Archive for June 30, 2016

Lending Club’s CEO Has Left and Its Stock Has Plunged. Should Lenders Bail Out?

Lending Club launched in 2006 with a promise to disrupt banks by letting individuals make and apply for loans through an online lending platform. Both Lending Club and its rival, Prosper Marketplace, drew interest from investors seeking a fixed-income alternative with higher rates of return than what bonds were paying.

But as the industry has sought faster growth, it has also expanded the types of lenders it works with, inviting institutional investors like banks and hedge funds to make loans alongside individuals. In fact, during the first quarter of 2016, only about 15% of Lending Clubs loans came from individuals investing on their own.

That shift has brought new scrutiny to the industry, and more trouble for Lending Club in particular.

Controversy amp; Resignations

In May, Lending Club founder and CEO Renaud Laplanche and several other executives resigned amid an ethics controversy. Although there were two separate issues cited, one in particular is pertinent to individual lenders. This spring Lending Club sold a number of loans to Jefferies, an investment bank, which planned to package them into bonds and sell them on to other investors. Like the individual lenders who use the site, Jefferies specified the types of loans it was willing to buy. But $22 million of the loans didnt meet the criteria Jefferies asked for, and the company has said at least some of its executives were aware of the flaws and let Jefferies buy them anyway. (In addition to forcing out Laplanche, Lending Club says it took back the loans and was able to resell them properly labeled at full value to a different investor.)

The events at Lending Club have raised some eyebrows. After all, if the company is willing to sell mislabeled goods to one its largest and most sophisticated clients, why should Joe Investor assume hell be treated any better? It brings up issues of trust, says Michael Tarkan, a stock analyst that follows the company. Small investors need to be sure they are receiving the loans they signed up for.

Peer-to-peer lending has faced other problems as well. Two ratings companies raised questions this spring about the performance of peer-to-peer loans. In February, Moodys said investments backed by loans issued by Lending Clubs rival Prosper werent performing as well as expected and might have to be downgraded. And in April, Fitch said pockets of recent credit underperformance were prompting marketplace lenders (a larger group that includes peer-to-peer companies as well as other lenders) to tweak the computer models they used to evaluate loans suggesting that the companies may not be as good at vetting borrowers as they had suggested. In an emailed statement, Lending Club said it monitors a variety of economic, credit and competitive indicators on behalf of investors.

Bankruptcy Implications

Lending Club hasnt put the controversy behind it yet. Last week the company delayed its annual shareholder meeting, saying it was not yet in a position to provide its stockholders a complete report on the state of the company. Still, the company says it has more than $900 million in its coffers and posted a profit during the first quarter of the year.

Lending Clubs overall financial health is relevant to mom-and-pop lenders using its platform because a bankruptcy could put any money youve lent at risk. Investors who make loans through Lending Club are actually buying a note from the company not unlike a bond rather than from the borrowers themselves.

Youve got exposure not just to individual borrower but also to Lending Club, says Peter Manbeck, an attorney who has worked with online lenders.

Thats an important distinction. It means if Lending Club were to enter bankruptcy, you would become one of the companys unsecured creditors, the notes prospectus makes clear. In other words, your legal claims are ultimately against Lending Club, not the person who borrowed money from you through Lending Club. (Prosper works slightly differently, with notes issued by a separate entity, which may provide lenders an extra layer of legal protection if Prosper Marketplace were to ever go bankrupt.)

While its possible a bankruptcy judge would decide to let you collect on the loan, its also possible he or she might decide to divert those payments to other Lending Club creditors.

Takeaways for Investors

So should you stay clear altogether? Not necessarily. For investors seeking higher returns outside their equity allocations, peer-to-peer lending seems to offer an alternative to traditional bonds. Historically, interest rates on Lending Clubs highest rated A loans have averaged 7.6% eclipsing the current 6% yield for corporate junk bonds although borrower defaults can bring your effective return down to 5.2%, Lending Club says.

There are higher risks, says Little Rock, Ark., financial planner Ryan Fuchs, who has experimented with peer-to-peer lending in order to advise clients who want to try it on their own. Thats why you get the higher return.

The companys problems appear to be isolated and shouldnt be a deal breaker, Fuchs argues.

