March/April 2010
Stoked About Asset Recovery
By T. Steel Rose and Cindy Pickett
Collection Advisor magazine began in July 2001 as Recovery Advisor. Recovering dollars was the focus until we learned more about Time Finance Adjusters from Skip Tracing Advisor columnist Ron Brown. That led us to the world of recovery agents, who are experts at skip tracing. Recovery agents locate the debtor and the assets that need to be recovered.
J. Patrick Altes, president of Falcon International, has been in the asset recovery industry since 1973. He is a Florida state-licensed recovery agent and has supervised more than 1,000 asset recovery accounts outside the U.S. Altes believes the secret to success in this business is using an investigative approach and brain power. Altes is a former professional surfer and enjoys traveling the world as a semiprofessional surf photographer.
Max Pineiro, president of Elite Collateral Recovery, Inc. (ECR), was introduced to asset recovery in 1984. A few years later, in 1988, he and his wife began ECR. Pineiro is passionate about advances in education and training for the industry. He is a licensed private pilot and enjoys flying with his family.
Asset recovery can be an exciting adventure, so right away we wanted to find out how Altes and Pineiro got into the business and learn their secrets to success.
Collection Advisor: Tell us how you got into the asset recovery business.
J. Patrick Altes: My father was involved in area law enforcement for many years and also was a private investigator. Back in the '60s, banks would call upon private investigators to handle repossession accounts. Over time, the company he started transitioned from an investigation agency to an auto recovery agency. We still do some private investigation work.
Max Pineiro: In 1984, while working as a warehouse supervisor, I was approached by a recovery agent who was repossessing an owner's truck unloading at our warehouse. The agent was working for a local company looking to hire and train part-time agents. Working the night shift at the warehouse gave me the opportunity to look into this trade and make some extra money during the day. Over the years, I learned the business and accepted a full-time position running the skip tracing department.
In 1988, my wife, Rita, and I decided to go on our own, so Elite Collateral Recovery, Inc. was born. Today, ECR maintains three offices throughout New Jersey and one office in southeastern Florida.
Collection Advisor: What is your secret to success in asset recovery?
J. Patrick Altes: This relates to my answer to the first question in that we approach these accounts as investigators. An inordinate number of repossession accounts require intelligent field work. If the car were always sitting at the address provided by the client, then this work wouldn't be necessary.
Another secret to success is using your brain in this business. Today, everyone and their brother have attorneys looking to sue the repossessor or the creditor if something stupid happens in the course of a recovery. Repossession has to be the most invasive collection technique there is. From a risk-management standpoint, using intelligent repossessors is key.
Max Pineiro: I'm not sure if it's a secret, but my success is the result of caring, hardworking employees who come to work every day and enjoy what they do. It's easy for any business owner to take credit for company success, but I can assure you that without our staff, we would not be here.
Setting goals as a team and re-evaluating our strategies as a team has helped tremendously. These people want to learn. They want to lead. And most importantly, they want to win each and every day. I learned a long time ago that one person can only accomplish so much. After all these years, I still consider myself a student of this industry and enjoy learning from those who have somehow "figured it out."
Collection Advisor: Briefly explain the process of working with creditors and collectors in asset recovery.
J. Patrick Altes: Generally, the creditor calls, e-mails, or faxes the assignment to us. The creditor provides last-known addresses, vehicle descriptions, loan balances and whatever backstory the case might have. Throughout the handling of the account, information flows back and forth between the creditor and Falcon. We report what we see, who we talk to and any information we surface along the way. The creditor surfaces information as well. With this cooperative effort, we have a greater degree of success in finding and recovering the unit.
Max Pineiro: We communicate daily with collectors nationwide. I believe this is the single most effective tool we have as asset recovery professionals. These collectors not only are responsible for distributing work to their vendors, but in most cases, they are familiar with the accounts and have inside information that can be valuable to the recovery process. I frequently see our account managers take a difficult file, call the collector and dissect the file. This usually uncovers useful information not supplied originally. The relationship between the collector, agency owner and field agents is the main ingredient to cost-effective recoveries.
Collection Advisor: What types of software or other technology do you use in your business?
J. Patrick Altes: We use an online application called Recovery Database Network (RDN).
Max Pineiro: Incorporating the latest technology has been a main factor in the growth of our business. One of the first moves we made was to convert from a software server-based program to an Internet-based platform. We use Recovery Database Network (RDN) to facilitate communication between our office, our field agents and collectors nationwide.
