FORT LAUDERDALE, Fla.-BrightStar CU have stopped calling repossession agents to recover cars with defaulted loans, opting for a cloud-based system that manages the entire recovery and remarketing process.
The $317-million CU can recover two-thirds of its collateral, and more than one-quarter of recoveries result in full payment on the loan, said Gary Howell, collection manager at the CU.
"We've been able to reduce our reserve toward our recovery assets to 40%, down from 50%," he added. "That's phenomenal."
Howell said that charge-offs have been reduced "exponentially" since BrightStar began using the online recovery platform, though he declined to provide figures.
Howell uploads cases to the web-based portal in just minutes, then uses the online dashboard to monitor the recovery process, he said. BrightStar began using the system, provided by Raleigh, N.C.-based Consolidated Asset Recovery Systems (CARS), this fall.
Tracking Nonperforming Assets
The CARS IBEAM portal allows BrightStar to track nonperforming assets and collaborate with CARS repossession agents, skip teams, transporters, auctions and remarketing partners. "Through the dashboard, I can see everything from inception to remarketing to close," Howell explained.
After Howell enters case reports and pictures, he can watch the "Pending" page as CARS assigns the case to a repossession agent-usually within 10 minutes, Howell said. Howell tracks assignments on the "Assigned" page, and he receives an e-mail alert when the agent has recovered the asset-which usually takes an average of 11 days. Recovered assets are displayed on the "Impounded" page for storage and auction.
Previously, BrightStar directly assigned all repossessions to a third-party agent, continued Howell. "That wasn't a good practice. Repossession agents tend to get lazy and give lackluster attention to some of your collateral since they're getting all your business."
Now, a community of local agents competes for BrightStar recovery business through the IBEAM portal. The CARS business model, which also features pay-by-the-case pricing, has saved BrightStar money in a number of ways, Howell said.
BrightStar no longer pays close-out fees to agents because the fee is included in the CARS service, said Howell. Transport fees average about $35 in the CARS system, whereas other services charged $150.
CARS alerts BrightStar before a repossessed car begins accruing storage fees. "In the past, those storage windows sometimes fell through the cracks, which ended up costing the credit union. Another company I used to work with never told me when they recovered my cars, so I had storage costs piling up."
CARS remarketing efforts are fruitful, added Howell. "I'm getting 95% of the price I ask for and 98% of the book value."
Collaboration is easy on IBEAM, Howell said. BrightStar can communicate with repossession agents and remarketers in real time through a forum. Each posting is assigned a different color, depending on which participant wrote the post, making it easy to identify participants.
"We can negotiate clear-to-sell dates and floor prices, or provide alternate addresses if an agent is having trouble locating a vehicle," said Howell.
IBEAM helps Howell "make a better decision as to where a vehicle should go for remarketing," he said. "I can look at the condition report and pictures. If the condition looks good, I can call a local dealer or remarketer to resell the vehicle and CARS will transport the car to the right place. That speeds up the remarketing process."
Before CARS, BrightStar regularly took 60 days to remarket a repossessed vehicle, which often resulted in a charge-off, Howell said. "With CARS, we've been doing a good job of selling the car before we hit the charge-off deadline."
BrightStar holds about 9,000 auto loans and repossesses about 12 cars per month, Howell said.
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