Special Report

Participants Expectations in a Time of Crisis - Second Annual Report

June 24, 2020

With the worst economic recession of our lifetime as a real possibility, we reopened our survey to compare market sentiment in this Covid-era to our results from 2019 and the pre-Covid 2020 survey. The study that follows is the result of broad participation from over 100 market participants of all types, including originators, investors, trustees, servicers and others in the field. 

It's time for the market to adjust its mirrors, buckle up and realistically consider whether a subprime auto crisis is imminent. Download our second annual special report to learn more

Marketplace Lending

OCC Says It Knows How to Identify the “True Lender”

Aug 02, 2020 | By JOSEPH CIOFFI

Tank: “How? Morpheus: “He is the one.” — The Matrix Last week, the Office of the Comptroller of the Currency (OCC) did its best to simplify the search for the one “true lender” in any transaction. Its proposed rule should provide clarity to lending partnerships between banks and third-party non-banks, such as marketplace lenders (MPL).  It’s the OCC’s second step, following its rule regarding the “valid when made” doctrine to end the uncertainty created by decisions like Madden v. Midland. Yet, ...

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Marketplace Lending

The “Valid When Made” Rule Strikes Back

Jun 07, 2020 | By JOSEPH CIOFFI

“It’s over, Anakin, I have the high ground.” — Obi-Wan Kenobi, Star Wars Episode III: Revenge of the Sith Last January, we reported on the Office of the Comptroller of the Currency’s (OCC) proposal to codify the “valid when made” rule—a longstanding doctrine that has served as the bedrock for bank lending for nearly two centuries—which, in 2015, was thrown under the bus by the Second Circuit in Madden v. Midland Funding. Valid When Made Under the “valid when made” principle, loan terms ...

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Marketplace Lending

You Down With PPP? Paycheck Protection Program Troubles Are an Opportunity for Marketplace Lenders

May 17, 2020 | By JOSEPH CIOFFI

Few participants involved in the federal government’s Paycheck Protection Program (PPP) will likely be able to escape criticism once the program is all said and done. For the marketplace lenders and fintech companies that have been shut out of the program, the preclusion may ultimately be a blessing. It may also be an opportunity to improve their public image and competitive position by satisfying the goals and markets intended to be served through the PPP. For those who got their wish to ...

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Marketplace Lending

On Our Watch: Marketplace Lending in the Age of COVID-19

Apr 12, 2020 | By JOSEPH CIOFFI

Marketplace lending took root in the shadow of the last financial crisis. Now, the question for consumers, businesses and marketplace lenders (MPLs) alike, is whether the conditions are right for it to thrive in the wake of the coronavirus and what may be the “deepest recession on record.” No doubt, cash-strapped consumers and small businesses will want to turn to nonbank lenders, such as MPLs and other fintech companies, for funding. MPLs may even be able to provide those loans through the ...

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Marketplace Lending Mortgage Loans and MBS Auto Loans Student Loans ESG

Market Insights in a Time of Crisis

Mar 26, 2020 | By JOSEPH CIOFFI

Distance – the space between – defines our present in so many respects, but that’s not what will lead to success in any market. We have distance from each other, distance from our normal life of just days ago and distance from a future without COVID-19. But that distance has underscored the interconnection of people and markets and their actions like nothing has before. Sure, we knew we were all connected, and we knew the cause and effect of factors that drive our economy, but the coronavirus ...

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Marketplace Lending

Marketplace Lending: Market Momentum in 2020

Jan 17, 2020 | By JOSEPH CIOFFI

Expectations are high for marketplace lending in 2020 but, more than any other lending sector, there are legal questions on the horizon that are likely to have an impact going forward. A Market on the Rise Marketplace lending deals have been steadily climbing since FinSight started tracking data in 2013. There was a jump from 2018 to 2019 with the number of tracked deals going from 37 in 2018 to 47 in 2019, and the value of those deals rising from $12.3 billion to $15.2 billion. Recently, Kroll ...

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Marketplace Lending

Marketplace Lending: 2019 60-Second Review and Insights

Sep 12, 2019 | By JOSEPH CIOFFI

ABS Issuances, by the Numbers Ten securitizations totaling $3.6 billion closed in Q1 2019, down 14% versus a year ago. PeerIQ attributed this decrease to “market volatility,” but noted this still represents the fourth-highest issuance in any quarter. Average deal size decreased to $366 million in Q1 2019, down from $0.6 billion the previous year. SoFi led the way with three deals totaling $1.5 billion in the first quarter, followed by Kabbage with a $700 million securitization. Performance and ...

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Marketplace Lending

Marketplace Lending: 60-Second Market Review and Insights

Jun 27, 2018 | By JOSEPH CIOFFI

ABS Issuances, by the Numbers Seven securitizations totaling $4.3 billion closed in Q1 2018, up 34% versus a year ago and representing the second-highest issuance in any quarter (after Q4 2017). Q1 issuances comprised $2.1 billion in student loan ABS, more than double Q1 2017 and the highest ever quarterly issuance of student deals. Total ABS issuance is expected to climb to $18 billion in 2018, up 30% from 2017. Performance and Practices Delinquencies increased in Q1 2018 across the consumer ...

