It was a Sunday evening in August, just after midnight, when I was awakened by a loud banging. I opened the front door, ready to remind my college graduate, COVID Class of 2020 not to forget the house key. Standing too close for comfort was a stocky, unmasked man with what looked like a club Billy in his hand.
“What is happening?” I cried, thinking it was a home invasion. “Oh, I’m on your game, ma’am,” he barked, adding that the car was going to be auctioned off as he made his way to a tow truck that was already hooked up to my Ford C-Max. I dragged around, begging him to please put on a mask, moaning, “I don’t understand.”
This is the scene that unfolded as my child approached our house. Then I fell to the kitchen floor, where I lay in an almost catatonic state for hours, repeating, “I’m so sorry, I’m so sorry.
In a childhood marked by dodging creditors on behalf of my parents, I had witnessed my share of economic ups and downs. Still, nothing stings like the humiliation of the repo of cars, purposefully designed for maximum traumatic effect.
Extended lease during foreclosure
My lease had expired during the COVID lockdown, and because my local dealership was not open, I had arranged for an extension. Busy managing the health and safety of my family, I hadn’t noticed that the automatic payments from my bank account for three years had been interrupted. Neither the billing statements sent by email nor the odd calls from unrecognizable numbers, which I had assumed were spammer calls, mentioned being late. I was sure what had happened couldn’t be legal.
I was wrong. Only a handful of states require advance notice for repossession and in California, where I live, creditors can legally repossess without notice if you’re a day late. It was astounding to discover that consumers do not have the ‘right to be cured’, which means that creditors are not required to offer the option of making up payments to avoid repossession and what to offer to save. your up-to-date account is not a guarantee of resolution.
Lenders can just decide to auction off a car, as my pension agent threatened. At auctions, cars regularly sell for less than the purchase price on finance deals. Guess who’s about to tell the difference?
Given widespread economic suffering and the need for access to safe transportation, it seemed unfathomable that millions of Americans whose cars were repossessed and credit ruined during the pandemic were left to fend for themselves. Who are these reprobate debtors? Who are these reprobate debtors? Laid-off teachers and health workers, mothers of school-aged children and members of marginalized groups.
The federal government has offered student loan relief, child care credit and extended unemployment benefits, in addition to an unprecedented moratorium on residential evictions. The Biden administration has pledged to extend the moratorium, and part of the proposed housing relief includes funding for landlords that relies on handing over at least some of the past due rent.
Yet the federal government has failed to alleviate auto loan defaults, and the consequences will haunt us long after the pandemic has subsided. As the unfortunate but all too true saying goes, you can sleep in your car, but you cannot drive your house. John Van Alst, a lawyer at the National Consumer Law Center, warns: “Lack of cars can drastically reduce access to education, health care and good jobs, reducing economic success at the generational level.”
Negotiating for my hostage car
The resolution of my takeover took on the character of a hostage negotiation.
Overwhelmed and understaffed, the collection agency took a week to locate my car. As it turned out, vehicles picked up in Los Angeles, including mine, were seized in Redlands, over two hours away. This made Ford’s March 2020 statement expressing its commitment to “help communities in times of need” particularly hollow. Consumers were expected to book appointments on tight deadlines and, with a backlog of thousands of trade-in cars, braced for a two to three hour wait at the repo lot. . That same month, I was diagnosed with stage four lung cancer, which further exacerbated my concerns about exposure. As the only driver in my house, now without a car, how was I supposed to safely handle this feat?
The next hitch was Ford Credit. Representatives could only be hooked up through the collection agency, presumably due to employees working from home, resulting in endless holds, accidental disconnections, and sour waits for return calls. Only after I Google searched “Help! My car has been repo’d!” Have I heard of Ford’s COVID-affected customer hotline. Then, because there were no standard criteria for receiving help, my best bet was to cry, beg, and plead my case over and over.
I was able to give my full account. Nonetheless, negotiating a settlement that includes reimbursement of repossession fees and delivery of my car to my home is a measure of privilege beyond ability to pay.
How many hourly workers or parents supervising school children could save the time I devote to them? I had unleashed a stubborn determination sharpened through years of rejection as an actress. The irony didn’t escape me: In 1999, I introduced the Ford Focus to the US market in a series of commercials I was hired to write and act for. Former Ford spokesperson, my message is now “focused” on outrage. and disbelief at the lack of consumer protection during repossessions.
A well-intentioned provision of the CARES Act ordered creditors not to report defaults to credit bureaus. Except the protections applied only to forbearance accounts, and my car had already been taken back. My credit rating plunged overnight, hitting just above the subprime rate.
Dark Scourge of Repeats
We’ll never know how many repossessions have taken place during the pandemic, in addition to the 1.5 to 2 million cars that are repossessed each year, as the industry does not share those numbers. According to the Federal Reserve Bank of New York, in the second quarter of 2020, 5% of auto loans were 90 days past due, the highest rate in more than seven years.
Additionally, the Federal Office of Consumer Protection reports that 70% of complaints received since COVID come from consumers who have been denied a repair and 60% of complaints related to lender attempts to repossess or deactivate a vehicle. This is a doubling of complaints from the previous year, what Frontier Group’s Gideon Weissman calls “a signal that consumers are in trouble and that many lenders are not coming to the rescue.”
The situation is made worse by the type of forbearance offered by creditors: bad debts have been added to the end-of-period fees.
“For borrowers with subprime financing, disproportionately people of color, often with 20-30% interest rates, many of these loans will not be due for five or six years, and the cost the end will be astronomical, ”says Van Alst, making even more urgent legislation dealing with notice and the right to cure and forgive loans.
Without my experience, I would have remained in the dark about this dark scourge. So much shame is associated with repossessing a car that people would rather admit ED than having their automobile stripped. I have published essays on my vaginal atrophy and downward mobility, so this vessel has already sailed for me.
Perhaps there is a simple explanation for our nation’s collective blindness to the underlying inequalities in auto financing and the suffering caused by auto trade-ins. Homeless people are visible on the streets of every American city and therefore more difficult to ignore, but for Americans who are already marginalized and vulnerable, losing their transportation can mean they are indeed gone.
Annabelle Gurwitch is a New York Times bestselling author and actress. His most recent book is “When Are You Going? Adventures in Downward Mobility”. Research for his editorial was supported by a grant from the Economic Hardship Report Project.
This article originally appeared on USA TODAY: Car Trade-In Rises Amid COVID, Without Help, Relief For Consumers