LendIt USA 2017

Originators are beginning to look at launching their own captive funds; at LendIt USA 2017 we hosted a panel featuring Cross River Bank, Freedom Financial, Money360, Credibly, UBS and Clifford Chance to discuss this idea; the originators on the panel talked about their current funds, if they have launched one, size, structure and how they currently view the idea of this vehicle in the long term; the panelists focused on diversification of funding sources; in good times it is never hard to get loan purchasers but when markets tighten how can you make sure you are prepared; they also talked about when setting up this funding vehicle should you manage it yourself or should you find a third party fund manager; how do conflicts of interest come into play when the originating company is then investing in the loan and servicing the loan; there are still many questions when it comes to setting up a fund like this, as more firms look to this option we will better understand how to answer these questions in the future. Source

Online lenders don't have a deposit base to lend out money, so they need to look at different forms of capital sources and Paul Fielding of SoFi talked about these options at LendIt USA 2017; they break up the investor pool into a few different buckets; investors looking to buy whole loans, their securitization shelf that has thus far done over 20 securitizations and direct capital from banks; understanding the right fit for the right investor and how that fits into the capital buckets is the key; while taking questions Paul discussed the recent formation of 1940 Act funds and believes the likes of BlackRock and AllianceBernstein could move into the consumer whole loan market as pensions begin to look at playing in the space; he also talked about the ABS markets being fickle, but in his view all markets are fickle as investors look at their allocation strategies. Source