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Our CEO, Brew Johnson, was recently quoted in a post written by Andreessen Horowitz about the future of work; in the office and remotely. 

The crux of the article talks about how COVID changed the way we all work and how we have approached hiring during the pandemic. We all were reminded that distributed teams working remotely can be effective. Some people prefer it, while others can’t wait to return to the office. Some companies are going fully remote, others going back to the office, but most are embracing a new hybrid model in at least some capacity. 

At PeerStreet, we’ve been hiring remote team members all along, but it certainly accelerated over the past year. We are actively planning to be a remote friendly company for the foreseeable future. We’ve found we have been able to enhance our talent pool with fewer location based restrictions. There are trade-offs of course, such as fewer hallway conversations and impromptu brainstorm sessions, but we’ve been learning to do those things in other ways and find new ways to foster the culture we hold dear. 

When Brew was asked, “Do you think your company can be as innovative and creative in a remote or hybrid work environment?”, his answer considered some of the most significant pros and cons: 

“No, but it’s not an apples to apples comparison because the hiring pool and talent are different. Being in person is much better for innovation and problem solving, but the fact is, on average, we are attracting much higher quality talent now that we are remote. The up leveling in the talent pool may allow us to be more innovative going forward.” -Brew Johnson, CEO at PeerStreet

Whatever the future brings, it is clear that remote working for at least some portion of the workforce is here to stay. That goes for many companies, including PeerStreet.

You can see the full results of portfolio CEOs surveyed by Andreessen Horowitz here.

We’re hiring for a number of roles. If you would like to join us, remotely or in office, please visit our careers page.

We recently hosted an internal event called “HackStreet”, our second company-wide hackathon designed to spawn innovation from all corners of the company. To inspire employees, none other than Chris Diamantopoulos, who plays Russ Hanneman on HBO’s Silicon Valley, made an appearance to encourage participants (watch the video). 

This year’s HackStreet was another successful hackathon in which many innovative ideas were developed, some will even be launched to our customers in the near future. Ideas ranged from improving internal processes, building adjacent tools for lenders and adding features for retail customers. A few of the ideas were even “code-complete” and are ready to ship. We’re grateful to all employees who participated, including our illustrious judging panel and our fantastic Lead UX Designer, Brian Stieler, who did an amazing job emceeing the awards ceremony in multiple characters and accents!

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Our annual hackathon has become a tradition that allows people throughout the company to stretch our collective thinking and develop new and interesting directions for the company. This aligns with our cultural value that good ideas can come from anywhere. It is a principle applied throughout the year, but perhaps never so strongly as during our hackathon. It brings out the creativity, imagination and fun we aim to foster within our team at PeerStreet.

We’re hiring, so if you would like to be a part of the company transforming the mortgage finance space, see our careers page.

We’re thrilled to announce that PeerStreet has been named one of the “2021 Best Places to Work in Financial Technology”. This award is voted on by our own team members who fill out a survey sent directly to them by “Best Companies Group”. The survey is anonymous and tallied by a third party, so the results remain as unbiased as possible. The questions range from vision to execution, leadership and culture.

PeerStreet has won numerous accolades for both technology and culture, including “Best Real Estate Platform” in 2020 by LendIt and “Deloitte’s Fast 500” for the second year in a row. Indeed, we have won this award in the past, too, and it is always gratifying to be recognized by our own team members for the company culture we have created together. 

These awards reflect our incredible team and all of their hard work to support PeerStreet’s mission; to make real estate investing work better for everyone. Our marketplace is designed to align the interest of all participants-borrower, lenders, digital investors and the local communities. To do this, we’ve worked hard to cultivate a workplace culture that focuses on collaboration to introduce new innovation to the world of real estate investing. We are incredibly proud of the PeerStreet team and these accolades are recognition of the commitment we have to building great workplace culture.

If you’d like to join us on our journey, please visit our careers page, we’re hiring both locally and remotely for several key areas of our business.

Welcome to a new series on PeerStreet’s blog - the Investor Spotlight series, where we’ll be featuring long time investors on PeerStreet’s platform. With the series, our hope is that you’ll be able to meet like-minded investors, be inspired by their experiences, and learn from their lessons. If you’re interested in participating in this series - email us! ‍

Meet Jordan Wyckoff

Jordan is a 36 year-old living in Brooklyn, New York, with his girlfriend and beloved English bulldog (@sirwinstonofparkslope). Physical health and sports has always been his career focus, having worked as a baseball coach upon graduating college, and then as a scout for a Missouri baseball team. Today, he’s Director of Bike Operations & Logistics at a millennial-favorite fitness company with very spirited instructors. 

Real Estate Investing Experience

What’s your experience with real estate in general?

