Upstart Co-Founder Dave Girouard talks with Forbes about alternative credit data modeling and his firm Upstart; Girouard's inspiration for Upstart came from his experience at Google where he was involved in developing algorithmic models for evaluating candidates and their potential success as Google employees; a third of Upstart's management team comes from Google and the firm is now building advanced credit models that utilize machine learning and modern technology to make credit more accessible for borrowers; the firm is targeting loan originations of $1 billion in 2017; Upstart will be at LendIt USA 2017 and is announcing a new white label software as a service product called Powered by Upstart. Source
A quarterly report from the New York Federal Reserve says household debt has reached its highest level since 2008 at $12.58 trillion; household debt increased $226 billion in the fourth quarter of 2016; home and auto loans represent the majority of the debt; despite the increase, bankruptcies and foreclosures for the fourth quarter reached an 18-year low indicating consumers are capable of managing the added debt. Source
Tala CEO Shivani Siroya not only points to the idea of building trust to grow a customer base but also belief in her instincts.
ID Analytics identifies the need for a specific type of fraud prevention that focuses on short term application velocity or loan stacking; ID Analytics has been very involved in loan stacking prevention, promoting a consortium approach and helping to establish the Online Lending Network which is an association focused on identifying loan stacking fraud through real time information sharing; members of the Online Lending Network can receive real time information on a borrower allowing them to identify up to the minute application activity that can be used in credit underwriting; ID Analytics is committed to the Online Lending Network and expects to see continued growth in its coverage and membership. Sponsored Blog Post
Panel discusses how to determine the valuation of loans and in turn how to value funds which hold loans; over the last four years loan methodologies have changed from bank accounting (holding loans at par value and holding a reserve against expected losses) to using fair value; the most prevalent approach is a discounted cash flow analysis; this shift happened as more investors entered this space and funds got larger; James Wu of MonJa and John Schrader of Duff & Phelps dig into the details of fair value and how to comfort investors who are looking to invest in this space. Source
VeriComply provides automated loan verification services for the marketplace lending secondary market; the firm has hired former Lending Club executive Roger Dickerson as its new president; Dickerson brings experience in investor operations and marketplace loan securitizations; he will be leading VeriComply's efforts to support marketplace loan sales and securitizations through its automated loan verification services. Source
VeriComply has announced the completion of a new funding round from investors including Jon Barlow of Eaglewood Capital and John Maute of Helios AMC and Situs Holdings; VeriComply plans to use the funding for sales and operations of the firm's automated loan verification services for lending platforms and the secondary market; it is currently building out its business for verification services in the marketplace lending industry. Source
Vetary.com provides an online healthcare marketplace and financing service for pet care; the platform is managed by FinRise and the business has announced a partnership with FinWise Bank that will help expand and enhance the service offerings on Vetary.com; through the partnership pet owners can apply for financing from their mobile devices and veterinarians can offer financing solutions at the point of sale; the platform also says its loan applications can be processed in minutes with funds available for use immediately. Source
The Victory Park Capital Specialty Lending Fund reported a net total return of -1.47% for the fourth quarter of 2016 with its marketplace loan investments dragging on total return; while reporting a loss for the fourth quarter, the fund says "…there has been further progress in the reallocation of capital to balance sheet investments"; the fund increased its balance sheet investments to 51% of the fund's net asset value in the fourth quarter, up from 22% at the beginning of the year; firm continues to reallocate its fund and is also buying back shares. Source
Victory Park Capital (VPC) Investments says it is shifting investments from peer-to-peer loans to balance sheet investments after losses in October triggered significant writedowns and caused a revenue return of -1.25%; in October the return was primarily caused by a substantial capital loss of -203 basis points from "certain marketplace loans" which it did not disclose and also from losses in a securitized portfolio of Avant loans; according to Cormac Leech, "the marketplace lending portfolio is not quite seasoned, while the balance sheet side of investments is doing really well"; this performance has caused the change in focus to balance sheet investments. Source