P2P Lending Is Dead

By Jorge Newbery CrowdFund Beat Guest contributor, CEO  American Homeowner Preservation,

First, disco bit the dust. Then, punk rock keeled over. Now, peer-to-peer lending has been annihilated. Who murdered P2P? Wall Street. BlackRock. Wealthy bankers. The guys I was shoulder-to-shoulder with last week in Las Vegas. At ABS Vegas 2015, billed as the largest capital markets conference in the world, the P2P/Online Lending 101 session attracted a Standing Room Only crowd.

However, this crowd was not made up of peers. These were killers.

Often called P2PL, this contemporary lending mechanism entails lending money directly between investors and borrowers, without using a traditional financial institution. Like eBay, Airbnb, Uber and other peer-to-peer services, P2PL represents an efficient take on a longtime business.

In the U.S., the leaders in P2PL have been Prosper and Lending Club. These are platforms where customers, looking for lower-interest loans than they can secure through a bank or by using their credit cards, are paired up with investors who want a solid, steady return.

At Lending Club, the larger of the two leading firms with about $4 billion in loans in 2014, a borrower with good credit history and stable income can get a loan for as little as $1,000 and as much as $35,000. Both borrower and lender pay Lending Club a fee, and the interest that the borrower pays goes to the lender.


The online architecture of P2PL platforms reduces the cost of lending dramatically from what bricks-and-mortar banks have to spend, enhancing the returns on these loans.

P2PL is a 21st-Century phenomenon. It started in 2005 in the United Kingdom, with a company called Zopa, and the next year in the US with Prosper and Lending Club. Just six years later, those two US firms had reportedly serviced 180,000 loans, for a total value of $2 billion.

Not surprisingly, those big numbers drew the attention of Wall Street. While P2PL initially attracted ordinary citizens to invest in modestly sized consumer loans to people like them, over the last few years those peer investors often have been elbowed out and replaced by Wall Street’s finest.

Last summer, Blue Elephant Capital Management said it would invest more than $300 million in loans through peer-to-peer platforms. BlackRock Inc., the world’s largest asset manager, has amassed $330 million of Prosper loans, which amounted to about one-sixth of the loans Prosper had made between late 2013 and early 2015, according to Bloomberg Business. These are just two among many Wall Street-style firms looking to get a piece of P2PL’s above-market returns.

I was there in that expo hall at ABS last week. As I looked around, this was not a crowd of small-time peer investors. These were Wall Street bankers, lured by the attractive P2PL returns.

Why was I there? I wanted to befriend the executioners. As the P2PL sector gets overly crowded, I want these assassins to help homeowners avoid foreclosure. My firm, American Homeowner Preservation, crowdfunds the purchase of non-performing mortgages from big banks. These pools of loans are acquired at big discounts. This empowers AHP to deliver sustainable solutions to struggling families and keep them in their homes.

To date, AHP has been supported primarily by peer investors. We need larger investors to help more families stay in their homes. We need institutional capital.

is article was originally published in The Huffington Post. Jorge Newbery is the Founder and Chief Executive Officer of American Homeowner Preservation LLC


Tags: ,


MarketWatchWhy a crowdfunding site is giving out $10000 scholarshipsMarketWatchCrowdfunding site GoFundMe announced Thursday that it will award $10,000 to 10 students with pages on their site that fundraise for education. The award is part of a contest the site held throughout Septemb [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

Crowdfund InsiderBrief: GoFundMe Presents $100000 in College Scholarships to 10 StudentsCrowdfund InsiderTo qualify for the scholarships, each student had to create a crowdfunding campaign on GoFundMe, shared stories about the obstacles they had overcome in pursuing their education, h [...]

Huffington PostReal Estate Crowdfunding's Pathway of ChangeHuffington Post“Crowdfunding is just the Internet,” stated Attorney Mark Roderick as he opened last month's RealCap Chicago. RealCap is an annual conference that joins crowdfunding leaders and innovators to propel th [...]

Smart From The Start: 3 Ways To Properly Establish Your Business When CrowdfundingCBS LocalConsequently, burgeoning entrepreneurs have turned to crowdfunding platforms to get the seed money they need to get business ideas off the ground. However, seeing as 98 percent of crowdfunding p [...]

Crowdfund InsiderTitle III Crowdfunding Might Not Be What Many ExpectedCrowdfund InsiderI have been immersed in the equity crowdfunding industry since late 2015 and have tried to collect as many different perspectives on the industry from as many experts as possible. And while it is h [...]

The RegisterHardware ain't hard, money is: Crowdfunding, bootstraps and startupsThe RegisterHmm, I think we call this bootstrapping in IT, or in our case crowdfunding. Raise enough money to get the first shippable product and ship it. (I did once work on a "big" defence [...]

Crowdfund InsiderSEC Schedules Open Meeting on Rules 147 & 504 Impacting Intrastate CrowdfundingCrowdfund InsiderMary Jo White October 30 2015 The SEC has scheduled a meeting to consider proposed amendments related to Rules 147 and 504 – securities regulations that impact intrasta [...]

ExtremeTechNew crowdfunding project promises an ATX motherboard for IBM's Power8ExtremeTechWe don't cover many crowdfunding projects at ExtremeTech, because most of the pitches we get are frankly terrible. While we can't make any promises about any crowdfunding project [...]

CoinTelegraphCrowdfunding vs. ICO: Experts Question Legitimacy and Guarantees of Initial Coin OfferingsCoinTelegraphOne major difference exists between traditional crowdfunding methods and ICO, and that is market value. When a product is introduced on crowdfunding platforms like Indie [...]

CFB Finance

Press Release

CrowdFund Beat News

Hello @CrowdFundBeat's 17296 followers - thank you so much for following! Wishing you all a happy Friday! >> bit.ly/_want_this_free

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |