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Keith Hanson's business is as good a barometer of the Gulf Coast economy as any.
Hanson's one of the guys bankers call on to repossess luxury toys such as fancy cars and yachts from people who lived large during the boom years and can't pay back their loans.
“Business is phenomenal,” says Hanson, who declines to cite financial results. He says his company, Bonita Springs-based Diversified Collateral Recovery Corp., has been profitable since its second month in operation last year and is averaging a 300% increase in the volume of seized assets every month.
Diversified Collateral now works with 200 lenders and Hanson plans to open a second office in New England within six months, he says.
Struggling business owners are letting banks repossess their personal items first in an effort to protect their business. Hanson hears this refrain often: “Take my Ferrari; I've got to save my business.”
But as times get tougher, Diversified Collateral is increasingly going after business assets such as construction equipment and the inventory of failing furniture and jewelry retailers. He's even repossessing airplanes from flight schools because people can't afford expensive pilot lessons.
Hanson, a former law-enforcement special operations instructor who once ran a juvenile boot camp, says the government is prolonging the recession by bailing out corporations that should have closed long ago. “It's survival of the unfittest,” Hanson says.
The longer the government helps to drag out the recession, the better the prospects for repo companies such as Diversified Collateral.
“The economy is in the toilet and it's not going to get any better until we get this buffoon out of office,” Hanson quips, referring to the current White House occupant. “The government is getting us set up for success.”
Further aggravating the situation, Hanson says, is that the government will eventually have to raise taxes on businesses as it has already proposed to do to pay for health-care nationalization. “They'll finance reckless deficit spending on the backs of small businesses,” Hanson predicts.
Tellingly, many of the expensive toys, equipment and inventory Hanson repossesses end up in places like Russia, Europe and China. Eager buyers there are taking advantage of the relatively weak dollar devalued by growing U.S. government debt, outbidding American buyers with their stronger currencies.
“We can recover more than pennies on the dollar,” says Hanson, who benefits by collecting a commission on the sale for its lender clients.
Meanwhile, regulators are increasing pressure on banks to improve their balance sheets, especially in light of the worsening commercial real estate problems. “Lenders are becoming significantly more aggressive,” says Hanson, who has a private-investigator agency license.
But borrowers are getting creative, too. “A lot of times it's a game of cat and mouse,” says Hanson. The biggest challenge is knowing for certain the location of an asset, Hanson says. He won't reveal specifically how he does that, but it's clear that he can lose money quickly if he sends in a team and the asset has been hidden elsewhere.
It costs about $1,500 to recover a 40-foot yacht, for example, although each job is customized.
Hanson has a team of boat captains and airplane pilots who will accompany his team of repo men. He has no trouble recruiting them (one is a pilot for a commercial airline) because they like the thrill of the chase. “It is a license to steal,” he says. And the money's good, too. “Everybody's hungry,” Hanson says.
The element of surprise is critical to Hanson's success, which touts a 76% recovery rate within 90 days of getting an assignment. Hanson says that's nearly double the industry average.
But to improve on that record, Hanson has built a network of 114 attorneys in 47 states who are skilled at obtaining court orders for the recovery of collateral assets. For that, he set up a separate company called National Replevin & Surety Inc.
Armed with a court order, Hanson can repossess assets flanked by police officers. “We can become the ex-wife,” Hanson jokes. Together, Hanson says Diversified Collateral and National Replevin recover assets 97% of the time.
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