Looking at the possibility of 3 million repossessions annually through the recovery lens

(upbeat music) - Hello again, everyone, and welcome back to the Auto Remarketing Podcast. This episode originated from use car week 2025 in Las Vegas. It's a presentation entitled The Recovery Lens. Practices in Innovation in 2025 and beyond. And it features John Sibit of RDN and Courtney Osborne from DRN. Now let's get to the conversation. - Well, thank you everyone for coming. I know it's about to be cocktail hour, and we've lost a couple already. So thank you for the guys that actually did show up for us today. We are going to talk about everything over the last year that we saw from adjustments in Linder Strategy, whether they're using direct agencies or forwarders, and how that's impacting the tech world, forwarder world, data world downstream. So I know this man needs no introduction, but we have known each other for over a decade, and we have 30 minutes to fill, so I'm going to add some stuff here. We both started in the forwarding world, and so we've seen the changes now over two recessions and how adjustments have really knee jerks sometimes may changes to our worlds and cause some mergers, acquisitions, some companies to not make it through. And so the stress on the network, how we can help support them, is something we definitely want to talk about today as well. John, you have a unique perspective of seeing all of it, about 99% of all recovery business goes through RDN in some form. So what are you seeing as far as volume trends today? - Yeah, first I want to start with a story, so I'm throwing Courtney a curveball here. She mentioned that we've known each other for a long time, but Courtney and I have known each other for roughly 15 years, so I'm aging both of us a little bit. The first time that Courtney was at the CCUCC conference in Reno, Nevada, and at this point, I'm basically a kid, or that's how people perceive me as, and somehow I was throwing a conference badge in a plane ticket and said, "Go get 'em, son." Which I do want to give a shout out to Jerry Crosches, he's inducted into the Use Car Week Hall of Fame, as well as Jose de Agado, because they were always really focused on me traveling, not just me, but the team, and attending conferences, getting to meet people, face-to-face, visiting clients, and they never saw a conference as a ROI, or how much business did you drum up? It was all about the connection and being there and being present. So my goal for the week when I met Courtney was smile, nod, and hopefully nobody asked me any questions, 'cause I didn't know the answers, and the acronyms were already way over my head, 'cause we love acronyms in this industry. - You love them. And one of the first people I meet was Courtney, and I realized really quickly that she knew a lot more about the business than I did, and I learned that we were competitors. So she was nice enough to introduce me to fellow peers. So that was my first interaction with Courtney, and if you'd tell 15-year-old, or if not 15-year-old, but 15-year-old Courtney and John, that they'd be on a panel, solving all the problems of today's recovery industry that used Car Week at the 430 panel, we probably wouldn't have believed that, but it's really nice to be here. I think Courtney, I think Cherokee Media for putting on such a great event. I don't remember the first question you asked me, 'cause I told that long-winded story, but I thought I'd eat some of it at our time, and how long I've known Courtney. - I appreciate that, and it does show that relationships are more important in this industry than anything. You never know where people are going to end up and being kind to your competitors, and especially people that are coming up in the industry and have a lot to learn and are willing to that we give them a chance, so that was very sweet. Thank you. I asked you what you're seeing for volume recovery-wise this year, and then just some predictions into next, just. - Yeah, speak on specific numbers, but we are seeing about a 6% increase year over year when we look at 2025 compared to 2024, but that is up 20% from the year previous. So we are absolutely never seen as many repositions in the industry before. So very record high number of recoveries. We are seeing recovery rates normalize back to what I'll call 2019 levels. That's really the last year that we kind of measured things 'cause 2020 in the COVID, and we really took a big hit in 2022. I think any lender here, any agency here, any Florida here, 2022 is kind of where we hit the bottom in terms of overall recovery rates. We've seen more agencies come back into the market, but we did lose a lot of recovery vendors from 20 to 2022. Not only did we lose a lot of recovery vendors, the staffing at those recovery vendors was drastically reduced to meet the volume of the time. And so there was a long ramp up time of being able to employ, get back to full capacity, that we are definitely reaching full capacity with a total number of repositions, like I've mentioned, 20% over 2023, and up 6% over last year. - With that, I know it sounds like a positive and we're all looking at this curve and saying recovery rates are back and they're strong, but it is interesting that they're stagnant. We have a lot of tech that we put out, we've changed a lot of strategies, there's been a lot of conversation whether going direct or a hybrid model is going to improve that. Now we're seeing some economic articles come out saying that the 60 plus day past due bucket is not only the highest it's ever been, but typically they're going past due twice and charging off more quickly than ever. So with that normalization that we're seeing just in recovery volume and the strong network, I do think a lot of the changes in strategy are keeping it from really hitting that next level of actually improving the recovery rates and the days to repo. - Yeah, I would say on, in terms of recovery rates, it's a really interesting dynamic of it. Sounds very simple, but it also depends on how you're measuring recovery rates. And whether you're looking at that a rolling basis or you're looking at an static basis in what time frame. So if you probably ask some forders and