I started getting serious about investing in 2015, mostly through index funds and my 401K, and in 2018 started dabbling in real estate investing. I came across PeerStreet early on and loved the concept, especially the ability to review deals on an individual level. Since then, I’ve diversified into other real estate platforms and types of real estate investments, including property tax lien investing.

What’s your investment style?

Generally speaking I like to be hands off when it comes to stocks and use apps like Wealthfront to simplify the process for myself, but when it comes to real estate, I’m super hands on. I like researching the properties and deep-diving into the deals. I find it fun to go through and do the homework and learn more about the tangible assets before investing.

What’s been your favorite real estate investment to date?

It was actually on PeerStreet! “Brooklyn refinance #37”. It’s a property down the street from where I live and I walk past it on my way to work every day. It’s a mixed use building, with a restaurant at the bottom floor and apartments above. I loved seeing the property evolve, starting from the for sale sign, and then it’s development, and I knew that every time I got paid by PeerStreet it was coming from them doing work on that property.

Who got you into investing, and what do you invest for?

My sister got me into investing, she’s financially savvy and told me to pay off debt to free up the ability to start making investments. It helped me turn a corner and I’ve been invested since. I re-invest everything that I make to set myself up for retirement.

Give us your top investing advice.

The sooner you start, the better, and automate as much as possible. Once you’ve picked an investing platform, set up auto-deposit and let it run in the background of your life so that you truly make the decision to invest and stick with it, rather than be faced with the decision to invest your money again and again. This really helped me during the pandemic, because even though things got tougher, I still stuck with it and kept up my contribution level, and now it’s paid off with the markets doing so well.

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The opinions expressed in this article are the investor’s alone. The investor quoted in this piece was not paid to participate in this series. Investments that are adequate or satisfactory to one investor may not be to others. Nothing contained herein should be considered investment advice or an offer to buy or sell any securities.

PeerStreet has always believed the more transparent, educational, and honest we are as a company, the better off all stakeholders in our marketplace will be. To that effect, PeerStreet continually strives to provide investors with more historical and current data of its loan performance. 

This is Volume 2 of PeerStreet’s continued commitment to provide insight into loan performance. View our first blog post on historical loan performance to understand the trends we’ve seen from a longer horizon. 

Key Definitions: 

L-30, L-60, L-90, L-120 = This means a loan has not made a payment in 30 days, 60 days, etc. 

Delinquent = PeerStreet classifies a loan as ‘delinquent’ when it is 60 or more days late (Late 60+). 

Foreclosure = The action of enforcing the lender’s rights under the loan documents, and potentially taking possession of the underlying property, when the borrower fails to keep up their payments. Once the foreclosure process starts, the most common outcomes are either: (i) the loan is reinstated or pays off before the property is foreclosed on or (ii) PeerStreet takes ownership of the property at auction resulting in an "REO". Properties taken over as REO are typically then marketed to be sold.‍

Default = A loan is labelled as being in “Default” when PeerStreet commences the foreclosure process. Foreclosure timelines vary from state to state.  ‍

REO = “Real Estate Owned,” we have taken ownership of the property, usually as a result of the foreclosure process, but we have not yet sold it. ‍

REO Sale = Sale of the property.

This report outlines the loan performance PeerStreet has seen historically, how that performance has been impacted by COVID-19 as well as an overview of the real estate markets as we move to a post-COVID era. It is worth noting that, due to the pandemic, certain qualifying borrowers were granted mortgage payment deferrals. Deferred loans are categorized as paid current in the data sets below.

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Foreclosure timelines have been extended due to COVID-19.

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• The foreclosure process, and associated timeline, varies by market. Some markets, such as New York and New Jersey, settle foreclosures through the judicial system which typically takes longer, while others, such as California and Maryland, typically handle foreclosures outside of the courts. 
• In reaction to COVID, many markets closed their court systems and issued moratoriums that prevented the filing of new foreclosures and halted the progress of foreclosures already in process. This stretched timelines out considerably, most notably so in New York.
• Approximately half of PeerStreet’s defaulted loans are located in states with foreclosure moratoriums in place, delaying PeerStreet’s Asset Management team from working through loans in foreclosure.
• As states begin to reopen the court systems and roll back foreclosure moratoriums, we are optimistic that timelines will return to pre-COVID levels once court backlogs are processed.

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As foreclosure referrals continue, loans in foreclosure are beginning to payoff.

• As courts reopen, we are starting to see progress on loans referred to foreclosure since April. This is an important step not only because it allows PeerStreet’s asset management team to move loans through foreclosure, but also because it puts pressure on borrowers to work out a resolution outside of the foreclosure process.
• A quarter of the payoffs have come from California. Resilient property values and a straightforward process, has largely allowed us to move loans through foreclosure smoothly.
• Florida, one of our most active markets, reopened their court systems in late November. After working through a backlog of cases, the state has begun scheduling foreclosure hearings again.
  

