HAVE WE HAD ENOUGH YET? (I know I have)

Editorial

I must be getting old and unreasonable. I just read that insult of a contract offered by PRA. $250.00 for assigning accounts? I know several other forwarders are paying $320.00 or better for first placement Toyota. In fact I work for one. A demerit point system? Welcome back to the first grade kids. Further reading will show their back-charge fee schedule. $500.00 for a wrongful repo? I am sure it is set up that it is the agencies mistake no matter what happened. How much do they plan to pay for the thrill of redeeming THEIR wrongful repo back to their debtor? Check out the c/r in the glovebox back-charge. If the c/r is not in the glovebox, the agency will be charged $100.00! You folks who sign up better hope none “grow legs” at the auction.

THE BEST NEWS IS YOU STILL GET TO DO THIS CONTINGENT!

I think I run a pretty good agency. We have made some mistakes but have always corrected them. Knock on wood we are litigation free and no insurance claims in over 20 years. We are members of ARA ,Allied and CALR. Our equipment is owned and we saved when times were better. Now we recover around 100 cars a month. I have watched our savings account evaporate the past few years. Forwarders came into existence because our industry was wildly inconsistent. Now the pendulum has swung to the lenders being inconsistent. Check out PRA’s individual requirements for each lender. That folks, is a train wreck waiting to happen. It is my opinion the forwarder is the “yes man” who simply crams it down the agencies throat.

I know some of the following comments have been beat to death. Do any of these forwarders /lenders really know fuel is $4.20 a gallon? Tow trucks really get 10 mpg. I know the standard comment is ” use a small chase car” Even if the car is found, the tow truck still has to come recover the collateral. Quite simply, the fuel saved was used up with the additional labor and vehicle expense. I guess this model might work if a reasonable percentage of the cars actually showed. A forwarder actually told me running their charge off work did not cost me anything since my equipment was already out looking for other cars. I was talking about this comment with a friend who owns another agency.. He said the comment might be somewhat accurate, with the time spent uncompensated looking for the collateral. Add to this the update requirements coupled with multiple addresses all over a county this simply is a losing proposition. Another friend that also owns agency mused that we should ask the forwarder if we can finance our $80,000.00 tow trucks for 0% interest with their client. He further commented that this has to be one of the few industries that costs have tripled but the fees continue to drop. Toyota said we are only “allowed” to charge $25.00 for personal property no matter how long we store it. We are the bailees charged with safeguarding, inventory and storage of the property. This takes time and money. Again an agency owner friend said we have to be the only industry that wants to work for free. (or less) He also sent me a copy of an e-mail from a Northern California forwarder that said he needed to make his yard available for “their” key company to make keys for their cars. Those who have key equipment must really appreciate the guy in a van who uses your electricity and yard for free to again remove another way for an agency to try to survive. Luckily he laughed at them, and said he would happily put the collateral on the street and “their” locksmith could coordinate with the transporter to pick up the unit.

I applaud our industry for pushing us to be more professional and compliant. Is it really professional to let our people risk their a** for minimum wage or less? Please resist the urge to tell us we need to become more efficient. Any agency that has survived the last four years already is running a pretty tight ship. One of my owner friends said to me unfortunately somebody will do our job cheaper. A long time ago an old repossessor told me “Kid I like this job but not so much I am willing to do it for free. I don’t need no more practice” I now truly know what he was talking about. I guess we are finally becoming united as a profession. WE ARE RUNNING OUT OF MONEY!(in some case people have run out) For my agency it is no longer “I wont work for that price” now it is simply “I cant afford to lose money servicing your work” I love this business but cant keep losing money like the past several years.

I cant and won’t be a forwarders skip/charge-off repo company. If you only send me old recycled work I will ask you to close and reassign the accounts. If you cut us off, I guess we won’t work for you. Please remember we work in several programs and often get the same old addresses from different forwarders. My relationship with Burns National was a casualty of this. If you send us accounts my crew can recover then we will gladly give our best effort on skips and charge offs. Please remember you don’t get one without the other. Door knock or kick in? Here is my industries funny little secret…Contingent? a door knock is usually done at 30 mph. Pay a positive resolution? the agent actually has some incentive. You will likely get more information than you wanted.