What you should do, however, is approach peer-to-peer lending with the same caution you would any untested investment. Remember that individuals, even ones with high credit scores sometimes lie, lose their jobs or end up in the hospital. That makes peer-to-peer lending inherently riskier than lending to the government or a blue-chip corporation.

While the fixed payouts on peer-to-peer loans mean they fit naturally into the bond section of your portfolio, view them as akin to junk bonds, not Treasurys or investment-grade corporate debt. Fuchs recommends limiting the amount you loan out to 3% to 5% of your overall investments.

He also suggests you build a diversified portfolio of loans, rather than making just one or two big bets. (With a $25 minimum investment per loan, this should be easy to do, even with a few thousand dollars.) If you put in $2,500, pick 100 loans at $25 each, says Fuchs.

Youll also want to keep an eye on the companys overall financial health over time, Fuchs says, checking its SEC filings as you make ongoing investments. Keep up with the news and their quarterly reports, he says.

Economy Task Force Calls for Financial Free Market Solutions

House Speaker Paul Ryan (R-Wis.) and House Republicans this week released their third policy blueprint. The proposal calls for overhauling the regulatory system and lays out a number of financial solutions to help all Americans better obtain financial independence. Over the past seven years, unelected bureaucrats have run rampant over, making unilateral decisions over products and services one better left up to consumers and investors.

Speaker Ryan blueprints many problems, and also proposes commonsense, conservative solutions to halt the Obama takeover of basic financial services. Most importantly, these solutions all ensure that decision-making power is placed back with American families and small businesses.

Obamacare for your retirement

The Department of Labor recently released the “fiduciary rule,” a regulation that will clamp down on the financial advice available to 401(k) and IRA users. The 1000+ page rule creates a “best interest” standard that is so broad and lack clarity that they are open to wide interpretation. Some economists have even warned the standard is an “open-ended obligation with seemingly no bounds.” This rule is projected to leave up to 7 million IRA holders being unable to receive investment advice, and 300,000 to 400,000 fewer IRAs being opened yearly.

To address the fiduciary rule, the blueprint calls for securing American’s retirement and investment choices, as well as censuring the DoL’s fiduciary rule and to directing the SEC to regulate this area as it is required to under federal law. These measures will put American families and small businesses back in charge of making their retirement decisions and reel in Obama’s executive overreach.

Lack of consumer choice

The Dodd-Frank Act has eliminated consumer choice and empowered regulators broad authority to control consumer behavior. Since the passage of the legislation, the number of banks offering free checking has dropped from 75 to 39 percent. Additionally, the law created the Consumer Financial Protection Bureau (CFPB), which has the authority to outlaw a product or service if the director finds it “unfair” or “abusive”.

The proposal recommends reforming the CFBP in three ways. First, turn the CFPB into a five member, bipartisan stand-alone agency. Second, create and institute an Inspector General for the CFBP. Third, bring transparency and accountability to the CFBP by creating a budget and restoring congressional oversight, so that money is not squandered by this unregulated agency. These are important reforms to restore consumer choice and not allow the Obama administration to inefficiently and unfairly act.

Credit unions and small banks are being phased out

Dodd-Frank has also squeezed credit unions and brought on roughly $2.8 billion in regulatory compliance costs. Inevitably, these costs are passed onto the consumer through higher prices or diminished credit availability. Today, credit unions are forced to dedicate one in every four employees to comply with mind-numbing regulations.

To stop banks and credit unions from being squeezed out, the GOP blueprint proposes providing immediate relief to the community banks and credit unions. It suggests enabling regulators to tailor regulations to align with the size and business model of a bank or credit union and raising the consolidated assets threshold to allow more small banks to access capital for new loan products and making loans. Both of these solutions will help small businesses regain control from the dictatorial regulations and executive overreach.

Mortgage applications fall 2.4% despite lowest rates in a year

Applications to refinance a home loan, which are more rate-sensitive, didnt get a lift either, falling 1 percent, seasonally adjusted, from the previous week. However, they are nearly 52 percent higher than a year ago, when interest rates were higher.

Markets reacted to the weaker than anticipated job market report by recalibrating their expectations regarding the Feds next move. Additionally, global investors concerned about the potential for Brexit and its implications have once again led to a flight to safety, driving down Treasury yields, said Michael Fratantoni, chief economist for the MBA. As a result, conventional mortgage rates dropped to their lowest levels since 2015 last week, while FHA rates dipped to their lowest level since 2013.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased 3.79 percent, from 3.83 percent, with points decreasing to 0.32 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio loans.