Elite Collateral Recovery's sister company, Elite Search Team, Inc. (EST) is licensed by the State of New Jersey as a private detective agency. EST is our in-house investigative team that specializes in charged-off accounts. The title of Licensed Private Detective Agency has opened many resources not available to other recovery agencies.
Financial institutions nationwide have discovered Digital Recovery Network (DRN) technology and have been partnering with Digital in order to track their unfound vehicles. We use the DRN license plate recognition system in our vehicles. Our recovery equipment consists of late-model self-loaders equipped with on-board laptops, GPS systems, real-time tracking and license plate recognition cameras. Our cameras scan about 75,000 license plates a month. Over the years, we also have created a state-of-the-art locksmith department that cuts and programs keys to all types of vehicles.
Collection Advisor: How has technology impacted your business? What is the most important technology in asset recovery?
J. Patrick Altes: Our most significant technology asset is the Internet. Contrary to what the layman might think, the greatest difficulty in this business is finding the customer — not repossessing the car. The addresses provided by creditors often are abandoned, foreclosed homes, former places of employment (POE) or addresses that show up on some Experian report. Through the Internet, we can ascertain the names of landlords, contact information for a POE, or even surface information through Facebook or MySpace.
Our company, Falcon International, handles several hundred repo accounts each year outside the U.S., in places such as Panama, Samoa, Germany, England and Guam. Because of the costs and hassles of phone communication, the Internet has smoothed the transfer of information between us and our agents overseas.
We also use a unique system of getting field reports from the agents. We use a voice-to-text company to transcribe phoned-in updates that arrive at the account rep's desk as e-mails with attached MP3 files for verification. The ongoing submission of updates sets our agency apart, and this process has made the transmission of field reports fairly painless from the field agent's standpoint.
Max Pineiro: Technology not only has allowed us to increase the services we offer, but also to better manage our operation. Knowing how to use technology and maximize its effectiveness is what makes an agency stand out. Moving to an Internet-based platform has increased communication within our agency and with our clients.
That being said, I feel that though implementation of technology in any business is a major asset, you cannot lose the personal touch that distinguishes an agency. Communication-based technology that simplifies a collector's role is at the top of our list. After all, we are hired to assist collectors — not create additional work for them.
Collection Advisor: What advances would you like to see?
J. Patrick Altes: From a technology standpoint, I wish creditors would develop reliable metrics for quantifying a recovery agency's performance — not just recovery ratios, but measurements that would factor in customer complaints, repossession-related damage to vehicles and other risk-management issues.
We keep advocating that using a professional pays, but right now, the industry is highly commodified, and the Wal-Mart beat-the-price mentality still rules in the minds of some creditors. It might take more repossession-related injuries or deaths and the resultant lawsuits and bad press for creditors to seriously factor in the value of using good field operators.
Max Pineiro: The single most important advance I would like to see in our industry is education. For starters, the majority of states have no licensing requirements, meaning our industry is unregulated in those states. It is of upmost importance that employers in our industry provide proper training to their staffs and field agents. Several certification programs are available nationwide. CARS (Certified Asset Recovery Specialist), for example, is required training to obtain a recovery license in the state of Florida. CARS is a tool that we have used to train our Florida office and though it is not required, our staff in New Jersey.
Even more importantly, I recently have noticed the vendor contracting practices of financial institutions. Although the practices have improved, lenders need to dig deeper when hiring a vendor in an unlicensed state:
- Does the agency carry proper insurance?
- Does it maintain a real office and a real storage facility?
- Who will be representing our financial institution when recovering our collateral?
- Does that person have a criminal history?
These items are not controlled in many states. Lenders need to realize that these questions are better addressed before contracting than in a court of law should something go wrong on a recovery. In most states, owning a tow truck and getting business cards made puts you in business — regardless of experience or background.
Collection Advisor: What is the greatest challenge of a successful asset recovery? What tools help you overcome that challenge?
J. Patrick Altes: As stated, the biggest challenge is locating the collateral. But the second biggest challenge is the interaction with the customer if the collateral isn't visible or accessible.
The most valuable tools in that case are the intelligence and abilities of the recovery agent standing face-to-face with the customer. People skills can make or break the recovery process. A poorly handled discussion with the debtor can mean a repossession account becomes an expensive replevin.
It amazes me that some creditors' only criteria in using a recovery agency is low price — even if the agency has a poor track record of recoveries and/or interactions with customers. Good, intelligent agents are our biggest asset. Over-reliance on technology is meaningless in the investigative world. Good field work remains a key ingredient to successful recoveries.
