Marine lenders managing lien perfections, defaults amid uncertainty

Marine lenders must take a state-by-state approach to lien perfection, repossession and deficiency recovery to protect their rights and manage losses amid rising repossessions of recreational vehicles and changes in state laws. As more states, such as New York, adopt the 2022 Uniform Commercial Code amendments , and other states, such as Utah and Texas, adjust their repossession and lien laws, lenders must be sure that their lien perfection remains intact, especially in boats, according to panelists during a Feb. 19 webinar presented by creditors’ rights law firm Weltman, Weinberg and Reis . Boats often involve multiple lien components, including the hull, trailer and, in some cases, an outboard motor with its own identification number. Failing to perfect a lien on each component can complicate recovery efforts, as lien requirements vary widely by state, Weltman collections attorney Stuart Best said during the webinar. “Certain states use a Uniform Commercial Code filing; some use a DNR, a different term for the Department of Natural Resources , and some use the Secretary of State, similar to titling of a vehicle and a car,” he said. “When you're perfecting the lien, you have to figure out where that boat is located, where the contract is written, and find out how to perfect the lien within that state.” After a borrower defaults, lenders should confirm the default, verify lien perfection, check for bankruptcy or military protections and evaluate whether the collateral’s value justifies recovery costs, Weltman collections attorney Stefanie Kempfer Collier said during the webinar. Navigating repossessions For nationwide lenders, much of their business is done in the “backyards” of the dealers they work with, so having perfected, primary liens that work in each state is critical, especially for potential federal disputes, Tom Thornton , senior vice president of M&T Bank , said during the webinar. “Federal courts now recognize these secondary liens in a lot of states as unconstitutional,” he said. “While it may cost us a little bit more to go to federal courts, they recognize them, and they'll wipe those liens off entirely in some instances.” Depending on the case, repossession can be referred from district courts all the way to federal courts, so lenders must have perfected primary liens to ensure they can secure their collateral, especially since federal courts have more standardized operations. As a result, M&T Bank, Thornton said, built its nationwide marine recovery strategy on five tenets: Understanding impound laws in all 50 states; Aggressively negotiating fees; Using dealer relationships and remarketing insights; Assessing asset value versus cost, and Relying on its attorney network when negotiations fail. At the end of 2025, M&T Bank’s 30- to 89-day recreational finance delinquencies, as a percentage of its portfolio, was 0.83%, down 1 basis point (bps) year over year, according to an Auto Finance News analysis of the company’s 10-K released Feb. 18. Nonaccrual loans, as a percentage of its portfolio, landed at 0.21%, down 4 bps YoY. Time-consuming proceedings Delinquencies and repossessions exist across the marine space, and recoveries can also become a time-consuming process as legal proceedings take place when negotiations fail, especially when the value of the boat makes it not worth a repossession, Collier said. “In those cases, I always recommend, let's look at the money judgment part. Perhaps we just proceed ahead and sue on the balance that our consumer owes us,” she said. “Make sure that your consumer is on an active bankruptcy, or that your loan hasn't been discharged, and then always review state law.” Depending on a state’s laws, there can be several factors, such as right-to-care laws or redemption rules, that can prevent the start of the repossession process, Collier said. Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with Auto Finance Summit East and Auto Finance Capital Summit in May. To see event agendas and register, visit autofinance.live .

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Marine lenders managing lien perfections, defaults as repos rise, laws change

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