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Weekly Industry Update: Fed Minutes, PeerIQ - Cross River Bank Strategic Partnership

By Vy Phan

February 24, 2018

Greetings, The Fed released the minutes of the January FOMC meeting and provided a bullish outlook to the economy with upside risks due to tax reform. The committee indicated that they were on track to raise interest rates in the March meeting, and market participants are expecting 3 rate hikes in 2018. Higher rates would eventually need to be passed on to borrowers who have enjoyed record low interest rates for the last few years. ABS markets have been well-behaved even with recent equity volatility, although no deals have priced in the last few weeks. Here is our previous coverage of ABS markets and MPL deals issued this year. The NY Fed report on The Role of Technology in Mortgage Lending concluded that FinTech lenders using online applications make quicker and better loans with lower default rates. Specifically, they reduce processing times by 20% and default rates by 25%. They also respond more elastically to changes in mortgage demand and streamline refinancing. The report also found that FinTech lenders aren’t particularly better at reaching underserved borrowers. In earnings news, LendingClub announced record revenue of $156.5 Mn for 4Q2017 and a net loss of $92.1 Mn. LC stock has dropped ~18% since the announcement. The loss stemmed from LendingClub settling shareholder litigation for $125 Mn, a positive move as the company seeks to put its lawsuits behind it. Originations dropped slightly to $2.436 Bn. LendingClub indicated that rising interest rates could cause consumers to seek alternative solutions to high-interest credit card debt, which would be positive for the company. LendingClub has also increased the interest rate on most grades by 40bps, and you can monitor how coupons across various loan grades are changing using the PeerIQ platform. Reach out today! PeerIQ News PeerIQ had an exciting week with the announcement of our strategic partnership with Cross River Bank and the launch of our Consumer Credit Suite. Cross River, an established financial services company, and PeerIQ announced a strategic partnership that will streamline capital sourcing between non-bank lenders and institutional loan buyers. The new effort will combine Cross River’s capital, technology, and robust regulatory compliance processes with PeerIQ’s risk management platform, loan/borrower data sets, and data verification tools to enable community banks and other loan buyers to more easily access the sector. PeerIQ also announced the release of Consumer Credit Suite, a fully integrated data and analytics enhancement available via the PeerIQ Analytics platform. The result of a year-long collaboration with TransUnion, this product combines TransUnion’s deep consumer credit datasets with PeerIQ’s risk analytics platform to offer its clients institutional investors and lenders a powerful tool to analyze and optimize their loan portfolios and make better investment and origination decisions. Below is some coverage on these releases: PeerIQ at SFIG Vegas The PeerIQ team will be at SFIG Vegas next week. Do check out PeerIQ’s Credit Facility Management Suite and Consumer Credit Suite. The Credit Facility Management Suite streamlines credit facility management—for borrowers and lenders— though transparency, risk monitoring and visual reporting. Using this suite you can optimize allocation for breached covenants, optimize pledged collateral, solve for allocation across facilities and generate your borrowing base report. The tool enables covenant monitoring, simulating origination expectations and projecting collateral paydowns. The Consumer Credit Suite offers in partnership with TransUnion, the most robust consumer credit reference data tool in the market—going back to 2000. Covering Unsecured Consumer, Auto, Student, Credit Card, Mortgage, and HELOC asset classes, the suite is essential for monitoring credit trends and performing vintage and benchmark analyses. Do stop by our booth or reach out to schedule a meeting! Conferences: PeerIQ in the News: Industry Update: Lighter Fare