Daily Fintech Conversations

A Review of UK P2P lending platform Proplend

Hey,

Check out our ‘Proplend Investment Review’ by clicking below.

We look at this property lender’s performance, product returns, borrower types, security packages and much more!

Proplend Investment Review

Thanks,

Having read only the link and glanced at their website, here are some initial thoughts.

I like the break up of tranches based on LTV. It makes sense, and actually I worked through a model like this a few years ago with a man who has a suite of mortgage & real estate patents in the US.

Although from the opposite sort of angle. Started with the understanding that… Given that P2P methods are generally applied to the most risky tier of a market first, and work their way into less risky tiers.

We envisioned that traditional Fannie/Freddie loans would be used and funded by banks, and could go up to 60% LTV. This lets the big money institutional guys with access to the lowest cost of capital continue to operate in the low risk tiers which they are accustomed to doing.

But leaves a riskier slice of the market for P2P. So, then we figured that the remaining 20% up to 80% LTV would be “large player” P2P, with $5-10k commitments. With “small player” P2P funding anything in excess of 80% through to the down payment.

There was some other great thoughts about how to break up the risk tiers, using a different basis, rather than LTV, but that was proprietary and key to the guy’s patents so I dont feel like I should go into that.

Glad to see what I would consider a Must Have with the secondary market for the $1000 investments. Not exactly sure how they are facilitating the secondary market, I would be happy to review any material on the details of the secondary market’s operation.

Also, why are they using the terms of CMOs when this looks like a simply weighted average type of math methods (like Prosper & Lending Club)? There should not be any “tranches”, in the same way as the term is used in structured markets, unless I am missing something.