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While some loans referred to foreclosure result in investor losses, the median return remains higher than the expected Investor Rate.

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• While foreclosures may delay loan payoffs and increase payment uncertainty, most loans that have entered foreclosure historically, have yielded positive returns to investors.
• Returns vary for loans that go into foreclosure. Loans in foreclosure accrue default interest and other fees, which may increase returns to investors if collected. At times, however, decreases in property values, foreclosure expenses, and other factors can also lead to losses.
• The equity cushion on loans, which is the difference between the appraised value of the property and the loan amount, can help insulate investors from losses. Things that can negatively impact that cushion are time to resolution, various costs that are absorbed by the loan investors (taxes, maintenance, selling commissions, legal). Real estate markets have generally held strong throughout the pandemic (with some exceptions), preserving equity in loan collateral.
• Historically, the median return on foreclosure loans has been higher than the expected investor rate, while the average has been lower. This implies that many defaults end in positive gains for investors, while a few large losses have driven down average returns. Some foreclosures currently being worked out by the Asset Management team have been particularly affected by the events of 2020 and we anticipate the return profile on these projects to skew lower than the historical norm. 

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As performing loans have paid off and delinquencies have remained constant, active pre-COVID investments are increasingly delinquent. All loans purchased since July are current and performing.

• PeerStreet closely monitored the impact of COVID-19 on the market and paused purchasing new loans in the Spring of 2020. Buying resumed in July and all loans purchased since have performed as expected.
• Over the past 9+ months, payoffs of performing loans have outnumbered new loans funded through the platform. This, along with the inability to process foreclosures in states with foreclosure moratoriums, resulted in non-performing loans beginning to make up a larger percentage of the portfolio. These loans tend to take time to pay off as PeerStreet’s asset management team works through the foreclosure process.
• New loan purchases provide investors an opportunity to reinvest proceeds back into performing loans. As of December 31, 2020, loans purchased since July have not missed a payment. ‍

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‍Diversification can be an important source of risk mitigation.

• As the number of loans in a portfolio increases, the range of expected returns will shrink. In a downturn scenario, like the one modeled above, diversification may be an effective risk mitigation strategy.
• Our foreclosure portfolio has a negative skew (average return is less than the median) due to a few large losses offsetting mostly modest gains. As more loans are added to a portfolio, the impact of any large loss on total portfolio return is diminished.
  

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DISCLAIMER: the data provided herein was generated from PeerStreet’s portfolio performance to date, may not be exhaustive or reflect market-wide trends, and is provided solely for informational purposes. Past performance is not an indicator or predictor of future performance. PeerStreet is not an investment adviser and nothing contained herein is, or should be construed as, investment advice. Investors should not rely on PeerStreet to make investment decisions and should independently evaluate the risks and merits of any investment opportunity themselves or in consultation with their own professional advisors.

Today we announced the launch of PeerStreet Pocket, a new investment product allowing investors to earn more interest on their cash. The waitlist for PeerStreet users opens today, with the first investors expected to get access soon. 

PeerStreet Pocket was created in response to investor feedback and requests for an alternative to low-yielding banking rates; it is more liquid than other PeerStreet investment products and not directly tied to any given loan. Pocket offers high-yielding interest and monthly liquidity, all with no minimum balances or fees. “We are thrilled to announce the launch of PeerStreet Pocket, which speaks directly to the needs of our investors who would like to make sure every dollar they have on the PeerStreet platform is working for them,” said Brett Crosby, Chief Customer Officer and Co-Founder of PeerStreet. 

Money that is invested in Pocket may be used to warehouse loans before they are sold to investors on the PeerStreet marketplace. Historically, traditional banks and financial institutions have been the source of warehouse capital. Now, through Pocket, accredited investors are able to fulfill this function, further leveling the playing field between Wall Street and Main Street. 

“PeerStreet is highly focused on innovation and bringing new products to market that create long-term value for our customers. Pocket is a direct response to our customers' request for a liquid, interest yielding alternative to holding cash. This is the next step in our evolution to providing a holistic investment experience on our platform.” said Jeremy Guttenplan, VP of Product at PeerStreet.

PeerStreet Pocket accounts are available to accredited PeerStreet investors, with as little as a $1,000 initial deposit. Investors are able to withdraw funds from this account once a month, which can then be used to invest in PeerStreet’s individual loans or fund offering. PeerStreet Pocket is only available to accredited investors that are signed up for the platform.

Victor Lipnitsky and Aron Yehuda had a shared vision of making capital more accessible to local real estate investors. This mission led them to start their real estate business, Pimlico Capital, in Baltimore in 2016. They recognized the need to provide short-term financing for investors and succeeded in making funding accessible and affordable to investors with and without experience.

