FALR Editorial – State of the Industry

GUEST EDITORIAL

In the past two years, due to mergers and acquisitions LPR providers have solidified their hold on the repossession industry. In the past year, the COVID-19 pandemic triggered many agency owners to close their doors. Those still currently operating are struggling to stay in business. There is no doubt that LPR is an extremely valuable tool but the decision to offer Pre-Recovery Data to direct lenders in the recent months is having a negative effect on the agencies that obtain the data.

Many repo companies depend on those same direct clients to be successful. Right now, repossession agencies fight to survive while the purveyors of the data reap the rewards. This trend is both detrimental and unsustainable.

Currently, the majority of the LPR data is collected by a small portion of agencies and that data eventually makes its way to the entire agent network. This is a major disservice to the agencies that are absorbing the cost and liability of producing that data. In the past, a reasonable amount of time was given to work the assignment using one’s own historical data to locate the collateral. If, the collateral was not located within a certain amount of time, the assignment would then be sent to other LPR servicers. However, LPR providers now dominate the forwarding space, Overtime, the repercussions will be felt throughout the entire industry.

Subsequently, the consolidation of LPR providers has given rise to an increase in repossession orders that are delegated directly to an agency AND being staged on the LPR hotlist on day one. The practice of Dual-Assigning not only dilutes the value of the agency receiving the direct order but also raises the likelihood of a Breach of Peace and increases the lender’s exposure for lawsuits. Most importantly it is inherently dangerous for the recovery agents in the field. Right now, lenders are seeing a decrease in the number of days to repo and an increase in the recovery rates.

The inadvertent deception of metrics will ultimately spell the end for professional recovery companies. Repossession agents nationwide face an existential threat that only lenders can alleviate.

In Florida, several agency owners have acted by powering down their LPR systems. The message to lenders is clear and undeniable. The long-term effects will result in more agencies shutting their doors and result in a significant reduction of data collected by agencies. Allowing pre-recovery data to be available, dual-assigning and day-one LPR staging will ultimately have a damaging effect for profession recovery agencies. The outcome will reverberate throughout the industry for years to come.