AN IDEA WHOSE TIME HAS COME

Weekly Insights from Sol Berkoff
Principal at Charleston Capital, Inc.

At CCM, we think that separating origination and servicing creates clarity in asset performance.

Not everyone agrees.  Much of the securitization market does not separate origination and servicing.  So, why worry?

Well -- on April 19th, the SEC fined Prosper, the online lender, for misleading investors.

They were fined for misstating charge-offs.  According to the SEC, “Prosper excluded certain non-performing charged off loans from its calculation of annualized net returns that it reported to investors.”

The SEC also found that “Prosper failed to identify and correct the error despite Prosper's knowledge that it no longer understood how annualized net returns were calculated and despite investor complaints about the calculation”.

When a third party handles servicing, investors should have a lot more confidence in the data they see. 

That confidence will build trust and encourage investment. 

CCM’s mission is to create data transparency in small business finance through a Secure Funding Ecosystem. 

We think it is an idea whose time has come.

Source: https://www.sec.gov/news/press-release/2019-58