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Marketplace Lending: Regulation Ahead?

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Marketplace Lending: Regulation Ahead?

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  1. Loans against Property

  2. Marketplace Lending: Regulation Ahead?

  3. The Consumer Financial Protection Bureau (CFPB) recently announced that it would start accepting consumer complaints about marketplace lending. • Marketplace lending, previously known as “peer to peer” or “P2P” lending, emerged in the aftermath of the financial crisis. • A combination of tightening credit markets and low interest rates created a perfect marriage between consumers looking for loans and investors looking for profit. • In its first incarnation, peer to peer lending served as an online matchmaking service, allowing prospective borrowers to post requests for loans to be reviewed by individuals willing to make those loans.

  4. “Peer to peer” referred to the fact that the lenders were ordinary people, just like the borrowers. • The Loans against Property are non-recourse, meaning that if the borrower fails to repay, the lender is simply out of luck. • Although these would appear to be risky loans, in fact, the default rate has been surprisingly low: 4.9 percent at market-leader. • Prosper as of the end of 2014, and 5.3 percent at the other leader, Lending Club, during the period between Q1 2007 and Q1 2015.

  5. The loans have performed so well that the market quickly attracted institutional investors and more sophisticated business models. • As the two leading providers of marketplace loans today, Prosper and Lending Club use the same (somewhat complex) model. • The companies issue notes to investors that are obligations of the issuing company. • http://www.cato.org/blog/marketplace-lending-regulation-ahead

  6. Click to know more on Loans against Property: http://www.idbi.com/loan-against-property.asp Thank You

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