A. Repossession of a Vehicle, Manufactured Home, or Boat
1. As required by the Title Law, the Department of Motor Vehicles issues a Certificate of Title for 1973 or newer model vehicles; 1995 or newer manufactured homes that are at least 8 feet wide or 40 feet long when transported or 320 square feet when erected on a site; and 1987 or newer model boats that are 14 feet in length or longer, when an Application for Registration and Title or Application for Title is filed with the necessary documents and fees.
2. Before repossessing a vehicle, manufactured home, or boat, make sure: a) The member is in default.
b) The member was sent at least three default notices and given a chance to cure the default before the repossession proceedings are started.
c) To check the credit union’s security interest. Verify that the credit union has proper documentation securing interest in the vehicle, manufactured home, or boat. This can be done through a lien with the Department of Motor Vehicle or through the security
agreement on the loan documents.
3. To safely transport the vehicle, manufactured home, or boat, the credit union must use a towing service or purchase a set of transporter plates from the Department of Motor Vehicles.
4. The agency handling the repossession must have a properly executed Power of Attorney authorizing him/her to repossess the vehicle, manufactured home, or boat on the credit union’s behalf.
5. If the vehicle, manufactured home, or boat is on private property and the credit union employee is told to leave the property, he/she must. At this point, the credit union can file a suit against the member.
6. Once the credit union takes possession of the vehicle, manufactured home, or boat:
a) Personally appear at the police agency in the locality where the repossession occurred and notify the police agency of the repossession immediately following the repossession.
b) Take an inventory on what items of personal property are in the vehicle, manufactured home, or boat. This should be done by two people, and photographs should be taken. Inform the member of the personal property and arrange for him/her to collect it.
d) Within 24 hours, notify the owner of the vehicle, manufactured home, or boat of such repossession, by providing an Affidavit of Repossession (Exhibit B) either personally or by registered or certified mail, sent to such owner at his/her last known address. e) Within 72 hours after the repossession, mail to the member a
notice of right of redemption (Exhibit A). This notice informs the member of his/her right to redeem the vehicle, manufactured home, or boat and how to payoff his/her debt.
B. Storage of a Repossessed Vehicle, Manufactured Home, or Boat
1. The credit union must store the vehicle, manufactured home, or boat in a safe manner. If the vehicle, manufactured home, or boat is kept on credit union property, be sure to have the proper insurance in case of theft or damage.
2. If storing the vehicle, manufactured home, or boat off credit union property, apply the funds received for the vehicle, manufactured home or boat to the cost of storage.
3. Be sure the credit union sells the vehicle, manufactured home, or boat in a timely manner to minimize storage costs.
C. Sale of a Repossessed Vehicle, Manufactured Home, or Boat
1. The credit union can sell the vehicle, manufactured home, or boat through any of the following types of sales:
a) Private Sale
(1) A private sale has no set time or place. b) Sealed Bids
(1) At least two, preferably three, bids should be taken and sale should be to the highest bidder. Keep a record of all bids, their amounts and the bidders. The credit union may close bidding after a reasonable period, regardless of the number of bids, and sell to the highest bidder.
c) Retail Resellers
(1) Another option is to place the vehicle, manufactured home, or boat on a retail reseller’s lot for resale.
d) Public Sale
(1) A public sale is held on a specific date and time and at a designated place. Specify the date, time and place on the sale notice of a repossessed vehicle, manufactured home, or boat when the credit union is reselling the vehicle,
manufactured home or boat at a public sale. If the sale date, time and place is canceled, a new notice must be sent out before a new, later sale can be held. The credit union may
purchase the vehicle, manufactured home, or boat at a public sale.
2. The member must be given a notice of sale after repossession and a “reasonable time” before the earliest time of disposition.
a) This notice must be sent to all debtors and secondary obligors (i.e. guarantors-cosigners).
b) “Reasonable time” is not defined for consumer goods (i.e. a vehicle), but 10-15 days should be sufficient.
c) The notice of sale must also include: (1) Name of debtor and secured party. (2) Description of collateral.
(3) Method of disposition (private or public sale).
(4) Time and place of a public sale or the time after which any other disposition, such as private sale, is to be made. (5) Description of the liability for a deficiency of the person to
whom notification is sent.
(6) Telephone number from which the amount that must be paid to redeem the collateral is available.
(7) Telephone number or mailing address from which
additional information concerning the disposition and the obligation secured is available.
3. Regardless of the type of sale, the credit union will try to sell the vehicle, manufactured home, or boat in a commercially reasonable manner. 4. Although there is no obligation to advertise the sale, the credit union
employee is required to get the highest sale price possible.
a) Therefore, it is in the best interest of the credit union to notify as many interested individuals (including members) as possible about the pending sale.
5. Revised Article 9 of the Uniform Commercial Code provides a sample notice of disposition for the sale of consumer goods and must be sent to the member and any secondary obligors (Exhibit C).
a) However, the credit union does not need to send this notice to any other secured parties or lien holders.
6. Credit Union as Seller and Creditor
a) Under the Federal Trade Commission’s (FTC’s) “Holder-in-Due- Course” Rule, if the credit union is both the seller and the creditor, the member’s consumer credit contract must contain specific language.
b) For example, when the credit union grants a loan to a member to purchase the repossessed vehicle, manufactured home or boat, the following notice must appear in 12-point boldface type:
Any Holder Of This Consumer Credit Contract Is Subject To All Claims And Defenses Which The Debtor Could Assert Against The Seller Of Goods Or Services Obtained Pursuant Hereto Or With The Proceeds Hereof. Recovery Hereunder By The Debtor
Shall Not Exceed Amounts Paid By The Debtor Hereunder. 7. Disposition of Proceeds
a) Once the sale has occurred, the proceeds of the disposition should be applied:
(1) To expenses incurred in the repossession and sale. (2) To satisfy the obligation.
(3) To satisfy subordinate obligations if an authenticated demand is received prior to the distribution.
8. Deficiency Calculation Notice
a) If there is a deficiency balance owed to the credit union after the credit union sells the collateral and applies the proceeds from the sale to the loan balance, the credit union must send the member a notice of the deficiency balance and a detailed explanation of how it was calculated (Exhibit D).
b) This explanation includes:
(1) The outstanding debt before the disposition, calculated within 35 days before repossession.
(2) The gross sale proceeds.
(3) The obligation after deducting sale proceeds. (4) The sale and collection expenses added to the debt. (5) Any refunds or rebates credited against the debt and not
included in the initial calculation of the debt before disposition.
(6) The balance remaining after accounting for items 1 through 5.
D. After the Sale of the Vehicle, Manufactured Home, or Boat
1. The credit union must inform the new owner the vehicle, manufactured home or boat is sold “as is.”
2. The purchaser must be given a completed Form MV-950, “Affirmation of Repossession and Bill of Sale,” (Exhibit E) Form MV-901, and the previous owner’s title, if available.
a) If there are any other open perfected liens on the vehicle,
credit union must advise the purchaser of the outstanding lien(s) on the vehicle, manufactured home or boat.
(1) These liens will be carried forward on the purchaser’s title at the time of issuance.
3. The credit union must apply the funds to any cost involved in the repossession, and then apply the remainder of the funds to the debt.
a) If there is any money left over, it belongs to the member. b) If there is not enough money to pay off the loan, the member is