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Marketplace Lending

Marketplace Lending in 2018: A DIY Mindset

Jan 22, 2018 | By JOSEPH CIOFFI

There is no doubt marketplace lending, by offering speed and flexibility not historically seen in traditional banking, has done its part to foster the “do it yourself” (DIY) era. At its core, the DIY mindset starts with a question – why pay someone to do a job or share your profits or glory, when you can do it on your own? And ideas come to fruition through the vast amount of information now available to model success. In this DIY age, it seems anyone can start a company, create a fund or even ...

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Marketplace Lending

From On Fire to Under Fire: Marketplace Lending Enters 2018 Taking on Flak

Dec 20, 2017 | By JOSEPH CIOFFI

Familiarity might breed contempt, but it seems nothing brings out the detractors like success. After a meteoric rise, marketplace lending has had its share of challenges and scrutiny, but the future should still be bright for such an industry on the forward edge of technology and consumer needs. Yet marketplace lending seems to be ending 2017 under an unwarranted attack from regulators and commentators determined to find similarities in marketplace lending to the subprime mortgage market in the ...

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Marketplace Lending

Marketplace Lending: 60-Second Market Review and Insights

Sep 18, 2017 | By JOSEPH CIOFFI

ABS Issuances, by the Numbers Nine ABS deals totaling $3 billion closed in Q2 2017, a 76% increase from Q2 2016. Q2 ABS issuances included approximately $2 billion in consumer (up 28% versus Q1 2017) and approximately $1 billion in student (down 5% versus Q1 2017). All deals were rated. Total ABS issuance is expected to be over $11 billion in 2017. Performance and Practices Performance continued to weaken as delinquencies and charge-offs increased in Q2 for personal, student, and subprime auto ...

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Marketplace Lending

On the Dark Side of Automation: Borrowers Will be Affected but Marketplace Lending is a Potential Bright Spot

Jul 17, 2017 | By JOSEPH CIOFFI

As lenders lean on data, algorithms and automation for more efficient loan underwriting, observers have noted that these largely untested tools have yet to go through an economic cycle. The greatest challenge for automated lending, however, may lie in the very technology that drives it. Artificial intelligence and automation aren’t just for lenders, after all—and as companies across industries adopt them in the coming years, the impact on borrowers’ economic stability could be severe.  But ...

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Marketplace Lending

Evolution or Regression: The Choice for Marketplace Lenders

Jun 16, 2017 | By JOSEPH CIOFFI AND MASSIMO GIUGLIANO

Act more like a traditional bank, and less like a tech start-up. That’s what some marketplace lenders are trying to do to appease some critical investors. Acting like a traditional bank, however, could be a slippery slope. Operational changes may be enticing to some investors, but they threaten the very foundation of marketplace lending, potentially shutting out the segment of the population marketplace lending was meant to serve. Evolution was expected.  Regression was not. The way forward ...

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Marketplace Lending

OCC Action Touches Off Fintech Turf War

May 31, 2017 | By JOSEPH CIOFFI

Beneath all the excitement surrounding the fast-growing “fintech” industry has been a more practical question: who, exactly, is going to regulate this new breed of enterprise? The U.S. Office of the Comptroller of the Currency offered one answer recently, announcing its intention to grant national bank charters to fintech companies. The OCC action would allow companies that gain charters to operate nationwide. Equally significant, it would result in state-level preemption. Chartered fintech ...

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Marketplace Lending

Law360.com, “Madden Creates More Uncertainty for Marketplace Lenders”

Mar 23, 2017 | By JOSEPH CIOFFI AND MASSIMO GIUGLIANO

In "Madden Creates More Uncertainty for Marketplace Lenders,"" a Law360 article, Joseph Cioffi and Massimo Giugliano discuss the ongoing case of Madden v. Midland Funding and its impact on the marketplace lending. The authors explain the significance of the initial decision by the Second Circuit in 2015, which created substantial risk for marketplace lenders that rely on a partner bank origination model to avoid state usury caps, and analyze the potential impact of a subsequent decision ...

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Marketplace Lending

Structured Credit Investor, “Next Steps: Madden Ruling Created Landscape of Uncertainty”

Jul 12, 2016 | By JOSEPH CIOFFI

In this Structured Credit Investor article concerning the potential effects of Madden v. Midland Funding on marketplace lending platforms, Joseph provides suggestions for platforms seeking to adapt to the ruling and the potential for the ruling to shape the industry. Joseph notes, “if partner banks start to get more involved in the origination process so as to avoid the problems of Madden, these banks may start to question why they need the platforms at all and there is the potential that they ...

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