some agencies in the room, they could say, well, recovery rates might be down. Well, maybe to them they're down because they only get to see that VIN for so long. But in our world where we get to see the life cycle of that VIN, as it translates from one vendor to the next to the next, and really looking at the life cycle of the VIN, we see the normalization of recovery rates where agencies might say, well, recovery rates are down. So when we measure recovery rates, it's really important to ask, well, how are you measuring it? How long are you measuring it? Because everyone might have a little bit of a different answer on their overall recovery rate. - That makes sense. You mentioned the recovery agents coming back and there's more coming into the network. What are you seeing from a volume perspective and do you think with the three million about repossessions were expecting to see next year that we're going to be able to handle it from an agency network standpoint? - That's a really tough question as we've never seen volume so high with the, because we're really close to the number of vendors that we had back in 2019. But that number was 30, 35% lower than the volumes today. So we're recovering the same amount of vehicles with close to the same amount of agencies. Now, to get down to employees, number of trucks, we're unable to measure a lot of that. So to us, it kind of looks like we're at a point that we've never been before in terms of overall vendors and then the total amount of volume. So I think it will be interesting to see what 2026 brings. We have seen some interesting analytics and going back to recovery rates. The biggest decline that we've seen through our system is credit union recovery rates have drastically dropped over the past five years. I think that's because credit unions took on a larger segment of the business than they ever had before. And maybe they didn't have the infrastructure. They went from a direct lending model to an indirect lending model as a completely different customer base. So that basis has gone down more significant than other portfolios. I know it's hard to say if they can handle the volume that we're going to see, but there are some signs that there might be an issue with the number of declines that we're seeing across the board, the run frequency. What can you share from your standpoint you're seeing trend wise on that? Yeah, and it's going to be interesting because I don't know if we have a volume problem or we have a priority problem in terms of what the agents can handle. It's almost what are they going to run? What do they decide to run? If you're not aware that the decline rates in our industry are really, really high, if you ask. Especially if you interact with your 40 partners, if you use them, the lender may say, well, I don't get a lot of assignments declined. They don't see the impact that's downstream with the forders. We're talking numbers from 20 to nearly 40% of all overall assignments are declined. And that's dependent from lender to lender, subprime to prime, credit union. There's so many different factors of that, but as an overall industry as a whole, 20% of all volume is declined. We've seen some stats thrown around, and I know it's hard to quantify, we're working on it, but it seems like from what we've heard, about 70% of the reap of volume out there is going to direct agencies now. So that bucket of what forders are all kind of fighting for is down to 30%. And to your point, they're buffering those rejections when the client's actually seeing them. And this is also causing right delays in repo. We're going through that process, especially if they reassign it, where we're having to find an agent to run it again. And there might be a second rejection down the line. I think on a positive note forwarders really have had to improve their pay, their processes, their relationships in order to compete in that small space. But I think that is definitely pushing that lenders have to understand what is impacting those agencies in order to be prioritized at all. They're really going to run that direct assignment for who has the least SLAs pays the most, it's the strongest relationship, especially because they're getting so much of it firsthand. - Yeah, and we don't have exact numbers of direct versus forwarding. It gets really complicated in our system to measure that accurately, so I don't want to give out false numbers. I will say I think there's a bigger sentiment of the idea of going more to a hybrid model than ever before. That doesn't mean a drastic change, but I feel like there's a more openness, even those who have been completely forwarder versus direct. I think there's some openness to it. And when you talk about the rejections or the declines, again, maybe it's not a volume problem, maybe it's an assignment, reassignment tier problem, because agents are more choosy, because there's so much volume, and I know that assignment's gonna be reassigned. The frequency of the runs goes way down, and to combat that, lenders have gone to, well, if I'm not gonna get as many runs, I'm gonna send it to a new vendor. Well, I'm gonna send it to another vendor, and then I'm gonna send it to another vendor. So we've got some lenders who have 10 plus tiers, so that means they've assigned it nine previous times, and for Courtney and her team to get an assignment that's been assigned nine times, and even the fourters may reassign that assignment. And when we're looking at 20 plus times at that VIN, maybe potentially could be recycled. So there's, again, do we have a volume problem, or do we have a tier assignment, reassignment strategy problem? And I think every lenders gonna be different, right? I think you have to look at your own portfolio, talk with your partners, but they're, especially when you get into some of those higher tiers, we're talking three to five percent recovery rates, with a lot of manpower, a lot of resources spent on those very aged old assignments. - Yes, absolutely. On the four-order side, it's up to 40% of the assignments that are going out are being declined, rejected, and to your point, when there's another tier, we're going through that process, again, and essentially just wasting