Indirect auto finance company. Policy is to never repo from any active duty customer, period. So:

• Primary began active duty a year before vehicle purchase
• Coborrower non-military
• Primary may be deployed out of the country, on a recent short phone call says nothing he can do ask the Coborrower
• Coborrower not engaging
• 6 months past due

I don't know if it's right or wrong to pick it up, but some other large players in my industry will also never involuntarily repo, and as one exec said to me, "military folks just get free cars if they want."

Thoughts on this?

Welcome to BOL!

Personally, I'd be careful from a rep & brand perspective. Even if the details may support your decision to repossess, if a media outlet gets a hold of this, the story will absolutely be "XYZ, Co. repossesses vehicle from deployed military member" and you'll be unable to provide details to defend yourself under the privacy laws (at least in the court of public opinion).

Although, on the other hand, if you're just buying loans from dealers, your rep & brand may not be as important as it would be for a direct lender. If you're paying enough for the loans, you'll probably still get them.

You can get a court order. (I wouldn't)

50 U.S. Code § 3952(a)
(1) Protection after entering military service After a servicemember enters military service, a contract by the servicemember for—
(A) the purchase of real or personal property (including a motor vehicle); or

(B) the lease or bailment of such property,

may not be rescinded or terminated for a breach of terms of the contract occurring before or during that person’s military service, nor may the property be repossessed for such breach without a court order.

Thanks for your perspectives. I don't do the court order thing even on SCRA-protected because (for one thing) it costs more in fees/management costs to get a court order than the cars are typically worth. Maybe if I were Lamborghini Finance or something I'd try.

If he were not deployed, but was sitting near some base in the US, would that change your strategy?

Also, it's getting to the point where a lot of service members (non-SCRA) know that lenders are loathe to repo them, and they kind of put it in your face, even saying things like they know they don't have to make payments because no lender will repo them due to reputation risk or even the cost of winning in court. It's pretty slimy stuff.

Is he on active duty serving the country? There's another active thread (https://www.bankersonline.com/forum/ubbthreads.php/topics/2209815/) discussing who's covered.

I did notice that the original post emphasized that the debt was incurred while the borrower was already on active duty, which I missed. That would make this a risk/rep decision. I will say that calling stateside active duty "sitting near some base in the US" could probably be worked into a headline pretty well though.

The rest of the statute I cited above is:

(2) Applicability
This section applies only to a contract for which a deposit or installment has been paid by the servicemember before the servicemember enters military service.

It is not a protected debt as it is not pre-service. There is reputational risk in a repo, but the bank is within it's rights. Do you know what condition the vehicle is i, has there been contact with the borrower, and would they allow a voluntary repo?

It could be the car isn't worth taking, or it may be the only way to retire the debt. (RARELY will a repo retire a debt in my experience.) But my point is, does the borrower even want the car such that the bank can work our a payment plan that is better than a repo and sale?

I agree that legally you can repo, but reputation wise you probably don't want to. Typically, a call to the Base CO (normal duty station) is far more effective in getting repayment than repo. In my experience (although I've not had deployed individuals) CO's will ensure payment is made and typically the military wants to handle it "in house" without it becoming public, so there is very little reputation risk with at least this attempt to collect compared to a repo situation.

"may not be rescinded or terminated for a breach of terms of the contract occurring before or during that person's military service, nor may the property be repossessed for such breach without a court order"

When the Act states the above, does that mean that a court order is required for a breach only during the time before or during the person's military service on the loan made before entry into military service (allowing the bank to repossess on a breach occurring after the person's military service without a court order), or does this comma-splice mean a court order will always be required on a loan made before entry into military service even if the breach occurs after that person's military service (requiring the bank to obtain a court order to repossess on a breach occurring after the person's military service)?

Pre-service loans are protected. After military service the protection will fall off. While protected, you can't repo it without the court order. That doesn't mean, in my opinion, that the SM can't abandon the car to you, but ensure it's noted it was the SM's choice.