Recovery Industry Takes Action

Currently, there is a bill being debated in the U.S, Senate that could literally eliminate an entire segment of the recovery industry.

Recently, a paper was issued from the National Consumer Law Center entitled, “Repo Madness: How Automobile Repossessions Endanger Owners, Agents and the Public”. Although there are some points in the article that are accurate, the majority of the article is misleading and doesn’t represent all aspects of the issues that effect auto loans and repossessions.

Regardless of its oversimplifications, generalizations and misrepresentations, articles like this seem to gain momentum within state and federal legislatures. Currently, H.R. 3126 aims to implement statutes similar to the ones recommended in the NCLC paper and it’s currently being debated in the Senate.

The report lists 55 instances in 2007, 2008 and 2009 in which repossessions were accompanied by violence. The report also says that 2 million repossessions occurred in 2009. Assuming 2009 was a representative year, that means out of 6 million repossessions, only 55 instances included violence. That’s .0000917% of all repossessions. More than 70 percent of these instances of violence involved consumer violence against those attempting to repossess the vehicles – including consumers trying to burn the repossessed vehicle or trying to shoot, knife or run down the recovery agent. Finally, the study fails to mention any of the existing laws governing repossession, including the Uniform Commercial Code which, as enacted in all 50 states, provides that a creditor may repossess collateral without judicial process if the repossession “proceeds without breach of the peace.”

It is important to address the areas of public safety for consumers as it applies to the self-help collateral recovery process, improvements must be made legislatively by the states. There are risks associated with this process and there are individuals servicing collateral recovery assignments that do not meet the requirements (certified, bonded, insured, trained, educated on state laws, etc.) of professional recovery agents.

There are certain lending institutions that base the hiring of collateral recovery specialists primarily on the fees they charge. In many cases these creditors rely on these unqualified individual’s insurance coverages to protect them should the collateral recovery process be violated. Such hiring practices set a dangerous precedent. However, recovery industry associations, like American Recovery Association, continue to educate lenders about legal and proper collateral recovery processes.

Legislation like this threatens car dealers and lenders — and that also impacts the collateral recovery industry. These statutes would put an unbearable strain on our already-strapped judicial system by requiring lenders to get legal approval before repossessing a vehicle and, more importantly, establish expensive, unrealistic requirements for automobile dealers – interest rates, collection requirements – everything would be mandated by this Consumer Financial Protection Agency.

The Brownback amendment (#3309) to H.J. Res. 45, was created to combat this. Jordan Forbes, Federal Government Affairs Manager for the National Taxpayers Union (NTU), recently explained the amendment at www.nut.org. “This amendment would establish a commission charged with submitting to Congress recommendations to eliminate or realign duplicative, inefficient, or wasteful programs. The Brownback amendment would create a structure similar to the military’s Base Realignment and Closure Commission (BRAC), which has been very successful in creating a streamlined, nonpartisan approach to assessing military installations. Establishing a spending commission that possesses the power to systematically review agencies and programs could allow the government to find billions of dollars in savings. In addition, requiring the application of these savings to deficit reduction will prevent tax dollars from being squandered a second time. This amendment would focus on spending, rather than providing cover for massive tax hikes,” Forbes said.

The National Automobile Dealers Association (NADA) is organized a Dealer Fly-in to meet with U.S. senators and urge support for the Brownback Amendment that would exempt auto dealers from the proposed Bureau of Consumer Financial Protection. The proposed bureau would have sweeping powers to control dealer-assisted financing and even commissions for auto salespeople. NADA worked with state and metro dealer association executives to put together a team of dealers that flew into Washington on April 26 and meet with their senators the following day.

ARA is encouraging its members and fellow collateral recovery specialists, to call their U.S. Senator and tell him/her to support the Brownback Amendment.

If you need help locating the Web site of your state Senator, visit: http://www.senate.gov/general/contact_information/senators_cfm.cfm