Embed Size (px)
Citation preview
LESSONS FOR PEER-TO-PEER
FROM THE FINANCIAL CRISIS
TWO COMMONLY HELD VIEWS
1. MORTGAGE LENDING CAUSED THE
GLOBAL FINANCIAL CRISIS
2. SECURED LENDING IS SAFER THAN
UNSECURED LENDING
WHAT HAPPENED?
GROWTH OF US SUB PRIME
WHAT HAPPENED?
EVOLUTION:
SIVA
NIVA
NINA
OPTION “ARMS”
US SUBPRIME DELINQUENCIES
US PRIME DELINQUENCIES
- AUTOMATED
- INCREASINGLY LOWER STANDARDS
2005 SUBPRIME ORIGINATIONS
- HOUSE PRICES RISING (9.7%)
- UNEMPLOYMENT FALLING (5.3% TO 4.8%)
16% DEFAULTED WITHIN 12 MONTHS
LAX UNDERWRITING
SECURITY
VS
AFFORDABILITY
NOT ALL ASSETS ARE EQUAL
A LOOK AT THE UK
UK COMMERCIAL VS RESIDENTIAL PRICES
Q1 2002 = 100
BTL MORTGAGE & RENT ARREARS
UK AVERAGE QUARTERLY RENTS
LESSONS FROM THE CRISIS:
1. “ORIGINATE-TO-DISTRIBUTE” MODEL
2. UNDERESTIMATING MARKET RISK
3. SERVICEABILITY OF LOANS
SOLUTIONS FOR PEER-TO-PEER
TRANSPARENCY
LANDBAY:
OUR SOLUTION
1. PUBLISHING BORROWER RATE FOR EVERY SINGLE
LOAN
2. ENSURING THAT LENDERS ARE COMPENSATED FOR
THE RISK THEY TAKE
3. MANUAL UNDERWRITING WITH A FOCUS ON
AFFORDABILITY
4. PUBLISHING REGULAR, INDEPENDENT STRESS TESTS
