PeerStreet’s Servicing and Asset Management teams are responsible for the management of loans in our portfolio. Since the loan investments offered by PeerStreet are not conventional mortgages, it’s important to understand mechanics around borrower payments and loan statuses so investors can track what’s going on with their investments.
This page details information about distribution dates, loan statuses, notifications and our internal processes so you can continue to monitor your portfolio and understand the unique circumstances of each loan. To check the status of your loans, go to your Positions Dashboard here. An example of this page is below.
PeerStreet makes regularly scheduled portfolio interest distributions on the 1st and 15th of each month. Once the borrower makes a payment and PeerStreet confirms the payment, the funds will be distributed to investors on the next distribution date. If the distribution date falls on a weekend or holiday, investors will receive payments on the following business day.
Loan status will be updated regularly. Notifications may be posted from time to time for loans with a status of Late 60 plus. See below for how your loan statuses are displayed in each individual loan.
Loan statuses may change throughout the life of your investments. We try to provide information up front to investors to ensure the servicing and asset management processes are transparent.
This is particularly important in this asset class since there are nuances that differ from other loan investments. For example, payments may be delayed, but this doesn’t necessarily indicate a problem with the loan. Late payments are common in the private lending space and, many times, are cleared up quickly. A couple of benign examples of late payments include:
- Servicer Setup Delay: When PeerStreet purchases a loan, we have to work with the originating lender to transfer servicing to our payment sub-servicer. Occasionally, this process gets delayed or the borrower accidentally sends an interest payment to the wrong entity. This issue usually gets cleared up by the next payment period.
- Wrong Billing Address: Occasionally, PeerStreet’s sub-servicer receives the wrong billing address for the borrower and mail bounces back. The correct address then needs to be obtained and a new bill needs to be sent to the borrower. This could delay a payment by a couple weeks.
Sometimes borrowers miss a payment and we closely monitor those situations. In any scenario, our team proactively communicates the loan status and how the situation is progressing. The details below outline what our team is doing every step of the way to protect your investment.
What does “Current” mean?: A loan is “Current” when all payments due have been made and distributed to investors. PeerStreet services the loan and ensures investors are receiving distributions on designated payment dates.
What does “Late 30” mean?: A loan is “Late 30” when payment is one month past due. The borrower must make one payment to bring the loan current. Borrower payments are due in arrears. For example, a loan with a payment date of October 1st would be considered “Late 30” on November 1st if the October 1st payment is not made by November 1st.
What are the reasons a loan might be “Late 30”?: There are several reasons why a loan might fall into the “Late 30” category, including:
- Onboarding Logistics: In some cases, the borrower experiences delays in sending their payment to the new servicer or mistakenly sent their payment to the previous servicer associated with the loan prior to PeerStreet purchasing.
- Sale or Refinance Negotiations: The borrower is finalizing the refinance, sale or payoff of the property imminently.
- Non-Payment: The borrower did not make a payment for a miscellaneous reason.
What does PeerStreet do in the event of “Late 30”?: There are several parties involved in all servicing aspects of a PeerStreet loan: PeerStreet Servicing Team, PeerStreet’s Third Party Servicer and Original Lender of the Loan.
PeerStreet Servicing Team and/or Original Lender on the loan will reach out directly to the borrower to understand the reason for late payment. PeerStreet’s Third Party Servicer sends 1st and 2nd late notices at 11 and 21 days, respectively, after a loan’s payment due date if payment is not confirmed as received. In cases of sale or refinance, PeerStreet will request proof of discussions and progress to further understand the timeframe for completing these negotiations.
What loan updates should I expect to receive?: Late 30 loans will have loan status details provided on the Positions Dashboard. Additionally, investors will see their loan status updated to “Current” when a resolution has occurred.
What are the typical time frames for resolution?
- Servicer Problems: 5 to 15 days
- Sale or Refinance Negotiations: 1-50 days
- Non-Payment: TBD
What is the likelihood that a “Late 30” will get resolved?: 95% of past loans that were Late 30 were resolved prior to reaching Default as of August 2018.
What does “Late 60” mean?: A loan is “Late 60” when payment is two months past due.
What are the reasons a loan might be “Late 60”?: There are two main reasons a loan might be in the “Late 60” category:
- Sale or Refinance Negotiations: Borrower continues to finalize the refinance, sale or payoff of the property. PeerStreet requires proof of refinancing and sale documentation and has confirmed the timeframe for the loan.
- Continued Non-Payment: The borrower has not resolved the delinquent amount despite attempts from PeerStreet Servicing and/or Original Lender
What does PeerStreet do in the event of “Late 60”?: PeerStreet Servicing and Original Lender reaches out to the borrower to get additional context on why the payment was missed. If the borrower is responsive, PeerStreet Servicing will request a timeframe for when the loan will be brought current.
Third Party Servicer escalates to their delinquent loan processes with additional phone calls and notices. The borrower is made aware of default procedures should the loan not be brought current in the coming days. At any point in the process, if no party can reach the borrower for a period of 15 days, then PeerStreet’s policy is to begin the foreclosure process. Also, if a loan reaches a “Late 90+” status, it is PeerStreet’s policy to begin the foreclosure process.
What loan updates should I expect to receive about “Late 60”?: Late 60 loans will have loan status details provided on the Positions Dashboard. Additionally, investors will see their loan status updated to “Current” when a resolution has occurred.
What are the typical time frames for resolution?:
- Sale or Refinance Negotiations: 1-50 days
- Continued Non-Payment: TBD
What is the likelihood that a “Late 60” will get resolved?: 90% of past loans that were Late 60 were resolved prior to reaching Default as of August 2018.
What does “Late 90+” mean?: A loan is “Late 90+” when payment is three months past due.
What does PeerStreet do in the event of “Late 90+”?: If the borrower is unable to make all past due payments, loans are considered on a case by case basis but generally, PeerStreet will start the foreclosure process.
What are the typical time frames for resolution for “Late 90+”?: After the foreclosure process has begun, the borrower may still bring a loan current prior to the foreclosure sale. However, timeframes will vary for judicial vs. non-judicial states. In judicial states, the lender has to file a lawsuit in court in order to foreclose. In non-judicial states, the lender can foreclose without going through the court system.
What does “Default” mean?: A loan is in ”Default” when the foreclosure process has been initiated. At this point, PeerStreet continues to communicate with the lender and borrower, while also moving forward with the foreclosure process.
What does “Short Pay” mean?: A loan is a “Short Pay” when PeerStreet does not receive the full principal amount of the loan. A “Short Pay” is determined on a case by case basis, attempting to maximize the estimated principal recovery and minimize the time it takes to resolve.
What does “REO” mean?: A loan is “REO” (Real Estate Owned) when PeerStreet takes ownership of the property. PeerStreet then works to liquidate the property quickly and efficiently. Once a sale occurs, PeerStreet collects and distributes the net proceeds to investors.
What does “NOD” mean?: A “NOD” (Notice of Default) is an official notification that is sent to the borrower and recorded against the property after the loan becomes significantly past due. The filing of a NOD is an important initial step in the foreclosure process and at this point, PeerStreet will generally provide investors with notifications as often as every two weeks regarding the status.
What happens if the principal of a loan has not been paid off by its maturity date?: The maturity date will be highlighted in orange to reflect that this loan is past maturity and the loan payment status will reflect its present state (i.e. Current, Late 30, Late 60 or Late 90+).