Post Repossession Processing – Pain Point For All

For at least the past 10 years, there has been a never ending struggle between lenders and service providers (mainly forwarders and agents) over fees.  Service providers push for increased fees to offset higher costs while lenders typically resist paying more.

While the key inputs into the cost side of the equation (labor, equipment, etc.) have certainly increased over the years, perhaps the biggest impact on costs are the inefficiencies that crept into the overall process.  Nowhere is this more evident than in the post repossession activities.  The diverse requirements relating to personal property handling, key cutting, redemption processing and transport have become a major obstacle to the industry operating more efficiently and effectively.

Lenders, agents and forwarders all experience the resulting pain.  This post will examine some of the key issues and present some potential solutions.

The lenders that we spoke to about the issue acknowledge that there are a wide range of issues but there were two that seem to stand out.  One big issue is the difficulty in communication around redemption holds.  The lack of historical integration between the agent systems (primarily RDN) and the remarketing platforms (primarily AutoIMS) prevents the primary parties (agent, forwarder and lender) from having a holistic view of the status of the vehicle and related workflows.  There seems to be some positive movement on this front currently.  Creating these integrations would help a lot.

The other issue that came up repeatedly in conversation was inconsistency is following the lender’s required procedures.  This is indeed a challenge but it has become such due to the lack of consistency between lender requirements.  Today, repo agencies have to manage literally dozens of procedures around issues ranging from pictures, key cutting, personal property handling, forms, transport, etc.. As a leading forwarding operation, we see all of these differences and, from our perspective, most variations have no meaningful impact on the lender’s risk exposure.  The industry could make huge efficiency strides if the key players could come together and develop standardized procedures around these issues.

Agents we have spoken to about the post repo challenges, add color to the issues:

• Personal Property Handling – While variations in lender requirements relating to personal property is an issue, the bigger (much bigger) issue is what many agents believe is a lack of understanding about the true cost of property handling as well as a misinterpretation of the CFPB’s views around property handling fees.  The resulting financial squeeze forces agencies to spend less on other areas that affect overall recovery success.  Lenders and forwarders would benefit from gaining a deeper understanding of these issues.
• Flatbed Approvals– While some more enlightened lenders have agreed to pre-approval on flat beds for certain vehicles, too many still require specific case approval.  This slows down the process and requires additional administrative resources to manage. Some lenders have imposed extra requirements on the agent that require proof that a flatbed was, in fact, used in the recovery.

All parties would benefit if the industry developed a standardized list of vehicles requiring a flatbed and provided pre-approvals on them.

• Key Cutting – This is another area that the industry is having to spend more resource to manage than it should.  Lender rules regarding the agent’s ability to key cut, the timing of the producing the key, etc..  create all kinds of inefficiencies.  Some lenders require that keys be cut at the auction (whenever possible).  Presumably, those lenders have determined that they can save a few dollars per key by doing so.  However, if the agent does not have the ability to produce a key it often slows down the ability to access personal property, makes it more difficult to move cars around a tight lot and impacts transport issues.
• Forms Variations – Both agents and forwarders have to manage a myriad of different forms required by lenders.  This is not only more costly but it also greatly increases the possibility of error.  As stated earlier, we find very little practical differences in the requirements, especially from a risk management perspective.

These are just some of the highlights.  The list goes much further and includes requirements relating to photo, systems integration, invoicing and communication protocols.

There is certainly nothing new that is addressed here.  These issues have been well known for many years.  It is time to finally seriously address the matter.  Everyone involved will surely benefit greatly.

Download our Infographic “5 Post Repossession Solutions That Move us Forward”

An easy-to-digest visual of the key solutions needed to solve these post repossession processing pain points.