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He’s smart, he’s funny, and he “steals” cars legally. (He’s also the best friend you never knew you had.) Our July-August issue’s cover story.
Business for the nation’s top recovery agents (better known as “repo men”) is booming. It has gotten to the point that some of them are feeling downright uncomfortable about their own success.
“Joe the Plumber used to be our friend and neighbor,” says J. Patrick Altes, 54, the softspoken, red-haired president of Falcon Inter national in Daytona Beach. “Now we’re repoing his truck.”
Altes is dealing with a surge of delinquencies and defaults—coming at the end of a long boom in Florida’s real estate and construction markets. With 50 employees and a fleet of 10 “self-loading” tow trucks, which can hook and remove a car or truck from a homeowner’s driveway in a matter of seconds, Altes is bringing in 400 cars and trucks per month this year, up from 175 month in early 2008.
While business is better than ever, Altes does not like having to target “fellow church members and Rotarians.” It’s the price he pays for moving “from crack town to the gated communities.” He’s spending less time with “the usual con men, travelers, and deadbeats,” and more time with “good people who, through no fault of their own, are unable to pay their bills.” Though sympathetic to their plight, he has put the clamps on scores of struggling or outof- work real estate agents, appraisers, mortgage bankers, merchants, carpenters, roofers, carpet layers, and—yes—plumbers.
According to national statistics compiled by MVTRAC, a Chicago-based firm, repo agents will pick up an estimated 2 million vehicles in 2009, up from 1.8 million in 2008, 1.6 million in 2007, and 1.1 million in 2002. The repossession of boats has nearly doubled over the past two years.
In the steepness of the current economic downturn, the upturn in the repo business may be likened to a movie on runaway consumption played in reverse. Think of all the fancy cars, boats, jet skis, and Harleys that were flying off dealers’ lots and landing in front of peoples’ homes during the economic boom. Now think of the same objects flying back the other way, landing in lots similar to, if not identical with, the places where they were first sold, where they will now be auctioned off to a new set of owners at distressed prices. This is the forcible deleveraging of America.
Even if you are biased in favor of the consumer, it would be wrong to dismiss the man responsible for retrieving those backward-flying assets as some kind of blackguard profiting from the misfortunes of others. Believe it or not, the repo man is your friend. Like the butcher, the baker, and the candlestick maker, he exemplifies the power of the “invisible hand.” Without a doubt, your own affairs as a consumer or small business owner would be more difficult without him.
If you have ever bought anything on installment—from a car or a truck to the equipment needed to run a farm or a small- or medium-sized business—you can thank the enterprising and resourceful repo man for helping to make you a creditworthy risk in the eyes of the lender. You can also thank him for the fact that you pay a much lower interest rate on your installment loan than you do on your credit card, which is not secured by any collateral. You might even thank him for your job—if you still have one.
This is how Jack S. Barnes, a nationally recognized expert on the repossession and liquidation of collateral, explains it in his book Collateral Recovery, published in 2008:
The ability to repossess collateral to reduce losses from a defaulted loan, and the right to dispose of that collateral, are two of the most important laws affecting the financial health of the United States! In 1990, 41% ($288 billion) of all installment loans outstanding were for the purchase of cars. The latest report indicates enormous growth. The current report by the Federal Reserve estimates the amount of installment loans in this country to be $1.3 trillion and that 60% or $780 billion is in outstanding auto loans. The ability to repossess an automobile if the loan defaults provides the security for these loans.
Without the ability to repossess, funds would dry up…with devastating results to both the auto industry and the nation’s economy. It is easy to see the immediate impact on the auto manufacturer, the corner gas station, the auto parts store, radiator shop, the tire shop, auto mechanics and dealers, fabric manufacturers, electronic manufacturers, glass manufacturers, and hundreds more. Add to that the grocer, department store, and every other merchant where those now unemployed shopped, well, the circle keeps growing.
I Decide to Pay the Repo Man a Surprise Visit
Earlier this year, a repo man knocked on the door of a friend of mine—the owner of a small business—and asked for the keys to the car. My friend had missed a couple of car payments because some of his clients had been slow in paying him, and also because he had over-stretched—leaving no margin for the possibility of late payments. Looking out the door, he saw his prized Mercedes dangling from the back of a tow truck. Like it or not, this was the old story of losing a favorite toy due to careless or negligent behavior. After arguing for a few minutes, he handed over the keys.
That incident piqued my interest in the repo trade, but it had nothing to do with how I came to know Pat Altes, Jack Barnes, and other members of the profession, including the legendary Ron L. Brown, an ex-CIA agent who has repoed “everything from a million-dollar oil rig…and 40 head of cattle…to seven prostitutes” sought as witnesses in a celebrated Hous ton murder case. (Acting, in effect, as a repo agent for the Texas Rangers, Brown was able to track the badly frightened girls down to a hiding place in Corpus Christi and secure their safety, before the murderer and his friends discovered their whereabouts—and secured their silence.)
My introduction to the repo trade came about as an unexpected result of a trip I made to Daytona Beach in mid-April. When my wife and I stopped for lunch at the famous Shores Resort & Spa, the lobby was filled with a boisterous convention crowd. Over lunch I wondered aloud about the identity of the group.