I often wonder how many forwarders/lenders work contingent? Give us accounts we can recover and you put us in a position of taking one for the team on the tough accounts. I was at the IRA Chicago conference and an auction forwarder was put in a position of defending his company, He said we were all “partners” and if we needed something all we had to do was ask. I don’t know about you, but I have a pretty tough time talking to a human. He claimed they do some “light skipwork”.  What the hell is that? In case you are wondering, it is the multiple addresses that you are required to update every 48 hours. Thanks but please don’t help like that as I can’t afford the fuel. Yet another agency owner/friend rightfully feels like we are on separate teams. He told me that we often have to remind the collector/CSR not to talk to us like a debtor. Double assigning accounts used to be a abomination. Now it is a joke. This same friend collected a business card off the front door of a vacant house. This was a Toyota first placement account! Nice…for $250.00! In fairness not all forwarders are this way. In fact, I have had a good relationship with Remarketing Solutions for several years. They are demanding but they are fair and reasonable. Unlike some of these forwarders they actually pay their bills without having to twist their arm. They understand I won’t put up $1500.00 for an impound get a PD release and do it for a vol and wait 90 days for my money back. I’m sure they either have their own repo company do it or send to one of the others who like working for free.

I know this is more of the same whining. I am only sharing some of my thoughts as I have to approach these changes with a business perspective. I hope our industry survives. CPFB is undoubtedly going to change the “money for metal” mentality these forwarders/lenders push. A lot of people think they will treat fines and lawsuits as a cost of doing business. Most would agree that CPFB has enough juice to make even the big boys sweat. I am sure many agencies wont survive and I hope it is the bad apples that go. If you want an agency that is legal,compliant and passionate. We will bust our a$$ for you. We just don’t work for free! (or less)

 

Just my thought and thanks for your time.

Scott Patterson

Patterson Recovery- California

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12 thoughts on “HAVE WE HAD ENOUGH YET? (I know I have)

  1. I think my topic kinda expanded. I was primarily trying to bring some attention to what I see as some unreasonable contracts. Just to be clear , I am a proud member of the MVTRAC Advisory Board. MVTRAC is in fact a forwarder. We initially signed up for the systems based on the availibility of our own historic data and $400.00 camera hit repos. I did vote to reduce the rate of camera hit repos. I heard cool comments like “what did it take to get you to drink the kool-aid”. I voted in favor based on some simple facts. The main fact was post charge off repos were running thin.I do understand completely that our market is dictated by competition. To be competitive in National accounts unfortunately it is price driven. I can sharpen my pencil to be competitive but only so much. MVTRAC is a $300.00 live hit repo. It is contingent and the work is often skip work. I cant speak for everybody, but my agency treats camera hit just for what they should be. LIVE HITS! meaning I dont run 5 bulls**t addresses and update them every 48 hours! In fact we don’t run ANY addresses, we literally trip over the cars. For $300.00 I can secure the collateral provide a condition report and some pics.. I know Scott Jackson, he is a good guy,a friend and very passionate about his business. When the rates went down, I actually ordered another set of cameras for my personal repo truck. This was because at 50 years old I am working out of my truck as much as my office. This does work for my agency but running $250.00 Toyota accounts that have been recycled and run to death does not. I hope this shows the difference, time,fuel and labor!
    My main concern is have we had enough? If $300.00 is the magic # then we have to decide if it works as individual agencies. MY piss off involves ancillary fees that used to help cover some of the freight, For example WE are responsible for personal property. It should be between us and the debtor. Quit making us trade keys for personal property if you dont want to help cover some of the freight. I know for a fact that I wont do a $250.00 repo with all of the included requirements and liabilities. It is my opinion the market (and CPFB) will eventually help the pendulum swing our way a little bit.
    Thanks,Scott Patterson

  2. Sam

    You’d be correct with our competitor, but we split outside revenue with the agents and they see every sale transparently in RecoveryManagerPro.com so you have an ongoing and real time accounting.

    What if you bring us a deal for revenue? Same thing, you get paid as if you owned, built and invested your hard earned money into creating the best ALPR model available!

    With us, run your cameras more and you’ll actually get paid from revenue outside the recovery industry and you see it, it’s real, it’s tangible and there’s no human error possibilities since it’s automated in programming.

    Stop complaining if you don’t know the facts, or you’re ill prepared to actually run the systems the way they need to be run to make money, or you’re not committed enough to think outside the box and bring in deals that benefit the industry and your revenue sharing bank account!