Homebuyers today are more concerned about credit availability than they are about current interest rates. Rates have been expected to rise for the past year, but every move up is countered by some force pushing them back down. While lenders have started to introduce some new, low down-payment loan products, overall underwriting standards are not expected to ease. A new survey of lenders by Fannie Mae found as much.

Key survey sentiment indicators suggest that lenders remain cautiously optimistic in their market outlook, said Doug Duncan, senior vice president and chief economist at Fannie Mae. Additionally, the trend toward easing of credit standards appears to be tapering off, as the vast majority of lenders, around 90 percent, reported plans to keep their credit standards about the same. The survey was conducted before the recent May jobs report, and the weaker reported job gains might potentially temper this optimism.

Dem study: Lenders finding ways to skirt state payday laws

House Democrats are out with a new report detailing how payday lenders try to skirt state laws.

The Democratic staff of the House Financial Services Committee examined how lenders in five states have found ways to operate around legal limitations placed on high-interest loans.

Consumer Wise: Managing your debt

Credit-counseling agency brings office to Atlantic City

Posted: Thursday, June 16, 2016 11:32 am

Credit-counseling agency brings office to Atlantic City


The Press of Atlantic City

German Rates Go Negative; Credit Scoring Trends – DU 10.0 & Trended Data Release Delayed

In about five years, I see myself with the same job title, about the same salary, and significantly more responsibilities. Time has a way of flying. An Experian survey finds about 45% offirst timehomebuyers say they have delayed buying a home in order to improve their credit score.Speaking of credit scores, investors and lenders continue to change guidelines – see below.

Trends in credit scores?

PERC, as part of National Financial Literacy Month, released preliminary results of a study on the effectiveness of personalized credit counseling services showing that more than two-thirds of consumers had an increase in their credit scores after receiving a credit counseling session. This is more than seen in a comparison group. The strong results from the study support efforts underway to convince policymakers to increase consumer access to this type of credit counseling information and services. Among the interim findings of the study, within 90 days after completing a personalized credit education session with a credit advisor from a nationwide consumer reporting agency included more than two-thirds of counseling participants (68 percent) had an increase in their credit scores, with 38 percent of the increases greater than 20 points. Nearly all participants (93 percent) reported they have a better understanding of the actions they need to take to improve their credit score.If you would like to read more of PERCs initial results, download the PDF report here.

Wells Fargohas removed its policy overlay for court-ordered debt on Conventional Conforming Loans and will follow Freddie Mac and Fannie Maes current guidelines.

If you missedMountain West FinancialsMay bulletin with updates and additions to its guidelines,click here to view the bulletin.

Tongues are wagging aboutFannie delaying the release of its DU 10.0.Originally slated for June 25, the talk on the street has it pushed back to August, at least. To support a successful implementation, we are postponing the DU Version 10.0 release that was scheduled for the weekend of June 25, 2016. As we prepared for the release, we experienced issues with the testing environment and decided it would be prudent to delay the release. We are rapidly addressing this issue in order to deliver these new enhancements to our customers to help provide even more certainty and simplicity while expanding access to credit and sustainable homeownership for creditworthy borrowers. Well let you know as soon as possible and give you ample time to get ready.

The industry, and credit reportingcompanies,was anticipating the release of this since the new version of DU incorporated trended credit data thought to help more borrowers. AsEquifaxputs it, Trended, historical, longitudinal or time-series data is an invaluable tool for gaining practical perspective into consumer behavior. It works by measuring a sequence of data points at successive points in time spacedoveruniform time intervals. Analyzing the data creates the opportunity to extract meaningful statistics and help predict future values based on previously observed values. When measuring trended data within a consumer credit profile, analysisondirection, velocity, tipping points and magnitude of changeswithinthe profile can help provide valuable insight into consumer credit behavior.

