Welcome to Debtwire's ABS Forum
As non-agency residential loan and bond spreads flatten, investors are looking farther afield for yield opportunities. Some are buying loans from marketplace lenders, whose methods are new and results have not been tested. Others are turning to short-term fix & flip loans for higher yields and shorter durations. But is rising demand pushing fix & flip lenders to skimp on underwriting?
Please join the Debtwire ABS team and esteemed panelists for this two-panel forum in which real estate loan opportunities and risks will be discussed and debated.
Investment Opportunities in Marketplace Lending
Marketplace lending was pioneered by consumer lenders LendingClub and Prosper more than a decade ago, but the online lending model has since spread to a multitude of assets. While the consumer lending segment of marketplace lending continues to grow and spreads continue to tighten, a new crop of niche online platforms — including in the real estate, small business and point of sale spaces — is attracting the notice of institutional investors. Technology developed and used by these platforms has made investing in these assets faster and more transparent. But a lack of historical data, and questions about underwriting, give some investors pause.
Delegates will have an opportunity to hear panelists discuss opportunities, risks and concerns about marketplace lending:
- What are the best investment opportunities in online lending at the moment?
- Panelists will look at different types of marketplace real estate loans and lenders, including residential, commercial, and fix & flip/investor loans.
- How are investors funding and levering their marketplace real estate loan investments? What are the pros and cons of buying loans from new entrants?
- Investors will discuss opportunities in various small business lending models, including term loans, merchant cash advance and factoring.
- What is point of sale (POS) financing and why is it under the spotlight? Are players like Affirm, PayPal and Amazon dominating the space?
- In light of deteriorating consumer marketplace loan performance, are real estate and small business lenders performing sufficient due diligence on borrowers? What proprietary methods are marketplace lenders utilizing when they underwrite loans?
- Which niche assets will withstand the next phase of the credit cycle? How will they perform compared to other marketplace assets?
- Panelists will also discuss new strategies for investing in consumer loans, including utilizing machine learning technology and investing in new entrants.
Coffee Networking Break
Bridging the Gap Between Creditors and Homeowners
A dearth of yield opportunities from traditional mortgages have prompted investors to zero in on the opposite end of the yield-curve spectrum: short-term bridge loans for the growing number of fix & flip borrowers. Financing for these borrowers last quarter climbed to its highest level in a decade, and interest rates flirting with double digits promise unlevered returns of 7%-8%. The loans are also favored for their short durations in an environment of rising short-term interest rates. There is already talk of overheating, however. The push for greater volume is leading to weaker underwriting and worry that a short term slam dunk will turn into a long-term nightmare.
- What is the outlook for volume in fix & flip lending and how do the loans differ from what was being originated during the last housing bubble?
- How do investors source loans in a competitive market? What lenders or brokers are the main sources of these opportunities?
- What does it mean that Goldman Sachs, a regulated entity, has gotten into a business where lenders have gone largely unregulated?
- What kind of financing is available for leveraging the loans? Who is offering this financing and how have costs changed over the past year?
- Perspectives on how these credits will perform through the next phase in the credit cycle.
Conclusion of Event
*Agenda is preliminary and subject to change.