Max Pineiro: For starters, some lenders close the most important door to successful asset recovery: communication. They opt not to deal with independent agencies and instead contract with nationwide forwarding companies. When you strip the ability for an independent agency to communicate effectively and directly with a collector/lender, delinquency and charge-offs rise. Reporting to a middleman and having to wait days or weeks for answers not only hurts the lender but also the recovery agency's efficiency.
Many forwarders require independent agencies to work at discounted rates and provide services free of charge. Some agency owners decide to contract with forwarders, and in most cases, limited effort is put into these accounts because of the cost of doing business. That being said, all forwarders do not play by the same set of rules. Some are fair. The majority, however, hire inexperienced agencies that work at discount rates, resulting in lower recovery percentages nationwide.
The general public has been given a front-row seat to what some believe is an inside look at our industry. The media's introduction of reality programming has given the professional agency owner a black eye while demonstrating to lenders that they should beware of who they hire.
The best way to overcome this trend is to continue to provide the highest level of customer service and to continue to implement the latest technology to yield high professional recovery percentages.
Collection Advisor: What is your philosophy on how to achieve a peaceful recovery?
J. Patrick Altes: We primarily attempt no-contact, self-help recoveries to avoid the possibility of a breach of peace. We know this angers the customer at times. We always hear, "If the agent would have knocked on the door, I would have given him the keys." Right! Because avoiding breach of peace is job No. 1, no-contact recoveries are the way to go.
Other methods of breaking "breach of peace" laws include entering a garage or breaking a lock on a gate. Even having the police present during a repossession can be a breach of peace.
Max Pineiro: This is an easy one, peacefully! I live by a simple rule: If someone is going to get hurt, walk away and try later. Do things by the book, and you will never have to look over your shoulder.
Establishing a relationship with local authorities and making them aware of what, when and where you will be conducting an asset recovery will increase your chances of a safe and uneventful recovery.
Understand that the majority of these customers have fallen on hard times and are struggling to make ends meet. Treat these folks with respect, and always remember that you are representing your client.
Most importantly, it boils down to using common sense. I am proud and thankful to say that in more than 20 years and tens of thousands of recoveries, we have never had anyone get hurt.
Collection Advisor: Tell us about an interesting or outrageous recovery you have experienced.
J. Patrick Altes: We had to repossess a large boat in Abacos in the Bahamas. We had to get the boat out of there before the government seized it. The boat had overstayed its temporary cruising permit. We flew out there with a boat captain and found the boat's hull encrusted with barnacles. It took several days to find a Bahamian diver willing to scrape the hull to get the boat running in time — all the while trying to make sure the captain stayed sober.
Max Pineiro: I'm not sure if I can classify any as "outrageous." There have been many over the past 20 years.
As a licensed private detective, the recoveries that stand out are those that no one, including your client, thinks will be found and recovered. Finding a load of new Mercedes Benz automobiles hidden in shipping containers to be shipped as household goods, ready to depart to South America, is one of our most interesting recoveries.
Flying over a marina and spotting a yacht that had disappeared for two years and successfully recovering the collateral for our client also is fresh in our memory.
What separates the tow truck driver from the Asset Recovery Professional is that the ARP knows how to find the asset, knows the laws and acts responsibly and professionally.
Collection Advisor: What do you do for fun?
J. Patrick Altes: I have been involved in the sport of surfing for about 40 years. In my younger years, I surfed professionally here in Florida and in Australia. I still am a professional surf photographer. Over the years, my photos have appeared in national magazines, such as Surfer, Surfing, Swell Magazine and Sports Illustrated. Surf photography helped pay my way to travel the world shooting photos and writing articles. I'm currently involved in a project with the Florida Atlantic University about the history of surfing in Florida.
Also for fun, I play electric guitar and do musical arranging for a worship band at my church. But I have the most fun hanging out with my wife, Sharon.
Max Pineiro: I try to enjoy my weekends and spare time. I have been married for 28 years to a great wife and mom. My daughter, Natalie, is a 25-year-old graduate of Kean University and is our office manager. My son, Brandon, is a 17-year-old senior in high school and is looking at colleges. He is focusing on criminal justice schools.
I enjoy coaching baseball, which I have done at different levels for the past 25 years.
My passion, outside of my family, is flying. I am a licensed private pilot, and we own our own plane that we use for business and pleasure. The use of our aircraft has allowed my wife and I to visit with clients and attend meetings in a single day that would otherwise take much longer to accomplish. We can fly unscheduled to our Florida office and land a very short ride from the premises. Okay, and the mini-vacations to Florida are fun, too.