New Info On The End of LoanMe
It was originally communicated as “market conditions.” That’s what NextPoint Financial, LoanMe’s parent company, announced in June 2022 as the reason that it was winding down LoanMe’s business. The news shocked the world because LoanMe had just been acquired by NextPoint for a price of more than $100M.
Now, after many delays, NextPoint has finally filed its 2021 financial statements, and with that more information about what happened with LoanMe.
Around the time it was being acquired (In Q1 2021), LoanMe transferred the majority of its loan portfolio to sub-servicers to “secure expected financial and operational efficiencies,” the report states, but “transition challenges negatively impacted loan performance and servicing costs.” The problems were allegedly so bad that in March 2022 they had to move the loan portfolio to yet another sub-servicer.
“LoanMe’s management’s attention was diverted from loan production to sub-servicer oversight,” the report states. This, when combined with lower than expected originations due to a competitive lending environment made for a challenging situation.
On May 9, 2022 LoanMe filed a lawsuit against loan servicer Amerifirst Home Improvement Finance LLC in Delaware Superior Court over alleged failures to live up to its loan servicing contract. Amerifirst filed counterclaims against LoanMe on November 3rd. The case is pending.
The tide of events had already overcome the company, however. On June 21, NextPoint announced that LoanMe would cease loan originations but would continue to service outstanding loans. LoanMe’s report attributes this final decision to an “elevated rate of charge-offs” and “a significant shortfall of cash being generated versus the amount required to fund the operations.”
Three months later, NextPoint decided to unwind LoanMe from its business altogether.
LoanMe originated both consumer and business loans. Its business loans ranged from 2-10 years. Business loan customers had an average FICO score of 692.Last modified: January 16, 2023
Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.