evolving Technology Is Changing Repo

by Mark Lacek

Iwas excited about attending the NARS conference this April in Dallas, Texas. On the Monday following my return, I was just as excited to sit at my desk and pen my thoughts and comments for this month’s Repo Run column. Just as I was about to begin writing, I was interrupted by the sound of a fresh email landing in my virtual mailbox from John Lewis

Lewis is the president and founder of masterQueue and Find John Doe. His blog, titled “The Evolution of the Repossession Industry,” hit the ball out of the park. Following are some key excerpts from his work. ***

As the books close on the North American Repossession Summit, I walk away with hope and optimism for the industry I’ve made my living at for the past 35 years. Being a Cubs fan, optimism is in my blood, so proceed with caution as I tell you my thoughts on the repossession industry and technology as a whole. …

We’re starting to see a larger impact in the industry by a variety of technology vendors, and when you put everyone together, great things can and are happening. Given the constant regulatory scrutiny, and especially in light of the tricky waters we all have to keep trying our best to navigate, events like this are critical and should be mandatory on every lender’s calendar. …

The continued evolution of the professionalism [of repossessors] the lenders are looking for has arrived into our industry, and those behind the times may want to take note. Additionally, the advancements in technology continue to become more evident at each NARS conference, and I believe this will be the main topic of opportunity for lenders and repossession companies as we move through 2016 and head back to NARS again next spring.

Some of the requirements from lenders and advancements we’re seeing from technology companies in this space are game changing, in similar ways to … the game being changed in years past: • We couldn’t rely on picking locks and slamming out ignitions once computer chips and laser keys hit the scene, so now everyone has to repo with tow trucks. • We went from no phones, to pagers and pay phones to brick phones to computers in our pockets. • We used to call in orders for repo (really!) and then we faxed them in, and then email and now we use assignment platforms. • Lenders used to be in every city, and now they’re mostly in Dallas, or other select regions. • Skip companies began to hit the scene in the late ’80s. • Forwarding stepped in to manage the repossession process in the mid ’90s. • Public records data became more readily available in the mid 2000s, replacing books and microfiche records. • Skip-tracing software came on the scene in 2010, with LPR becoming prominent around the same time, and routing software came on the scene last year.

Now we’re seeing Big Data, Predictive Analytics and Automated Workflow being introduced to our industry. Sophisticated telephony is being integrated with software that contains compliance rule tracking that becomes a must-have if you want to make compliant phone calls. We’re also seeing a variety of other advancements, including: • LPR advancements that are now starting to leverage historical data on the location of where a car has been and where its’ likely to be seen if you don’t find it where it’s supposed to be.

• Tow trucks have improved from sling trucks with bench seats with cigarette burns to vehicles you prefer to take your old lady out on a date with; they’re that cool, efficient, and luxurious in many cases. • Skip-tracing software that builds a checklist of steps that should happen on every skip account at an early stage to help manage the process vs. having everyone do it “their way,” which is hard to describe, let alone manage. • Routing software that can fully automate the direction an agent goes when working to ensure efficiency in the field. This allows repossessors to run deals vs. spending time looking at deals to choose what to work; working deals that make no sense to working deals based on historical and predictive data analytics. • Technology that will eliminate repeated and worthless field updates. Geo-stamping the address when its actually ran, forcing an automated update back to the lender so they can verify the agent really ran the deal and didn’t fib about it.

The levels of compliance that software provides … creates many opportunities we’ll see become realities in the coming year.

If you read all the restrictions placed on repo agents and how they work assignments by a large, leading subprime lender (who got slapped pretty hard by the Consumer Financial Protection Bureau), you know why this is a game changer.

Telephony products that give the office and the field staff click-to-dial capabilities with full caller ID, cell vs. landline number scrubbing to know who you’re calling before you make the call, record and store the call in the account notes for easy compliance and training review, and more importantly, tell the user if you are allowed to even call that number vs. the myriad regulatory compliance laws.

