Burt Greenwood Jr.'s business is booming - not in spite of a dismal economy but because of it. His squadron of tow truck drivers can barely keep up with the orders to repossess cars and trucks of people who have fallen behind in their payments.
"Our intake of new work is increasing like crazy because of the state of affairs economically," said Greenwood, chief executive officer of Greenwood Recovery, who estimates his volume at 40 percent higher than a year ago.
That mirrors what appears to be happening statewide. Motor Vehicle Administration officials say that through April, they issued 4,791 "certificates of repossession" from the agency's Glen Burnie office, which handles the bulk of all such title work. That puts them on pace to top last year's numbers.
The 13,915 vehicles repossessed in 2007 were a 38 percent jump from 2006. However, the number of repossessions in 2005 was slightly greater than last year's total.
Recently, Greenwood has noticed a different type of vehicle owner showing up to claim personal belongings. "It's reaching deeper into the middle-class sector," he said, referring to the downturn.
He described a well-dressed woman of middle age who came in one morning last week to pick up personal items from a late-model Ford Explorer that had been repossessed. At his busy shop in West Baltimore, one of Maryland's largest and oldest repossession companies, workers bag, tag and stash personal items from vehicles in a locked vault.
"She looked sad. My heart went out to her," Greenwood said.
She told him she was in a mortgage brokerage business that went under, he said, recounting parts of their conversation she had given him permission to share. He said she told him that she could no longer afford a combination of high fuel prices, payments on the Explorer and a mortgage on a home in a nice area of Baltimore.
"She knows she is not alone, that a lot of people are in the same situation," said Greenwood, whose company also had an increase in repossession orders for boats, recreational vehicles, motorcycles, construction equipment and other merchandise purchased on credit.
On a recent visit, a reporter saw four vehicles hauled into Greenwood's shop during the space of an hour.
One was a late-model pickup truck, polished and gleaming with shiny rims. It had been picked up in Pasadena, a driver said. The owner's cell phone charger still dangled from the cigarette lighter inside the cab.
Nationally, analysts say, delinquencies and defaults on loans are up sharply, as financially strapped consumers struggle to keep up with rising fuel and food prices. The American Bankers Association, which tracks consumer loans, says car loans make up about half of banks' total consumer loans.
Delinquencies were up in all categories of fixed-end consumer loans - car, home equity, personal, recreational vehicle and marine loans - during the fourth quarter of 2007, the most recent period for which ABA has figures.
"It's the first time in 15 years we've seen that," said Carol Kaplan, an ABA spokeswoman. She said a loan is considered delinquent if it is more than 30 days past due.
Lenders don't like to have to repossess vehicles because they lose money on them, according to Kaplan and others in the auto finance business.
"No lender wants to take a repossession," said Rick Apicella of Benchmark International, which does consulting work for the automotive finance industry.
He said lenders lose more than $8,000 on average on each vehicle they repossess. Such vehicles are usually taken to auction. But prices for used cars are down and that adds to the losses for lenders, he said.
Tom Webb, chief economist for Mannheim, the nation's largest vehicle auctioneer, said 1.5 million vehicles were repossessed nationally last year - up 10 percent from the year before. About 80 percent were sold at auction, he said, and the others went to used car lots or were sold over the Internet or through other methods.
Apicella said the growing volume of delinquent loans prompted many lenders to change their collection practices to be more lenient with borrowers as a way keep them in their vehicles. "They say, 'Maybe we can allow you to skip a payment and extend the term of the loan,'" he said. But lenders eventually have little choice.
A car loan normally has to be delinquent at least 60 days before a lender will initiate repossession, although Maryland law allows a lien holder to take back a vehicle if a borrower is so much as a day late on a payment.
A Web site for ADP Recovery Inc., a repo company in Rosedale, features a banner saying, "Support Your Local Repo Man - Miss Two Payments." It also advises lenders that "we work around the clock, so if you have a case that needs special attention, just say the word and we will make it happen."
Workers at ADP's lot referred questions to a manager, who was not available.
In the lobby of the corrugated metal building that serves as ADP's office sat a child's car seat with a tag identifying the owner. Outside, dozens of vehicles were parked in a large lot surrounded by chain link fence topped with razor wire. One was a panel van with lettering on the side advertising a man's gutter and window replacement business. The phone number had been disconnected.
State law allows a repo agent to go on private property to retrieve a vehicle but requires that repossessions be carried out by "peaceful means," meaning force or threats of force can't be used. The repo agent can't break into a garage, cut the lock from a fence or move a vehicle that is blocking the one he wants to get.
And the lender generally can collect towing and storage fees only if it has given the owner 10 days' advance, written notice that a vehicle is due to be repossessed.
Once the vehicle is picked up, the owner has 15 days to catch up on his or her payments and pay for storage and towing, or it can be sold at a wholesale auction. The owner has the right to bid on it there. If it sells for less than what is owed, the borrower is liable for the difference.
While companies such as Greenwood and ADP are properly licensed as collection agents, some used car dealers do repossessions with little state oversight.
Shannon Davidson complained to the attorney general's consumer protection division after two repo agents dressed in black came to her Baltimore home. They flashed fake badges and commandeered a 1998 Mitsubishi Eclipse that she and her fiance owned. The car was repossessed after the couple got into a dispute with the seller over needed repairs and stopped making monthly payments, she said.
"They were in a Ford Explorer and represented themselves as police officers," Davidson said of the repo agents. "They told us we had to relinquish every set of keys. When my fiance opened the trunk to get our personal belongings out of the truck, one of them snatched the keys from his hand and they started taking off."
State law prohibits such practices by licensed collection agents, and reputable repo companies don't engage in them. Greenwood, for example, said he thoroughly trains his drivers in permissible techniques.
Nonetheless, it's a risky business. Wary owners have been known to sleep in their cars or leave a pit bull inside.
In an attempt to avoid confrontation, repossessions often take place at night, when the owners are likely to be asleep.
"Seventy-five percent of vehicle repossessions are done during the night hours," said David Gryglewicz, president and chief operating officer of PAR North America, a major provider of services to the auto finance industry "However, an element of danger always exists. It doesn't matter if they are repossessing day or night."
Judy Buckley, who manages repossessions for DMAR Inc. in Upper Marlboro, said that she has been "pushed down and threatened" by owners angry about their vehicles being repossessed. She comes into contact with them when they come to the office to claim personal belongings.
The drivers on the street experience even more. Some nights, the owners wake up.
"You have naked people who want to run after you," Buckley said. "I've had my guys offered money to put the cars down. [That's] not worth their paychecks. They're not thieves. They're people like everybody else, trying to make a living, that's all."
Repos by year
The Motor Vehicle Administration office in Glen Burnie issues more than 10,000 certificates a year for repossession of vehicles. :
2005: 14, 688