Articles by deBanked Staff
Princeton Alternative Funding Files Chapter 11
March 9, 2018Princeton Alternative Funding LLC filed for chapter 11 on Friday, court records reveal. A related entity, Princeton Alternative Income Fund, LP, also filed for Chapter 11.
Princeton Alternative Funding provides capital for businesses that make consumer loans in the non-prime market.
The Princeton Alternative Income Fund was previously reported to be a woe affecting Ranger Direct Lending after the blowup of online consumer lender Argon Credit.
AltFi reported in November that Ranger had written to Princeton to urgently seek information about Argon-related financial reporting prior to the commencement of arbitration proceedings.
Yellowstone Capital Funded $51 Million in February
February 28, 2018A company email circulated by Yellowstone Capital on Wednesday said that they originated $51 million in funded deals for the month of February. That brings their 2018 YTD total to $111 million.
Yellowstone Capital is based in Jersey City, NJ.
Lending Club Stock Price Hits Record Low
February 27, 2018Lending Club’s stock dropped to its lowest level on Monday, closing at $3.27, according to the online lending tracker. That puts the company down 78% from its IPO price of $15 and down 87% from its all-time high.
Since going public, the company has been mired in litigation, losses, and scandal. The company has also put funding from peers aside in favor of funding from Wall Street banks.
Worse yet though for the company is that competitors like Goldman Sachs have been able to undercut Lending Club’s rates (Goldman Sachs’ Marcus charges no late fees or origination fees), while simultaneously tapping into a cheaper cost of capital (deposits).
Fed Study Debunks “Lax Screening” Hypothesis Of Fintech Lenders
February 23, 2018
The New York Federal Reserve published the results of their study on the role of technology in mortgage lending. And they bear good news for fintech, that technological innovation has improved the efficiency of financial intermediation.
Fintech lenders, it turns out, are faster, experience lower default rates, and are more responsive to changes in demand. Faster processing times did not translate into issuing riskier loans, the report concludes.
Fintech lenders were defined as lenders that offer an application process that can be completed entirely online.
The Fed researchers also found little evidence that fintech lenders disproportionately target marginal borrowers with low access to finance. On the Contrary, the data actually shows that fintech borrowing is actually higher among those both older and more educated.
“We find that default rates on fintech mortgages are about 25% lower than those for traditional lenders, even when controlling for detailed loan characteristics,” the report says. “There is no significant difference in interest rates. These results speak against a lax screening hypothesis, and instead indicate that fintech lending technologies may help attract and screen for less risky borrowers.”
The two largest fintech mortgage originators in 2016 were Quicken Loans and loanDepot.
Another ICO Leads to Losses
February 16, 2018
DropDeck, a company that launched an ICO, suffered a catastrophic event, according to the company’s company’s blog.
The digital wallet software where token purchasers were being held was hacked. But rather than the funds being stolen, the Ethereum (ETH), the cryptocurrency that purchasers sent to DropDeck to make their investment, was irretrievably locked in the wallet. In effect, the user money is there but no one can withdraw it or use it, not even the company. All users of that particular wallet software were cruelly affected, not just DropDeck.
The DropDeck loss totals 2,766 ETH or about $2.6 million at today’s prices.
George Popescu was one of multiple advisors to DropDeck according to a company post. Popescu is also the founder and CEO of Lampix, an augmented reality platform company whose own ICO has so far resulted in participant losses of nearly $5 million to-date, due to a decline in the Lampix token price.
Lampix had announced ties to reputable organizations such as the Aspen Institute while soliciting token purchasers. However, Douglas Farrar, senior manager for communications and public affairs at the Aspen Institute, previously told deBanked that he could find no business relationship between Aspen and Lampix, when deBanked attempted to confirm one. Popescu informed us, however, that a Fellow from Aspen had invited Lampix out to Colorado to power up a meeting using Lampix, and that Lampix was paid for its services provided during that meeting.
Popescu also advised the launches of ICOs by the companies AirFox, FirstBlood, and Restart Energy. The latter, Restart Energy, a Romanian company that claims to be the fastest growing private energy and gas provider in the European Union with $20 million in annual revenue, raised approximately $30 million from purchasers through their recent ICO. Restart’s tokens, RED MegaWatts, or MWATs, which participants received in exchange for their purchase, immediately declined in value by 30% after the ICO, according to KuCoin, where the tokens can be exchanged.
Popescu is advising more companies that are gearing up to launch their own ICOs, according to his LinkedIn profile. These include companies named Opiria, FIC Network (formerly Factury), and Well Inc.
Lendr Announces Vegas Contest Winner
February 16, 2018
A Las Vegas contest marketed to ISOs by Chicago-based Lendr was a success, according to the company. Lendr revealed the first prize winner of a Vegas trip for 4 (valued at $7,500) to be iAdvance Now.
One Way Funding and Fast Cash Team won second and third place and cash prizes of $2,500 and $1,500 respectively.
Lendr had marketed the campaign through several channels including deBanked late last year.
Eddie Hamid, iAdvance Now’s president, said “Working with Lendr over the past few months has been an amazing experience.”
“Winning a trip to Vegas was a nice surprise, being rewarded for working with such an amazing team was even a bigger surprise,” Hamid said of their win. “Thank you from the iAdvance Now team, we appreciate all the hard work and efforts Lendr has provided and continues to provide.”
Abe Zeines, Jennie Villano ‘Cook Up’ Buzz
February 13, 2018Abe Zeines, of former MCA infamy, is cooking up something new, according to a video that was posted on LinkedIn earlier today. The 2-and-a-half minute clip was produced by Jennie Villano, a top social media marketer who serves as the VP of Business Development at Kalamata Advisors.
Villano was spotlighted for her notable online marketing acumen in a deBanked story last December.
In this for-fun video, Zeines appears to put spaghetti noodles into an empty pot.
Did he win the cooking challenge?
SoFi Personal Loan Performance Suffers
February 11, 2018
A story in the Wall Street Journal last week reported that SoFi borrowers are missing their loan payments at an unexpectedly high rate. The emerging trend is part of the reason the company is said to have missed its internal fourth quarter earnings projections. According to a letter SoFi penned to investors that the WSJ obtained, the company had to mark down the “value of certain personal loan assets due to lower-than-expected credit performance.”
$202.3 million of SoFi’s $9 billion in consumer loans since inception had gone into default as of November 30th, 2017, deBanked learned through a report. Consumer loans had been made to a total of more than 266,000 individual borrowers.
A recent ratings agency chart shows the default rates of SoFi Managed Portfolio consumer loans have been increasing since 2015 and that defaults are starting to occur even earlier in the repayment cycle. The April 2015 vintage, for example, showed a default rate near 0.0% by the twelfth month. The April 2017 vintage, by contrast, had already exceeded a default rate of .5% in month eight.
Last March, Bloomberg reported that the company’s personal loan losses at that time were high enough to breach bond triggers that the loans were backed by.
The consumer loan space has become very crowded as of late, with SoFi not only competing against online upstarts like Lending Club and Prosper, but also against banking stalwarts like Goldman Sachs and Discover.