These rules keep coming at us with the same intensity of Mike Tyson in his prime.

Based on something as simple as the lender or the first skip company already called the brother, and you are not supposed to call the same guy back—but how do you know not to call?

The problem is if … the lender doesn’t mandate everyone work in the same software so everyone knows what’s happening in a system that can be monitored and enforced. … Then the CFPB will keep lining their coffers with massive fines to the lenders until they realize they’re serious about these rules and the enforcement of them.

The answer isn’t to have the skip companies and repossessors stop making calls, but rather to make sure they work in a platform that tracks it. …

So as you can see, our industry is evolving, and it will continue to innovate, consolidate and evolve, which are all healthy signs of an industry moving forward. …

The last thing I will leave you with is something no one is really talking about yet, and that’s software consolidation. Everyone would like to work in one system, but given the tools needed to do all aspects required to validate compliance, assign, locate, repossess, transport and remarket

each vehicle—and given the depth of the compliance, security and regulatory requirements that now must be followed—we are starting to see things change in terms of integration and lender requirements when it comes to software where their customers’ [information] reside, or the software their trusted vendors use. The game has evolved to “trust, but verify.” This is an interesting juncture as we await the arrival of the CFPB into our industry in a direct manner that focuses on repossession and skip tracing in addition to debt collections.

We saw a lender client of ours recently kill their deficiency collection outsourcing program cold, and the main reason was the fact they didn’t feel they could spend the money needed to inspect, audit and certify every different software platform all their vendors used, which is where their customer data was residing. Many of these platforms were one-off, stand-alone proprietary systems. …

The expense to audit each individual software containing the banks’ customer [personal info] included costly code reviews, penetration testing, and reviewing thousands of pages in compliance policies and procedures and then calls, meetings and site visits to ensure the policies were all actually being done. When they found out that money went right into their budget as a new expense line item, they quickly realized outsourcing no longer made sense as there were so many different platforms the vendors were using that had to be audited.

They then looked at their options: • Find one software that more than one vendor used and only allow vendors to work in that one platform as they would only have to audit one, or maybe two platforms. • Moving all efforts in-house and eliminating outsourcing (not likely to happen in our industry as I personally believe Forwarding and Skip are here to stay). • Putting the files in a drawer and doing no deficiency collections as it may not be worth the expense and the risk (except they have to repo the cars as the losses are too high not to).

They ended up choosing a combination of solutions that included:

Writing off low-deficiency money owed, putting those files in the drawers and writing off the loss. Due to CFPB mandates that lenders are responsible for the lifecycle of the loan, they can’t even sell the debt any longer as they’re responsible for the debt-buyer’s actions.

Building a scoring system to see which accounts were more likely to be able to be collected, writing off the ones they deemed uncollectible based on historical results, and then building an internal team to work in one system that they could require their vendors to work in as well, cutting off many vendors and consolidating down to only a few.

Right now, there are a lot of systems where customer data resides, and there are still companies where agents work off paper assignments on clipboards. …

Unless you like fighting Mike Tyson, its best to find a way to move forward with technology if you are a repossession agent, or you will be shut out soon.

***

Thanks John Lewis for your views of the future, as well as a glimpse into the past, of our repossession industry. To read his entire column, “The Evolution of the Repossession Industry,” go to www.linkedin.com/pulse/nars2016co ming-you-like-mike-tyson-his-primejohn-lewis.

Editor’s note

John Lewis is president and founder of masterQueue and FindJohnDoe .com. He has 30 years experience at corporate and entrepreneurial levels in collections, compliance, skip tracing, repossession, recovery management and software development.

Repo Editor Mark Lacek authored the

Certified Commercial Recovery Agent certification program and has more than 30 years of recovery experience.

He is the former editor of “Professional

Repossessor” magazine. Email him at Mark@commercialassetsolutions.com.