For its part, Freddie Mac, in itsSingle-Family Seller/Servicer Guide(Guide) Bulletin 2016-10 from last week, revised requirements related to the Home Affordable Modification Program (HAMP) expiration, extendingtheLender-Placed Insurance (LPI) deductibles mandatory effective date for certain Servicers, and more.As the HAMP program winds down at the end of 2016,were aligning with certain expiration dates and removing HAMP-specific forms and references from our solicitation requirementsso we arent promoting an imminently-ending program.Were extending the mandatory effective date for LPI deductiblesfor certain Servicers that use American Modern Insurance Group (AMIG) as their LPI provider. The revised effective date for Servicers that use AMIG ison or after July 1, 2017.Servicers must use IRS Form 1099-Cwhen reporting a cancellation of debt in connection with a short sale.You can see for yourself atSummary of Upcoming Requirement Changes.

In case you havent heard, onSaturday, June 11, 2016,FHAimplemented a technical change to its Technology Open To Approved Lenders (TOTAL) Mortgage Scorecard technology. Effective on June 11, the TOTAL Mortgage Scorecard will no longer return either Upfront or Annual Mortgage Insurance Premium (MIP) factors to an Automated Underwriting System (AUS) for subsequent return on the AUSs feedback certificate. Mortgagees should consult Appendix I of the FHASingle Family Housing Policy Handbook4000.1 (SF Handbook) for applicable MIP factors.AUS vendors have been notified of thischange,and are making accommodations to their systems in advance of the change.

Do you need an avenue for a customers major derogatory credit issue?NewLeafsAccess Product, per the company, might be your answer.

Citadel Servicing Wholesalehas partnered with Valuation Link allowing the capability toorder Non-QM appraisals for 2nd MTGs. Borrowers can qualify with Up to 85% CLTV, 1-day seasoning from Short Sale,1 yearseasoning from Foreclosure or BK, Up to $1mil. combined loan amount, Loan amounts up to $500,000, Bank Statements used for income self-employed.Visit Citadels website for complete details.

Congrats to Credit Suisse, who is marketing the deal, Fitch, who rated it, and toCaliber Home Loan which has priced a $137 million mortgage bond deal, the industrys first rated non-prime home loan securitization in a decade. Critics quickly asked what was different about the usual rating agency being paid by the issuer to rate its deal than ten years ago, the fact that it only has an A rating, and to the relatively small size of the deal compared to the billions of residential loans being funded daily.But hey, itss a step in the right direction, right?

Caliber is owned by Lone Star Funds and last year issued a string of non-rated securitizations of similar non-prime home loans. Although the mortgage loans were originated to satisfy the Consumer Financial Protection Bureau (CFPB) ability to repay (ATR) rules, they were made to borrowers who generally do not qualify foragency, government or private label non-agency prime jumbo products for various reasons described above. In accordance with the CFPB Qualified Mortgage (QM) rules, 2.6% of the loans are designated as QM Safe Harbor, 41.4% as QM Rebuttable Presumption and 51.8% as non-QM. Approximately 4.2% of the loans are not subject to the QM rules.

Caliber…is the originator and servicerforall loans in the portfolio. Wells Fargo will act as the Master Servicer, SecuritiesAdministratorand Certificate Registrar. US Bank National Association will serve as Trustee. That means any advances required but not paid by Caliber will be paid by Wells Fargo.

The 368 mortgages were originated under five programs. Jumbo Alternative (35%) – borrowers with unblemished credit seeking larger balance mortgages. These loans may have interest-only features, higher debt-to-income (DTI) and loan-to-value (LTV) ratios, or lower credit scores as compared with those in traditional prime jumbo securitizations. 2. Homeowners Access (50%) -borrowers who do not qualify foragencyor prime jumbo mortgages for various reasons, such as loan size in excess of government limits, alternative or insufficient credit, or prior derogatory credit events that occurred more than two years prior to origination.

3. Fresh Start (10%) – borrowers with lower credit and significant recent credit events within the past 24 months. 4. Investor (4%) – borrowers who finance investor properties where the mortgage loan would not meet agency or government guidelines because of such factors as property type,numberof financed properties, lower borrower credit score or a seasoned credit event. 5. Foreign national (0.4%) – non-resident borrowers holding certain types of visas who may not have a credit score.

As mentioned yesterday, rates continue to benefit from the world political scene, as well as our economy not going gangbusters. Put another way, US fixed-income securities rallied as risk assets around the world sold off on concerns that the UK will vote to leave the European Union on June 23. The probability of the UK remaining in the EU is now 64%, according to someodds makers.