time. They're not only prioritizing from the lender direct. They're prioritizing when the four-order sends it, they know who the lender is as well. How can lenders be selected or have a higher acceptance rate with agents using RDN? I'll do your shameless pug. - So on my last panel, we were talking about what are some of the biggest bottlenecks that agencies are facing in lenders and four-orders, and I think on the agency side, what we've really focused on is allowing them to be more efficient with the same amount of staff, creating processes for them. For example, we have an RDN Pro which allows them to auto-accept certain accounts, and not only can they auto-accept certain accounts, they can automatically add a flatbed fee. If it's in a zip code where they require mileage, they can automatically add that mileage. So a lot of those front-end processes, and now we're working towards the back-end processes, which is auto-invoicing. And so we were creating rules to say, if I work for MV, and this is my involuntary rate, I can automatically send that invoice, it can automatically get approved, and making that back-end and the front-end more efficient for our agent partners. - That's fantastic. I think DRN is embracing a similar ideology with the agent-twice process that we're putting out, or we're putting the power in the agent's hands to say, if it's staged with multiple forwarders, we're going to pick the one we want to report it to. Obviously, there's some downside, having two forwarding companies. So we're really trusting that our relationships have to be strong, and taking away the, we're forcing you to work this assignment, we're forcing you to report it to whomever, with that power being put back in the agent's hands between the auto acceptance and agent choice, I do think that there has to be some type of trust with the lenders and forwarders to say, once you have that assignment, it's yours to work, we're not going to reassign it, we're not going to tell you when you have to reassign it, we're not going to ask for updates every five days because you have it in your spaces, so much smaller, that you're going to have control over that, especially in a contingent world, that we have every reason to make that our priority and work that assignment and create our own strategy by client. So I think that shift definitely is something that's going to have to happen next year. - Yeah, and I think the question also is, what makes your account more attractive to the end user? And I think a lot of that is, what special requirements do you have that make their job difficult? And not picking on anyone particular, but do you use a condition report that's outside of the norm? That's a pain point. The integration's a pain point with that condition report. Do you require a picture of the car on the flatbed to get paid for that flatbed? That's a pain point. So ask your partners, ask your forwarders, what do I do that makes your job more difficult? Because it doesn't always necessarily boil down to fees. Always, obviously that I think that's a big indicator and it can help a lot. But what makes your portfolio or what makes your assignments outside of the norm and what can put you at a normal playing field with other lenders? Because everyone's competing with the same, every lender has different specifics, but we're all competing for the agent's attention. It boils down to that. - I'm going to not use the trigger word or that every other panel has had and just say technology. In order to make the agents more efficient with all of the information that's out there, because as we started with, we haven't seen an improvement in the recovery rates despite how much data is out there. We're scanning 524 million license plates a month at DRN. And the way that it's used isn't leading to recoveries on a lot of the lender models. So what we're looking at is continuing to create a kind of live version of what's the best address on that assignment with all these data points that everybody's using and just make that more available. But everyone's using LPR now. How do we take it to that next level? How do we use it just to say, here's a bunch of scans you have to go through or how often that last assignment was scanned. Based off of the most recent scans, when it was seen, making sure it's the right vehicle, here's the best address to run. And that's, I think, really where the relationship between our companies and other forwarders and your company on the clear plan side could do a better job of cleaning up that map and making it more streamlined of giving just, here's the best address. Here's why you should run this account. And that helps in the post-acceptance world when they're prioritizing their runs. Does that-- do you have anything else technology wise that you think would assist on that? Yeah. Well, on that exact thing, I spoke last time about the bottleneck that ICA and the forwarder side. Obviously, we talked about a little bit of declines. But that is making sure that they have the best information, they're armed with the best information. And right now, they're a little bit blind. Again, back to the tier strategy. They only see that as a new assignment, or I've just received this assignment. They have no history of what's occurred the previous three, four times that it's been ran. So our initiative next year is to provide better insight to our forwarding partners of the history of that case. Without it being proprietary, without giving away agent-specific data, but arming our forwarders, arming our partners with better information, and feeding those models, and letting them control that data flow. So if we can give you this certain information, you can do it as you wish. You have a lot of information on your side. It's using the information from our system that we've never really shared in the past. A lot of it was kind of seen as proprietary. We're going to open that up more in the coming years to make the whole ecosystem more efficient so we can hopefully pick up some more cars. That's the plan. You talked a little bit in your last panel about the bottleneck and the post-recovery processes. And I know we all wanted some type of standard condition report redemption process. That