  3. Interesting Article! The High Volume/reduced rate scenario proves that we repossessors are paying for the lender lawsuits. As such the “Pie in the Sky” BIG LAWSUIT that will make lenders change their ways will never happen. Now with increased scrutiny being pressed upon lenders by the CFPB they want to invent a system of fines for repossessors to pay for that. MY CRYSTAL BALL SEES A DAY WHEN LENDERS WILL BE DRIVING THEIR OWN TRUCKS, BECAUSE I WON’T BE.

  4. Dear “Fed Up!!!!!”

    I responded to this because I actually care, I actually have a comprehensive perspective, and it is applicable to our company and our agents. If you’re not going to use your real name, you shouldn’t be allowed to post anything. It’s cowardly, if you can’t express your viewpoint from your perspective and state who you are and your experience, save yourself the embarrassment because everyone is scratching their heads in wonder and thinking, “&%$#@!”

    Let me first address your post however, by stating the obvious; you don’t have to accept the assignments. You have a choice to accept those that are efficiently located near your current addresses being run, located by your office or near some other convenient location and decline those that are not convenient and will cost you more money to run. You certainly won’t hurt any feelings, and although I can’t speak to what PRA, PAR, Primeritus, ARS or other Forwarders will do, I can say that our folks have had active discussions to make sure they’re being accommodating in giving Concierge customer service to the industry even when assignments are being declined.

    Let me now address your 13 car scenario:
    If you’re running assignments you “hit” and recover 26($7800.00) cars versus 13($5200.00), you’ve just increased your gross on that 13 by 50% Yes, there’s an argument you have static costs of insurance, manpower and some may cost the same fuel, but our analysis has shown that agents are spending a ton more “average costs per repo” than those that use our efficiency tools. Those that are not, more often than not, it’s because they’re not utilizing the available historical mapping, routing, leveraging the right skip tracing or address verification methodologies and more.. Yes, as Tim stated, there is added opportunities for risk, just as there are added opportunities for revenue. Run smart, use your tools, communicate with everyone and anyone that can add value to your methodology, and put systems in place that create profitability assurance mechanisms. Tim is just one example of an agent that sends me direct communications, and my team works on making changes to the systems to accomodate his requests that also get unveiled to the rest of the industry. Tim is just one, of many! In other words, I’m not just talking and blowing smoke, we’re actually doing what we say we’re going to do and we do it every day, day in and day out. I treat our agents like the clients they are, and I and my team give them unparalleled concierge customer service on every level, and even when it’s not related to our company or our accounts.

    Let me address our changes……. again. It was the industry, over 100 agents in fact, that came to me asking and some begging for greater volume. It’s not my fault, the other Forwarders charge the lenders less than the $400.00 we were paying our agents. If you do the math on originations, and you do the math on repo totals for 2011 and expected Year-End 2012, with an expected uptick of only about 10-15% for 2013, you’ll come up with the same numbers we came up with. You’d find, there’s no opportunity for growth for our agents or for MVTRAC, without competing in the volume market of the business. Despite competing with some Forwarders paying $250.00 per repo, (which is not PRA’s initiation but more than likely they followed suit because there are a variety of Forwarders paying $250.00 and getting results) we decided to pay above industry average of $275.00. We visited with clients for 18 months, and took the numbers and overlapped them onto real statistics, and we found the agents make more money with less effort. Of course this is subjective, we took a standard cost ratio we were able to determine from real agents using real math, but there are some of course that might be spending far more and that’s an anomaly we can’t use in the math.

    To address your statement about “How much money is enough”, let me tell you that team analyzed a few clients that don’t allow us to bill them much above what we pay our agents. I can tell you that it’s much more expensive to run our business than apparently you believe that it is, and the decision to service at least a couple clients is to benefit the agents revenue, and not our EBITDA. Yes “Fed Up!!!!!” – we made the decision to pass-through the revenue, for the benefit of our agents, that’s how little money is enough and I didn’t create the environment and I’m not crying about spending my money to benefit the industry on many programs we’re developing while making less profit than we could have made had we made the decision to lower our pricing 5-10 or 23 years ago.

    Of course, with the new model we procrastinated implementing for the sake of the industry, the agents should actually grow at a rate of 20% and our target for 2013 is between 20-30% growth. Now, if you’re not targeting your business strategy through every moment of 2013, you should readjust your measurements and create a model that fits the realistic expectation.

