Direct Agent vs Forwarding Company?
The repossession industry has changed models. Traditionally, lenders and banks would hire their local repossession agents directly. Today, many national lenders use national “repossession forwarders,” and no longer even have any contact with the local repossession agency. The repo forwarder attempts to locate the equipment and hires the local repossession agency itself to go take the asset. This new way of doing business is driving responsible repossession agents out of the business, and is creating physical danger to both consumers, businesses and repossession agents. The repossession forwarders often do not bother to get licensed in the states they operate in. State licensing laws typically define a repossession agency as any entity that engages in business or accepts employment to locate or recover collateral, for money. The repossession forwarders must be licensed, but they are not.
The repossession forwarding model may even increase long-term costs for lenders. Recovery companies being paid reduced rates may not diligently work the assignment, and look for only the low-hanging fruit. For example, if the equipment is located in a remote area, they may wait until they have another assignment there before they repossess. They may give bogus updates just to appease the lender or forwarder. The lender loses money from a depreciating asset. The extra money the lender would have paid for a professional recovery is less than the value the collateral lost during the delay in repossession.