would be the goal, but it doesn't seem that that's going to get implemented anytime soon. What can all these agencies, lenders, do to make it more efficient in that space? So we've got to-- again, we get to serve a lot of different lenders and partners in our space. And we've focused a lot of attention on this post-recovery space. Not only for the lenders, not only for the forwarders, but also for the transport companies. So we've given them a tool to show visibility down to the agent level of where the keys are at. Is the condition report done? The pictures of the vehicle. And so they can schedule a direct pickup from our system that we've given them access to. So number one, ask your agents if you're using direct agents. Are they using clear data, which is a subset of RDN? That's where they're completing all their post-recovery process. They can mark whether they have the keys, whether they've been quoted, and they can slide a bar and say it's done. So for all using similar technologies and your accessing our data through the Vinlow application, which is that that's kind of our post-recovery process that we've set up for some of our transport companies, that's going to make the process a lot easier. The transparency through that system, because sometimes where it gets lost from the lender level, if they're using a forwarders, they send it to the forwarder, the forwarder sends it to the agent. But we're bypassing the forwarder on this stance to show them the actual status at the agent slot. So whether those keys are completed, show them pictures. So we're trying to give them access to it, and that's becoming more and more popular for not only transport companies, but our forwarding partners and our new partners. I think that's always been a really big fear on the forwarding front, as if we just push everything through from the agency level to the lender. Why do you need a forwarder? Hopefully we've moved past that, and the value is seen in the management of all these processes, all of these pain points, making sure that SLAs are met. I've lost track of how many of these conferences we've attended at this point, but there's always a leading theme, and it was COVID, and it was compliance, and you can see-- storage, yeah, storage, storage, yeah. You can see on the scorecards, monthly with lenders, that it goes that way. It'll be the focus, where performance is one very small portion, and that's a minute of the conversation. And then compliance is five minutes of it nowadays, because everyone has that locked in. It's all post recovery now, and I think embracing that, we just need to quickly share that information to get these cars off lot. It does solve a lot of the problems that we talked about last year. For 2026, have you heard what the biggest challenges people are feeling outside of you, the heartbeat, and everything, post recovery? Yeah, I think, along with post recovery is the keys, but every lender's different, so you talk to John Asai. He's like, hey, I got my keys down in. I'm pretty good. You talk to another lender, and it's like, I have no idea what's going on with my keys. So I think keys is a big, big topic right now, which leads to post recovery, which leads to transport times, which leads to auction times. So the key is kind of that indicator. What we're working on is giving the ability for everyone in our system, agent, forward, or lender the ability to get the key type at the onset of the assignment. That way they can identify what actual key does it need to be cut so that they can also standardize key fees, because that's a big question, as well, as why is this key cost this? And obviously, there's market restrictions on each of those. But identifying and giving that visibility will really kind of clean up that process, so identifying those key types. I think we just did an integration with Verven, which is a lean verification. That's becoming more present as I have conversations with lenders. I think it's always been present. It's just more talked about today, and I think the solutions are getting better out there. So we're adding a lean monitoring system within RDN, as well as in-pound notifications, stolen, total lost notifications into our system, as well. So those are some of the key points that we're trying to address for next year. Just giving better visibility into the life cycle of the count. I think as an industry, we're doing such a better job being more progressive and looking forward rather than reactive. Key fee types, I think, is the last of that. Now we're talking about monitoring the lean issue. I've heard that a lot, as well. More real time. It's always been very reactive. All of a sudden, we picked up the car, and the customer swears that they've paid current. It's a lean loss, and we have to return it. Now everybody's monitoring their repo portfolio, and looking at maybe their entire portfolio, and how we get that awareness moved up front, so they know there might be a fraud issue. Another hot topic I've heard with that title, and having some type of live alert if there might be a lean issue down the line. So I think that's definitely where we're headed, as well. Well, what am I missing? I'm out. - We're missing cocktail hours. What we're missing, Courtney. - Thanks, Plainsett. - We hope you enjoyed this special episode of the Auto Remarketing podcast that originated from Use Car Week 2025 in Las Vegas. Make plans now to join Cherokee Media Group's next in-person event. They use car industry summit. It's a boutique version of Use Car Week with round tables and in-depth conversations. Slated for April 13th to 15th in a new location. The Intercontinental Miami Hotel. Registration is already open at Use Car Summit Dot Bizz. Again, that's Use Car Summit Dot Bizz for more details. And of course, you can find more episodes of the podcast by clicking on the podcast box at autoremarketing.com or by subscribing through whichever platform you get your podcast. For a fellow host, Bill Zedites, Joe Overby, and Andrew Friedlander, as well as our fantastic executive producer, Matt Rice. I'm Nick Zoolovich. We thank you for joining us and we look forward to having you again next time on the Auto Remarketing podcast. (upbeat music)