Subprime Boom Is Prime Time for Repo Business

Plenty of banks are making a killing these days in subprime, nonprime, high-yield, and no-documentation lending.

But there's a flip side to all this: Sometimes the loans don't work out.

And so it is that the 1990s have become the Golden Age of the repo man. Collectors, tracers, and property repossessors say that they have more work now than ever, and they don't expect any slowdown soon.

Bank work, mostly automobile repossession, was a common topic of hallway chatter at a recent "Manhunt" seminar in Atlantic City sponsored by Time Finance Adjusters, a collections trade group that promised tips on "how to find anyone, anywhere."

The seminar-which found pinstriped bankers seated beside pistol-packing repossessors in T-shirts-offered a clear window on the latest strategies at work on the outer fringes of liberal lending.

Brochures featured a quote from Ernest Hemingway: "There is no hunting like the hunting of a man, and those who have hunted men and liked it have never cared for hunting anything else thereafter."

Much of the activity on the repo front stems directly from the merger wave in banking. Many acquirers are now left holding a lot of loans that they didn't originate, said Steven Diangikis, president of the New England Adjustment Bureau.

"They're finding paper out there that people haven't paid on in three or four months," Mr. Diangikis said. "Our job is to help them out."

Tanned, fit, and sporting a precisely tailored double-breasted suit, Mr. Diangikis looks nothing like the stereotypical repo man. But car repossessions are where he got his start-and now his staff of 16 handles more than 200 car, truck, and equipment loans a month. Some loans are worked out, but for the bulk of them, the end result is a property repossession.

"We do everything," Mr. Diangikis said. "I've done a printing press with two forklifts, I've done office equipment ... I even got a repo note for a 9-year-old kid's saxophone. I called the mother and made her pay."

Although no one apparently tracks the industry quantitatively, the number of car repossessions is undoubtedly going up, said Harvey Altes, a 46-year veteran of the repossession industry. "It's because the number of subprime loans is increasing."

A few years ago there were only a handful of subprime auto lenders, Mr. Altes noted, and now there are "over 300."

Mr. Altes, 69, is chairman of the board at Time Finance Adjusters. The trade group's members specialize in tracking down everyone from deadbeat borrowers to ex-husbands and kidnapped children. He sports heavy black- rimmed glasses, promises to "answer any question," and signs faxes to near- strangers "Uncle Harv."

The car repossession business didn't start in earnest until after World War II, Mr. Altes noted, because banks didn't make automobile loans.

Now many of the industry veterans are turning over the reins to the next generation. A case in point is Mr. Altes' daughter, Nicki Squires, who is now president of Time Finance Adjusters.

The new blood has meant new technology, mind-sets, and energy at a time when the business is the best it has been in memory.

Lecturers at the seminar were full of handy tips:

Mothers always know where their daughters are, but they don't always know where their sons are.

Rural working-class men always get hunting and fishing licenses.

Looking for a deadbeat guy? Try his in-laws, especially if he's divorced.

They offered ways to crack unlisted phone numbers and look up Social Security numbers.

And-one of the most helpful hints: Be female.

"Any woman knows that they can talk on the telephone and get information," said Debora Shadlow, a locator with City Select, a New Jersey used-car chain. "Instant Credit-We Finance Anyone," the company's business card reads.

Ms. Shadlow has even persuaded relatives and neighbors to call her when the debtor pulls into the driveway. Then she puts a call in to her partner, Troy Casey, who heads out in his brand-new tow truck to get the vehicle.

"She's great," Mr. Casey says of Ms. Shadlow. "I'm on the phone, they won't tell me anything; you get her on and they're telling her their whole life story."

Cash doesn't hurt either, Ms. Shadlow said. Sometimes she will offer a reluctant neighbor a $50 or $100 incentive to call City Select when the pursuee gets home.

Mr. Casey works only at night-peak hours are 3 a.m. to 8 a.m. on weekends. The reason he loves the job? "It's borderline fraud," he said. "You're in North Camden, N.J., taking a drug dealer's car and there's nothing they can do about it."

No matter what the method, veteran tracking experts say that finding borrowers is more difficult than it used to be.

"Debtors are more educated," said Ronald Brown, Manhunt lecturer, Time Finance Adjustors executive director, president of Santa Fe Credit Union, and Oklahoma-licensed private investor. "People know how to borrow and get away with it."

Some said the business is recession-proof. "In good times, banks are more apt to give more loans," Mr. Diangikis said.

But Mr. Altes said this Golden Age can't last forever for the repo industry.

"This is a cyclical business," he said. Of the hundreds of subprime lenders currently in business, more than half will be gone in a couple of years, and business will go down, Mr. Altes predicted. "It doesn't take much brainpower to figure that out," he said.

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