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Car repossession business is booming amid downturn

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  • Car repossession business is booming amid downturn
    Car repossession business is booming amid downturn

    "I've had people drive their car on my truck and shake my hand, and I've had people try to run me over," Dawn Smith said.

    Today is one of the former. When Smith calls the owner of a late-model Nissan to tell him the bank needs to repossess his car, he tells her he knew it was coming and he'll have the keys ready. And, to Smith's surprise, he's as good as his word - handing over the keys and signing the paperwork with a smile.

    "You can repo a car from me any time," he tells Smith.

    The booming market for car repossessions is one of the few silver linings to the current economic recession. Smith's business, Team Recovery, keeps four trucks rolling every day across the state.

    "We average five to 10 repos a day," Smith said. "Some days we might get 15."

    Repossessors aren't licensed in Colorado, although the attorney general's office said about 43 companies have taken out the minimum $50,000 repossession bond (Smith's company carries a $1 million bond). If they're all out working, then "that's a lot of repossessions," Smith said.
    If business is up, it's because delinquent auto loans are on the rise. According to a study by Experian Automotive, an arm of the credit reporting agency Experian, 2.48 percent of auto loans were at least 30 days past due in the second quarter, up 9 percent from 2007. And 0.75 percent of auto loans were more than 60 days past due - a rise of 11.9 percent from 2007. Past due loans in Colorado were slightly lower - 0.63 percent of auto loans in the state were 60 days past due.

    It's unlikely to get better soon because the fastest growing segment of auto loans is the riskiest. The number of below sub-prime loans has shot up 43 percent in the last two years, according to the report.

    Herb Goldstein, owner of Repo's Unlimited in Colorado Springs, said business is up, but the bad economy actually helps some car owners.

    "Banks have got so much delinquency in many cases they're trying to work with people rather than recover them," he said. "If a fellow's got nothing and you sue him, what are you going to execute on? Nothing."

    Team Recovery's Smith, 42, has been repossessing cars for 23 years, starting out answering phones for a repo service, then starting her own business four years ago. It's in her blood now, she says.

    "Yeah, it's not the prettiest job in the world, but I love what I do for a living," Smith said.
    Smith, by the way, is not her real name. She never gives out her last name, she said. As civilized as picking up the Nissan was, repoing a car can just as often turn into an ugly confrontation.

    "I've had women hit me," Smith said. "I've had men hit me. I never back off."

    Smith practically lives in the big, black Ford F350 she uses to repossess cars. The truck has dual rear tires, a low-profile hydraulic wheel lift below the rear bumper and a diesel engine big enough to haul it and a Hummer over Monument Hill.

    "I can't drive around in a white repo truck," she said. "That says, ‘Hello, here I am. Run!'"
    Smith keeps a laptop open next to her, a cell phone glued to her ear and often lights up a grape-flavored cigarillo while she steers with her knees, picking up her coffee cup as the truck jounces over bumps to avoid spilling. Carol, her 62-year-old mother and business partner, tells her when to pay attention to the road. There's a sheaf of repo orders from banks shoved under each sun visor.

    This is the prime season for repossessions - the holidays, when people's pocketbooks are stretched to their limits. Most banks, however, don't allow repossessions on Thanksgiving or Christmas.

    Banks and lenders, Smith says, never want to repossess a car. They'd rather the owner keep it and keep making payments. Vehicles depreciate too fast - banks inevitably take a big loss when they hire a repossessor and send the car to auction. But at some point, she says, it makes no sense for them to let the borrower keep driving around for free.

    What ends up getting repo'd runs the gamut: Dodge Neons and Jeep Grand Cherokees head Smith's list, but there are ATVs and Harley-Davidsons and motorhomes, too. She repos Mercedes and Dodge Vipers and Chevy Corvettes. It's old people and young people, couples and singles, rich folk and poor. The key is to be nice to the soon-to-be-former car owners, Smith said. Be polite, be understanding, but be firm.

    "You're not the only person on this earth or on this street that's had their car repossessed," she tells the people she calls "customers."

    Smith said she's never bounced a check, never missed a car payment. Although business is up, the economy hurts her, too, she said. She often drives 3,000 miles a week in the big Ford and spends $7,000 a month in diesel. Insurance, bond, maintenance, rental of storage yards in Denver and Colorado Springs - there's a lot of overhead. And, although she's working a day shift on this occasion, most repossessing happens at night, when people are home.

    "It's not a job where you can have a family and keep everybody happy," she said. That may be why Smith's family is her mom and her German Shepherd, Bristol, although she treats her F350 like a member of the family, too.

    Once the cars are on her wheel lift, their fate can vary. Some banks send their repos to car auctions, others pick them up in a transport for later resale. Owners often need to get personal items back. Sometimes, knowing a repo man is on their way, car owners will trash the car, or put it on blocks and take the wheels and stereo. It's not a smart move, Smith said, because that only hurts the car's value at auction, which gets applied against what the customer still owes on the loan.

    With the economy, Smith sees more people giving up their cars voluntarily. She gets a lower rate for the voluntaries than her typical $300 repo fee, but admires the owners that give in rather than being forced out of their vehicles.

    "People are thinking smart and giving up their toys until they can afford them," she said.

    And the recession, and the repos, are likely to get worse before they get better. Goldstein, who has been in the repossession business since 1957, said this economic downturn may be the worst he's seen.
    "I can visualize that this thing may deteriorate far worse than this thing is now," he said.

    Later in the day, Smith rolls up on a home in suburban Denver. There's a late model Chevy in the open garage and a mother and daughter playing in the yard. Smith walks up and tells the woman she's there for the Chevrolet. The woman calls her bank, calls her father and works out a deal to avoid the repossession, Smith said.

    Finally, Smith leaves, shaking her head. Sure, the woman kept the car another month by borrowing from her dad, but what happens next month, or the month after that? Often, people would be better off letting go of their car and moving on.

    "I can't tell her how to run her life," Smith said. "I hinted to her as much as I could.

    "It's not going to get any better for these people," she said. "With this economy, it's not."