    Lastly, I sent my clients the post before this response and several had already seen it! It’s not a surprise, the market bears what it bears. A couple of my clients asked me why I cared so much, and why I’d waste my time responding “since communicating will not work in this industry” You have a choice! Don’t accept PRA’s $250.00, PAR’s or any others if you’re not primed to be profitable at their rates and they will have to find agents that will. Unfortunately, there are agents that are causing the market price of a national average and they are primed for the assignments and unfortunately that is the market we all compete within.

    In the meantime, I’m going back to helping our agents make money with less effort and even you “Fed Up!!!!!”, can contact me directly and challenge me directly verus through an alias and I’d never embarrass you by revealing your name to anyone.

    Stay safe everyone, and keep your head up, brighter days will get here exponentially.

  5. Well put Scott
    On on other note MV_TRACK and DRN will have their agents working for $250. car before you know it. All you are doing is making more money for them when they sell YOUR history YOU pay for the camera the truck or car and driver lets not forget fuel and insurance . They collect the bucks.

    Sam Corolla
    Southern Adjustment Services Inc.
    Florida

  6. I am not sure why Scott Jackson even responded to this. His response has nothing to do with the purpose of the article. It appears with his response that he is telling us all we have to work for the $250 but just don’t put as much effort into working the account as he states “Everyone for now, should focus in efficiencies, running the right accounts and the right addresses,” I wonder if his clients are reading this? Scott Jackson told the entire MVTRAC community that YOU HAVE to work for $300 now but your volume will increase to make up for it. As Tim, said how does that statement make any sense. Scott cuts the fees by 25%. Therefore, if you were repossessing 40 MVTRAC cars and getting $400 you were billing $16,000. Now, you have to repossess 53 cars at $300 to bill $15,900. It doesnt take a rocket scientist to realize that if you have to repossess 13 more cars to make the same money, you are LOSING MONEY!!!! That aside, the lower pricing strcuture was kicked in immediately, yet the MVTRAC hotlist has not gone up. All MVTRAC “subscribers” are still picking up the same old Santander cars but now for a $100 less. Yet, Scott Jackson is still billing the same to Santander!! When is enough money, enough? These contracts and demands are getting worse by the month and it’s all because there will always be someone out there that will SIGN them. The simple fact is that MOST Lenders do not care who is repossessing their cars. We have all seen the lawsuits and violence increase, yet nothing is being changed from the lender side. Their solution is not to find better and more professional agents, it is to lower the fees more to offest the cost of the legal settlements. Maybe when the CFPB shuts one down it will change, but probably not.

  7. Recent changes in lender contracts hold MVTRAC responsible for the provisions in Scott Patterson’s post. There are now fines for failing to notify of a repossession timely, personal property sheets, complaints and more.

    Our new agreement to the agents will be reward based rather than to focus on penalties. The point the industry should take from these changes is that the CFPB has increased the costs to the lenders to do business far more than the agents and Forwarders; but the agents and Forwarders feel the burn far greater than the lender.

    Had we risen up as a country and voted out Obama, the CFPB would have been dismantled and costs might have normalized. I’m not going to say the Forwarders don’t have a responsibility, MVTRAC is taking on some of the costs rather than passing them down to the agents; but everyone in the industry needs to understand this is the greatest evolution in history, happening right now.

    The lenders are giving us time to fall inline with the contracts, and we will be giving agents some time to fall inline with the contract. The changes to the industry are a call to “adapt, conquer and overcome” and to “adapt now, or die”. I grew up in this industry and everything we’re doing in development is to save the agents money with added efficiency, RMP integrations with MVTRAC, RDN, PRIOS, and iRepo help to make that possible and more integrations are imminent.

    Our Recovery Industry Advisory Board will get the first draft of the new agreement, and Scott Patterson is a board member, and all will give their input to the new language. It’s not optimal, but there are changes being driven by CFPB and yes, the lenders are putting the contracts out but there is something to be said about “don’t shoot the messenger”

    Forwarders, Recovery Agents, ALPR, Transporters, Online Auctions, On-the-Ground Auctions, there is no related industry that’s not impacted and will be further impacted. My hope in writing this post is to better communicate with the readers and encourage greater overall communication with the Forwarders and within ourselves as the Recovery Industry so the changes are not a shock to the overall system.

    Everyone for now, should focus in efficiencies, running the right accounts and the right addresses, saving costs is paramount and communication is critical. My email address and desk phone is open to anyone, and I’m always available for discussions; those of you that contact me regularly know I spend a great amount of time helping others, so feel free to communicate with me about anything good or bad, I’m as prepared for the challenges ahead as possible.

