Financing Near-Prime Borrowers

Financing Near-Prime Borrowers panel with Mike Armstrong, of ZestFinance; Al Goldstein, of Avant; David Mandel, of Citi; Daniel Tilipman, of National Debt Relief; Joseph L. Toms, of Freedom Financial Asset Management; and moderator James Gutierrez, Insikt & Opportun.

Each of these companies focused on a slightly different part of the near prime, subprime or underbanked market. Whereas Freedom Financial, Avant and Zest Finance focus on the lending element, Citi focuses on securitization and National Debt Relief helps borrowers resolve their debt.

The panelists agreed on a few key points. Firstly, subprime borrowers proved to be more recession proof during the recent recession than prime borrowers. Secondly, the middle FICO score borrowers (in the 600-680 range) are perhaps the hardest people to underwrite, and thus present the greatest opportunity. Thirdly, this industry focuses on big data, but the reality is there actually isn’t that much data. Rather, the important differentiating factor is machine learning and building superior algorithms. In the current environment, there is a search for yield, which is leading investors down the credit spectrum.