This week we speak to Samir Desai, founder of peer-to-peer lender Funding Circle. Friends often share money-making ideas over a few drinks in a pub, but it is not often that the scheme in question ends up creating a billion pound business. But that is ultimately what happened after Samir Desai first discussed his big vision with two old university mates when they met up for a few pints in a bar in central London in 2009. At the time the UK and the rest of the world were still mired in the maelstrom of the global financial crisis. As a result, banks had stopped lending to small businesses.
The 2018 Digital Mortgage Conference will be held Sept. 17-18 in Las Vegas. In its third year, the conference is a one-of-a-kind experience that brings together lenders, servicers and technology developers. As always, the event's main attraction will be the nearly three dozen live demonstrations of digital mortgage products representing the entire spectrum of the home lending process. While it's a great opportunity for mortgage executives to get a first-hand look at the latest innovations, the stakes are even higher this year for the vendors. A panel of judges will score each demo and the vendor with the most innovative product, technology or idea will win a $10,000 prize.
Has the Bank of Mum and Dad run dry? Then maybe it's time to ask someone else's parents to help you buy your first home. A survey by Legal and General suggests more than a quarter of UK parents (27%) would consider funding other people's children onto the property ladder in exchange for a return on their investment. This year, the so-called Bank of Mum and Dad will lend 5bn to the next generation of UK homeowners, making it the equivalent of a top 10 UK mortgage lender, says Legal and General. Now, it looks as though some parents could consider reaching out to needy nieces and nephews, godchildren, their friends' children and even strangers.
A tough few months for online lenders got even more difficult Monday with the resignation of one of the industry's leading figures, a development that adds to already considerable uncertainty for the business. Lending Club, the San Francisco firm that's become the largest of a new class of so-called marketplace lenders, announced Monday that founder and Chief Executive Renaud Laplanche would resign over problems with the sale of loans this year to an investor. The news sent shares of the firm tumbling 35% for the day to 4.62, leaving them down 70% from their December 2014 initial offering price of 15. It added to an already lengthy list of concerns about an industry that have led firms to lay off workers and cut once heady growth expectations. Lending Club and rival Prosper, both in San Francisco, originated 12 billion in loans last year, up from less than 3 billion in 2013.
New York state's financial regulator sent a letter to 28 companies this week requesting information about their online lending activities, according to a person familiar with the matter and a copy of the letter seen by Reuters. The New York Department of Financial Services sent the letter to San Francisco-based Prosper, the second-largest online lender, as well as to Avant, Funding Circle, Upstart and others, according to the person, who was not authorized to publicly discuss the matter. The business is raising some novel questions for banking regulators, because online lenders have shunned a traditional banking model that uses deposits to make loans, and bypass their regulations. Instead, online lenders either connect borrowers directly with retail investors who want to fund loans, or they extend credit to borrowers, then quickly bundle the loans into securities that are sold to investors. The department demanded "immediate compliance" with New York licensing requirements for debt collection, money transmission and mortgage lending activities, according to a copy of the letter reviewed by Reuters.