    We are working on a very comprehensive webinar to the industry, stay tuned.

  8. Scott,
    Thanks for putting this topic out there as it appears that our industry is being THREATENED daily and really needs to be addressed. I understand that the banks went to BROKERS/FORWARDERS but that’s a whole different post. I know and understand that our industry will never be profitable as it once was but lets just see if it is even fair?

    I am so tired of BROKERS/FORWARDERS telling me about how we will cut your prices but the VOLUME will make up for it??? That is very, very bad business if you are in the transportation industry as far as fuel, equipment wear, paper, toner, insurance, damage risk etc. I want one PRES, VP etc to explain how volume of touching or recovering 2 cars for
    $700 is equal to having to recover 3 for $750??? You have more chances of error the more units that you have to touch. COMMON SENSE! That is failure for the BROKER/FORWARDER as well as the agent. Let me tell my agent ” hey while I’m asleep and your out risking your life doing a repo you need to repo 2 more cars and make the same amount as we need the VOLUME.

    When these BROKERS/FORWARDERS want to negotiate these VOLUME contracts with banks they should bond with Repo Agencies that have been in this industry for 10 to 20 years plus to see what we feel about work harder for the same or less pay. We could given them our advise and experience as we have not been doing this for a few years with only banking experience. We as agents/ owners know the fundamentals of how the recovery, expense, damage and cost associated with a safe, profitable, and legal recovery. I’ve only been in the industry for 23 years and have always believed that “ALL MONEY IS NOT GOOD MONEY” I enjoy working for my clients that pay $350 per unit and a close fee if I actually resolve an acct..

    I saw this last hit to our undustry coming and was like here we go again. We watched as Toyota restructured their work and every BROKER/ FORWARDED attempted to sign up other agents for INVOLUTARIES in the 200’s. You get what you pay for, for that price do not request an update, or expect that you will have a profession agent recovering your unit.
    STAND SOME GROUND.Guys I know that we are all trying to survive all these hits but please . An involuntary should not in my personal opinion be less than $350. I argue with collectors daily that want $250 for a car with a tracker! My arguement is always the same. That tracker car is going to be more work as I have to follow it around the entire county until the debtor gets out.
    STAND SOME GROUND. if you are providing a good service they may leave and if they return good.If you continue to given discount repo’s you will just wear out your equiptment , yourself and make the same amount of money.

    My post is not saying that all BROKERS/FORWARDERS are bad but lets go by the statement that Scott made pertaining to personal property. I know that there have been agents that have abused the fee’s amount etc, but please show we case law, state law etc where you are able to dictate how much I charge. As time would have it , people live in their cars. We are required to safely store and inventory personal property and BROKERS/FORWARDERS allow us $25 WHOLE dollars. I’m confused as if the STATE DEPARTMENT that regulates us does not demand that we store, inventory, box, bag, keep secure, and dispose of property for free then why are the BROKERS/FORWARDERS doing it? This was an additional fee that kept us in business. We always gave this fee to our agent to show appeciation for 0 incidents of theft.

    Ok BROKERS/FORWARDERS lets address the storage issue . We all know that we will never see the storage fee’s that we saw 20 years ago that even the banks paid but that is fine. FREE storage what is that?? if i call my mortgage company do you think they will explain that to me?? if I call any tow company in my state do you think they will? As far as working with BROKERS/FORWARDERS on “FREE STORAGE” I get it but how is that they are dictating how much we charge the debtor and requesting free storage,even if we are charging 1/2 of what the local tow companies are charging. The POLICE impounds that we front the fee’s for paid back by BROKERS/FORWARDER were $50 a day but we can’t charge the debtor??
    Our lots that have to be site inspected, guarded, gated, secured are not worth us charging your debtors a fair amount to maintain??

    I hope I did not seem to rant, but I just don’t undertand where this INDUSTRY turned to AGENCY vs BANK(BROKERS/FORWARDERS)

    I agree Scott ” We are not the DEBTORS! ” so treat us as we are on the same team.

    BROKERS/FORWARDERS for those that are fair. THANK YOU!!

    BROKERS/FORWARDERS BANKS AND CREDIT UNIONS we are on the front lines working for you, don’t expect excellent service when you pay, talk and treat us like DEBTORS……….

    Tim

    Secured Collateral

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