For news today, German rates have turned negative – arguably more important than news in the US today. Weve had the May Export Price (+1.1%) and Import Prices (+1.4%) as well as May Retail Sales (+.5%, stronger than expected).We closed Monday with the 10-year at 1.62% and were down to 1.59% this morning with agency MBS prices better by nearly .125.

Jobs and Announcements

In wholesale job news,Plaza Home Mortgagespread the word that, We are excited to announce a new career opportunity as anAccount Executive position has become available in the Atlanta, GA market. The previous AE is retiring, so the incoming AE will take over a current pipeline with active broker accounts. This AE will have market exclusivity in the Atlanta market as this is the only rep from Plaza covering the area. Take advantage of this unique opportunity and join one of the top 5 Wholesale lenders in the nation! If youre interested in applying, please contactMark Boleky, Sales Manager, at 866-915-3650 x2409.Plaza is an EEOC employer and follows all federal, state, and local laws relating to fair employment.

Up the coast,Santander Bankis hiring for a Mortgage Wholesale Account Executive to work in the Northern Virginia/Maryland market. In this position, youll help serve Santanders customers as part of one of the top banks in the United States. Santander offers aggressive mortgage lending products to help our customers reach their financial goals. You will be able to stand out in the DC Metro market by offering Santanders jumbo program which will be a must have for your clients. In addition, Santander offers aggressive agency high balance products, a non-warrantable condo program, an 80-10-10 product and much more. Responsibilities of this position include soliciting mortgage brokers,bankersand correspondents, developing and implementing sales strategies, presenting and discussing loan programs and reviewing customer scenarios. This is a great opportunity for an individual to be very successful and to be a leader in themarket place.To learn more about this opportunity, please contact Regional Sales ManagerJoe Kowalewskiat 484-431-1953.

On the operations side of things,Indecomm Global Services, a leading provider of mortgage technology, training, and outsourcing services is seeking experienced Senior Post Closing Quality Control auditors.Clients include prominenttop tier, mid-tier lenders, and regional lenders as well as title and settlement companies. The successful candidate will Audit loan files in compliance withagencyor private investor guidelines. Auditors may also be asked to perform reviews for State Compliance, HECM, Pre-funding, HELOC/Second Mortgages, Adverse Action, and/or Fraud Investigations. The position is remote. The ideal candidate will have 5-10 years of underwriting experience in the mortgage industry and possess strong written communication skills. Direct Endorsement Certificate and Compliance experience is a plus. Interested candidates should send their resume to HR ManagerCandyMechels.

In personnel news,PRMGannounced the hiring ofAimee Johnsonas its National Operations Manager.Aimee brings with her over 22 years experience in the mortgage industry with an emphasis specializing in Underwriting/Credit Risk, Compliance, Business Analysis, Project Management, Training and Streamlining Workflows. Some of her most recent accomplishments include the successful implementation of Optimal Blue-pricing software, development of a Wholesale Broker Web Portal as well as a new Loan Origination System which required strong collaboration between operations,salesand management. Congrats!

An East Coast lender, expanding its direct to consumer platform, is looking to acquire a small/medium size title company to support the retail origination platform. If you are a title company owner looking to join an exciting, growing company, please send your confidential contact informationto meto pass along to the principals. (Please specify opportunity.)

And in retailnewsGuild is hiring. As Guild Mortgage Company continues the march to establish themselves as the leading privately-held mortgage company in the nation, expansion continues in its Texas Region which includes Texas, Oklahoma, Arkansas, and Louisiana.Founded in 1960,Guild Mortgageis licensed in 37 states.If you are a branch manager or loan officer, looking to align with a direct seller/servicer in one of these states, please contactJed Rudd, District Manager (682.498.8990).

Speaking of Guild,STRATMOR Group announced the expansion of its industry-leading MortgageSAT borrower satisfaction survey program to cover mortgage servicing operations as well as origination.MortgageSAT – Servicing will complement STRATMORs popular MortgageSAT – Origination program that measures borrower satisfaction levels from pre-application through the closing of a mortgage loan. Guild Mortgage Company, headquartered in San Diego, CA will be the first lender to implement the new program. At Guild, the new program will initially function as an internal management tool strictly focused on gauging the satisfaction levels of Guilds own borrowers. But, as additional lenders enroll in the program,Guildand other participating lenders will be able to benchmark their servicing satisfaction scores against other (anonymized) servicers to identify best practices and continually gauge their competitive success in keeping customers happy. (For more information about MortgageSAT programs, contactTim Ryan.)

