Moody’s has warned that the marketplace lending industry bears some similarities to mortgage lending leading up to the 2008 financial crisis because the companies that market the loans and approve them quickly sell them off to investors.
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Pitfalls for the Unwary Borrower on Emerging Lending Platforms
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But OnDeck crossed the line, according to a bankruptcy judge, when it kept collecting payments after being informed multiple times that the company had filed for Chapter 11 bankruptcy protection. In July, a bankruptcy judge imposed sanctions on OnDeck and ordered the lender to return the money. Last month, OnDeck was chided by a different judge for taking cash from Wayco Ham, a company in Goldsboro, N.C., that cures and sells hams and that also filed for bankruptcy protection. After its filing, Wayco Ham opened a new bank account. In a move the judge called “particularly willful and malicious,” OnDeck tapped Wayco Ham’s new bank account and took out the loan payments. The bankruptcy judge had not granted permission to OnDeck for access to the new account, according to court documents.
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