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LendIt Fintech News: Daily Coverage of Fintech & Online Lending


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The Bank Partnership Model Affirmed in Settlement With Colorado

This groundbreaking settlement resolves the "true lender" issue in Colorado and could be used as a regulatory framework across the country

August 18, 2020 By Peter Renton Leave a Comment

Views: 1,305

The issue of “true lender” has been one that has dogged the marketplace lending industry virtually since its inception. When a borrower takes out a loan from most marketplace lenders the loan is often originated by a partner bank then held on their balance sheet for a short time before being sold to the lending platform. There has been debate about who is the true lender in these circumstances.

In 2017, the Colorado Attorney General filed two separate lawsuits against Marlette Funding and Avant alleging violations of the state’s Uniform Consumer Credit Code by charging interest rates in excess of those allowed under Colorado law. These loans were originated by out of state banks, Cross River Bank and WebBank, who were also party to these lawsuits. These banks are allowed to export higher interest rate caps across state lines but Colorado was saying that this was all a scheme to lend above Colorado’s usury rate limited.

The upshot of these lawsuits was that Colorado consumers had less choice as both Avant and Marlette, along with WebBank, started excluding Colorado consumers from their loan offerings. And it even called into question the business models of Cross River Bank and WebBank as both banks have established long running partnerships with many marketplace lenders.

After years of back and forth, and much time and expense, today the Colorado Attorney General announced a settlement with all parties. It is hard to overstate how important this is for the industry. These lawsuits have been hanging over the industry for years and even though the OCC recently proposed a new true lender rule there was still a great deal of uncertainty.

With this settlement, which amounts to $1.55 million in total, the companies have “committed that they will not lend to Colorado consumers at rates above 36% and will provide consumers with other protections required by Colorado law. In addition, non-bank partners will maintain a Colorado lending license.” There are also certain oversight requirements and they laid out a model for successful bank-fintech partnerships in Colorado. It is this model that could be adopted by other states and become a de facto national standard. Which is why this is big news today.

The industry was clearly pleased with this settlement. I reached out to several parties to get their commentary on what this means. First, Nat Hoopes from the Marketplace Lending Association: [Read more…]

Filed Under: Fintech Tagged With: Avant, bank partnerships, Colorado, Cross River Bank, Madden v Midland, Marlette Funding, true lender, WebBank

Views: 1,305

New Action Plans from the Leading Consumer Lenders

We reached out to several leading online consumer lenders to see what actions they are taking to deal with the fallout from COVID-19

March 25, 2020 By Peter Renton 2 Comments

Views: 2,920

There is likely no one alive who has witnessed this level of economic disruption in this country in such a short time span. With potentially millions of people losing their jobs in the past two weeks this could have a dramatic impact on the consumer lenders.

We reached out on Monday of this week to several leading online consumer lenders, across a range of the credit spectrum, to get a sense as to how they were responding to the rapidly changing economic conditions. We asked four questions:

  1. What are you doing to help your existing borrowers?
  2. How are you changing their underwriting?
  3. How are you responding to increased loan demand?
  4. What is your message to investors?

We heard back from several of the leading companies although some wanted to talk on background only, preferring not to go on the record at this time. Suffice it to say that every single lender has reacted quickly to this looming crisis.

Below are their responses.

LendingClub 

LendingClub released this 8-K earlier this week that has a detailed explanation as to how they are responding. Here is a short summary: [Read more…]

Filed Under: Peer to Peer Lending Tagged With: Aura, Avant, consumer lending, coronavirus, lendingclub, Marcus, Marlette Funding, Opploans, Prosper

Views: 2,920

Two Big Banks Set to Launch Their Own Online Lending Platforms

Traditional banks have moved into the online consumer lending space, making a crowded market more competitive.

December 20, 2017 By Todd Anderson Leave a Comment

Views: 327


A little over a year ago Goldman Sachs launched their consumer lending platform Marcus as part of a digital strategy to move into the retail banking segment. They have since grown faster than any online lending platform with originations approaching $2 billion. Goldman Sachs now believes revenues from online loans will equal that of trading in the near future.

Seeing this success more traditional banks have started to move into the online consumer lending space. In this article we will focus on two recent entrants: PNC Bank and Barclays.

[Read more…]

Filed Under: Peer to Peer Lending Tagged With: Barclays, Lending Club, Marcus, Marlette Funding, PNC Bank, Prosper, SoFi

Views: 327

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ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

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