Loans for porn Chinese money lenders are forcing female students to send them nude pics as ‘guarantee’

The lenders threaten the students with telling their parents about the naked shots

According to the newspaper Legal Daily, some lenders sell the nude pictures for 30 yuan at a time, even after they receive all their money.

A female student told Beijing Youth Daily that she sent nude pictures to numerous lenders to raise 120,000 yuan to start a business.

But, between February and June, her debt doubled and she was forced to ask her parents for help to pay back the loan.

What Really Happens When You File for Bankruptcy

Ironically, bankruptcy isn’t free. The filing fee alone is a few hundred bucks for Chapter 7 and 13, and nearly $2,000 for Chapter 11. And then there are the attorney fees. You can file without a lawyer, but it’s not recommended since bankruptcy laws can be tough to navigate. Upright Law estimates the fees for Chapter 7 are $1,000-$2,000, and Chapter 13 are $2,200-5,000. Chapter 11 costs a lot more. Over at Forbes, attorney Robert Bovarnick explains:

In my experience, attorney’s fees run about 4% of annual revenue. If your company has $2,000,000 in revenue, expect to pay between $75,000 and $100,000 to your bankruptcy lawyer-and there may be expenses for accountants and other professionals on top of that.

You’ll also have to take a class or two. The government requires individuals to take credit counseling 180 days before you file, and you also have to take a debtor education course if you want your debts discharged.

A couple of weeks after filing, you’ll have to attend a “creditors meeting,” which is basically what it sounds like: a court meeting between you, your bankruptcy trustee, and any creditors who want to attend. They’ll all ask you questions about your financial situation and decision to file bankruptcy.

Your Assets Get Liquidated With Chapter 7

Nolo says that in most cases, Chapter 7 debtors don’t have to liquidate their property (unless it’s collateral) because it’s usually exempt or it’s just not worth it. They explain:

If the property isn’t worth very much or would be cumbersome for the trustee to sell, the trustee may “abandon” the property — which means that you get to keep it, even though it is nonexempt…Most property owned by Chapter 7 debtors is either exempt or is essentially worthless for purposes of raising money for the creditors. As a result, few debtors end up having to surrender any property, unless it is collateral for a secured debt…

After the creditors meeting, your trustee will figure out whether or not to liquidate your stuff. If it does get liquidated, that means you’ll have to either surrender it or fork over its equivalent cash value to pay back your debt.

You Get a Payment Plan With Chapter 13

With Chapter 13, you get a plan to pay off your debts, and some of them have to be paid in full. These debts are “priority debts,” and they include alimony, child support, tax obligations, and wages you owe to employees.

Your plan is based on how much you owe and what your income looks like, and it will include how much you have to pay and when you have to pay it.

The “Best Interests Test” for Chapter 11

After filing for Chapter 11, the company has to come up with a reorganization plan for their business and finances. While they can continue operating as normal, they do have to run major financial decisions, like breaking a lease or shutting down operations, by the bankruptcy court. Creditors and shareholders can offer their input on these decisions, too. This plan is basically an agreement between the debtor and creditors about how the company will pay its future debts.…

Is There Really Any Difference Between Mortgage Lenders?

The Consumer Financial Protection Bureau has safeguards in place to make sure mortgage companies operate on a level playing field with consumers. The level playing field specifically has to do with rates, pricing, and whether borrowers are getting a fair and reasonable offer from one lender to another. But how banks look at your financial picture is something else entirely.

Here are some factors that impact how your mortgage company works and the deal you get on your mortgage.

Whats their relationship with Fannie Mae amp; Freddie Mac?

The relationship your mortgage company has with Fannie Mae and Freddie Mac carries significance in whether or not they can fund your loan even if it is slightly outside the box.

For example, if youre dealing with a company that originates the loan through another source, and then ultimately that loan is sold on the secondary market, the mortgage originator may be more conservative in its product offering and underwriting. Simply put, the more hands touching the file, the more scrutiny that file is going to have when the loan ultimately is delivered to the end investor.