Boston Globe Writes about P2P Lending
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Elaine Appleton Grant at the Boston Globe writes about P2P lending in her article “Lending to relatives? Read this.“ Elaine starts the article out with a catchy and sympathetic (at lest for lenders) story of a brother who did not bother to pay a sister $500 for a used car sold on credit. In short, the sister repossesses the car from her brother because he never pays. Elaine goes on to explain such services as Virgin Money, Prosper.com, Lending Club, Zopa and GlobeFunder.
The most surprising part of the article to me was that Virgin Money is providing secured P2P loans (backed by property) and loans with values up to $1 million dollars. Also, Virgin Money is providing reverse mortgages. This sounds like a great idea where the parent may be in need of cash and have equity in the home. Combine that situation with children who may not agree on money matters and this could explain to financially illiterate Johnny why his sister Jane, who supported mom for 10 years at $500 per month, receives more of mom’s home value upon mom’s death. Of course, the major problem with that scenario is if nice Johnny visited mom everyday while Jane was off traveling the world. Oh, well, P2P lending through a bank cannot solve all family problems.
The article ends with a great quote about family loans:
John Napolitano… recommends lenders overcome the squeamishness of asking a relative to document a loan. “People don’t document loans, because they feel stupid saying ‘I want to have you sign this note,’ ” he says. “But even dumber is sitting there at Thanksgiving dinner with the guy who hasn’t paid you in a year.”
By the way, Elaine Appleton Grant asked about family lending on LinkedIn before writing this article.
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[…] If you’re new here, you may want to subscribe to the Personal Loan Portfolio RSS feed or take a look at the site map. Thank you for visiting!Richard Branson, the master of promotion, launched Virgin Money in the United States with much fanfare as expected and wearking a “Go Fund Yourself” T-Shirt. CNN honored Sir Richard with a photo gallery, a news article, and a video. As the WSJ recently mentioned, Virgin Money was originally Circle Lending. I was surprised by the data provided by the Boston Globe on the size of the family loans originated through Virgin Money. […]
[…] seem to be consistent with what has been reported in the past including in a recent article at the Boston Globe on P2P lending and my understanding. Because Virgin Money just lends between friends and family, there is not a […]