While most of us were unaware, in March 2010, the National Consumer Law Center (NCLC) published a report titled “Repo Madness.” This publication touted their proposal for massive national legal changes to the repossession process which, if taken to action could mark and end to self help repossession and possibly the repossession industry, as we know it. Such regulatory changes could cause thousands of lost jobs and closed businesses in the repossession industry, which in no way will help this fragile economy. Before the passage of the "Financial Reform Bill" and the creation of the Consumer Financial Protection Agency (CFPA) this would have seemed impossible or certainly unlikely. However, there is reason to beleive it is far more possible now than ever.
The NCLC proposes a number of changes to the self-help repossession process that include:
· Federal mandates on “Right to Cure” letters
· A provision to require any repossession that is opposed “in any way” by the consumer, to immediately cease.
· Repossessions may only be allowed with a court order
· A requirement that consumers authorized by the courts for repossession be notified when and where the repossession will occur
· All repossessions must be conducted by law enforcement personnel
To press their “Agenda for Reform”, they have published a rather dramatic map titled “Locations of Violent or Traumatic Repossession Incidents Since 2007 That Resulted in Deaths, Injuries or The Taking of Small Children.” This map is littered with tombstones, guns, knives, fists and red crosses to pinpoint the location of incidents. However, if you read the details of this report and these incidents, the vast majority of these incidents occurred to the repossessors themselves and one of the incidents was perpetrated by a car dealership.
While this map appears to have been created to support the need to protect consumers from the repossession industry and self-help repossession, all it illustrates in my opinion is the need for increased penalties to those who commit violent acts against lenders, collections personnel and repossessors. What it fails to illustrate, is the number of repossessions that have occurred over the same period and represent these incidents as a percentage. I can easily imagine the ratios would be ridiculously low. Likewise had they made a similar case against ice cream trucks based upon similar inferences of violence or dangerous situations such as child molestation, truck accidents, drugs being sold and hold ups, it would very likely look worse.
Unfortunately, the media through the years has created a poor and inaccurate public perception of repossessions through imagery like the 1980’s cult classic “Repo Man” and television shows like “Operation Repo” which is a blatant “Jersey Shores” like stereotype of repossessors that recreates and dramatizes incidents purely for viewership. The public opinion of the repossession industry is easily influenced by such images while they are not presented a balanced reality because it does not make good drama and sell advertising time. Let's face it, reality isn't very entertaining.
A dismissive view of injury and death upon repossessors by the media feeds into the mentality of that small percentage of the public that feel vindicated in committing these crimes. News and imagery of the November 2009 death and funeral procession for
murdered Atlanta, Georgia adjuster Brandon Thomas were widely ignored by the national media as a whole and are a sobering reminder of the risks these men and women take and the character they display in life and death. Just as with this case, most repossessor injuries and deaths fail to even make the national news while police frequently dismiss assaults on agents without even filing reports and consider it their cost of doing business.
The reality of the repo business is something quite different from what the media presents. Most repossession industry professionals operate their business with great care to avoid conflict and injury. The liability is far too great and the insurance costs are so brutal that if used, the increased cost of the policy would push them out of business. No agency owner or manager wants to hire a loose cannon, it is far too big a headache. It is simple, accidents happen and as the stories behind the aforementioned map illustrate, it is usually the result of the public’s emotional reaction to their own circumstances that causes these incidents. If they think it's bad now, giving them their way, imagine how law enforcement officers would handle most of the situations a repossessor finds themselves in. I assure you, there would be a high body count.
I was in this industry for several years and know a fair amount about the character of these people. These are extremely hard working people in an underpaid profession that requires long thankless hours with considerable risks. While the nature of their profession makes them an easy target for media and public demonizing, they serve a vital function in the world of lending.
If the proposals of the NCLC report were to be taken into action, we in the collections community would be forced to expend large amounts of time and money mired in an over burdened legal system while collateral continues to depreciate and losses mount. The natural flow of the lending system would be disrupted and losses to the entire lending industry would increase dramatically. The ripple effect would be a tightening of lending standards and higher rates to offset losses. This could further stall auto sales and production causing more unemployment to add to the thousands of repossession professionals directly affected.
While it may seem beyond the realm of probability to most of us that such laws could come to be, one must keep in mind the political environment of Washington, the Czar like authority for broad and sweeping legal and regulatory change authorized to the CFPA and the power of the NCLC to influence.
|
|
 At the top of the short list of appointees for the head of the Consumer Financial Protection Agency is career academic and Harvard Law Professor Elizabeth Warren. Warren is an outspoken opponent of the collection industry as a whole and wrote in her 2006 blog “Debt collections is the new Wild West-Shoot first and don’t ask any questions-Ever.” Her sentiments toward the lending and collections industry seem very much in line with the mindset of her contemporaries in the NCLC and the AFR. If appointed, I can find little reason not to believe that the suggestions and ideals of her contemporaries will find fertile and friendly grounds to plant their roots of reform against the repossession industry.
While the economy wallows in this recession and the well-meaning persons of the consumer advocacy groups desire to shield the public from the repercussions of unemployment and lost wages, one thing seems clear. The bleeding of the economy can not be stopped through public aid and stimulus programs and vocal, opinionated special interest groups reacting emotionally, intend to stop it by using "tourniquet tactics." Unfortunately, once a tourniquet is applied, the limb is usually lost, as will be thousands of jobs and a market of easily available and priced credit. Is it beyond imagination what the response to this lending environment might be?
|
K.W. Armstrong
Editor, CUCollector.com
