Repossessions on Long Island: Taking it back

Long Island Business News, Jun 20, 2008 by Laura Glasser

Car and boat repossessions are up on Long Island, as consumers stretched too thin by rising food and fuel costs are failing to cover their monthly payments.

The good news is, the trend is keeping local repo firms busy.

Sal LoDico, who owns Midnight Towing in Centereach, said his business is up 17 percent since the start of 2008.

"Right now everybody's just trying to keep their houses, not their car or boat," he said.

Auto loan delinquencies hit a 17-year high in the fourth quarter, with 3.13 percent of all car loans at least 30 days past due, according to the American Bankers Association.

When that happens, auto lenders have to choose between working with customers to keep them in their cars, or taking the vehicles off of their hands, eliminating the debt while obliterating the customers' credit ratings.

Wholesale car auctioneer Manheim Consulting said there were 1.51 million repossessions nationwide in 2007, a 10 percent increase over 2006, and it expects about 1.6 million repossessions by the end of the year.

Michael Gouldsbury, owner of repossession firm East End Asset Management in Manorville, said he is averaging 100 repossessions a month, mostly in Suffolk County.

"I did three boat repossessions last week. I don't think I've ever done three in a two month period," he said.

Some repossessions come easy as more and more struggling customers are choosing to voluntarily turn in their vehicles.

"When we gets into these tough times, people just know they're overextended," he said.

Other times, desperate customers try to outsmart Gloudsbury by skipping town with the target vehicle. When that happens - now five to six cases a week try to evade him - he has to track those people down.

LoDico said he's never seen this many "skips," and in many cases he ends up at an empty house with no occupants, no furniture and definitely no car.

"And this isn't in the lower class neighborhoods, this is everywhere. It looks like they just picked up and left in the middle of the night," he said.

The surge in repossessions isn't going unnoticed by banks, who have to write down losses on the loans whenever a vehicle is repossessed. To curb those losses, banks are giving more payment extensions to help borrowers out.

Scott Lenon, chief executive of Payback Repo in Lynbrook, said his business volume from some banks has actually dropped.

"A bank never wants to repossess a car. If a person is at least in contact with them they usually will try to work something out," he said.

LoDico said his business slowed slightly in the past month, as banks let borrowers slide, but expects it to pick up again in the next few weeks as the extensions run out.

Gouldsbury said bank's extensions are partly responsible for the number of people evading repo men.

"They're doing everything they can to keep customers in their cars, but these extensions are just giving people time to run," he said.