A focus on borrowers and Baltimore

They  began  in  2016  with  two  core  clients  that  ultimately  led  them  to  their  success.  They attribute this success to two main principles: first, bring a personalized approach to customer relationships, and second, remain focused primarily on the city of Baltimore to grow a strong network of borrowers in this area.

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The founders saw this strategy to be working after about 12 months and having the opportunity to work with many investors who are native to the Baltimore area. “One of the things I am most proud of is how our business has been able to focus on communities that can benefit from revitalization,” Aron said. Pimlico is proud to work together with capital partners like PeerStreet. This has enabled them to contribute to transforming neighborhoods in the heart of Baltimore City, surrounding Baltimore County, nearby Washington, DC, Philadelphia, and various other locations by providing competitive financing for real estate investment projects. Their five-star Google  reviews are a testament to the success of the relationships Pimlico Capital builds with their clients.

Pimlico Capital partners with PeerStreet

Pimlico Capital was introduced to PeerStreet in the fall of 2019. After diving into an analysis of what a successful relationship between the two companies might look like, Victor and Aron flew out to California for an in-person meeting with PeerStreet’s management team. From there, a successful business relationship was born, with Pimlico Capital brokering long-term loans to be funded through the PeerStreet marketplace.

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While Victor and Aron did evaluate other potential partners, there were several factors that led them to ultimately pursue collaboration with PeerStreet. Pimlico Capital considers itself a technology firm specializing in the real estate space. “I was impressed with the robustness and sophistication of the technology platform used by PeerStreet to do business with its brokers,” Aron said. “PeerStreet is dedicated to providing superb customer service to borrowers, which is a mindset at the core of Pimlico Capital’s business.”

This new partnership provided the opportunity for Pimlico Capital to offer a 30-year rental loan  product.  Pimlico  Capital  saw  an  immediate  spike  in  demand, resulting in the growth of their rental business from $4M in 2019 to $25M in 2020 and the need to hire additional staff to accommodate the product’s popularity. Pimlico Capital looks forward to continuing to partner with PeerStreet and its borrowers to make capital for real estate investment both accessible and affordable. Pimlico Capital is proud of the role it has played in the revitalization of city blocks and knows it is just getting started. To date, Pimlico Capital has provided $45M in capital for properties in Baltimore City.

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View Pimlico Capital for more information.

PeerStreet has again been included in Deloitte's prestigious Technology Fast 500 list. This is our second year in a row to receive this honor and comes on the heels of PeerStreet winning Lendit’s Top Real Estate Platform award just a few weeks back. Earlier this year, PeerStreet was also named among Forbes’ Best Startup Employers for 2020, recognized for our “Best Tech Work Culture”, and our CEO, Brew Johnson, was a finalist for the EY Entrepreneur of the Year Award.

The Deloitte Fast 500 is unique in that it recognizes the growth of companies across a variety of industries. The ranking is based on fiscal-year revenue growth over the previous three years; PeerStreet’s growth landed us at 89th place, breaking into the top 100.

As of November, PeerStreet has achieved $3.9 billion in loans sold, $2.5 billion in principal returned to investors and over $200 million in interest payments. That money is creating real value not only for our thousands of investors, but also for the communities that are improved by borrowers who use that capital to upgrade properties and neighborhoods.

We congratulate all of the other firms on the list, and want to thank all of our investors, lenders, and partners for your continued support.

We’re excited to share that LendIt, one of the largest media and events companies for FinTech, has named PeerStreet the “Best Real Estate Platform” at this year’s awards ceremony. The ceremony, which is typically accompanied by a dinner at the LendIt conference and attended by the LendIt community was virtual this year, but the honors were real.

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Having won “Top Emerging Real Estate Platform” in 2017, we are so proud to have now won the top real estate category just a few short years later. This is one of the most prestigious awards a company can win in our space and this highlights our unwavering commitment to our mission to democratize real-estate debt through technology. 

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Each award received and milestone met is meaningful to PeerStreet, but as an active participant in the LendIt community since our platform launched in 2014 this feels extra momentous. We’ve attended numerous LendIt trade shows, spoken on panels and attended many sessions and events associated with their conferences. This year, we were also active in the virtual events through Brett Crosby, our co-founder, appearing on a panel discussing why direct real estate investing continues to attract capital. In this panel, he spoke alongside leading voices in the real estate space, including executives at Lending Home and Sharestates. This session was an example of how the LendIt community has prompted industry discussions that continue to inspire us and contribute to how we grow and innovate our business.

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This latest win is also only one of the several industry recognitions PeerStreet has had this year, including being named a finalist for Los Angeles Best Tech Work Culture in the annual Timmy’s Awards, and being named in this year’s CBInsights Fintech 250. We would like to thank the judges, the people behind LendIt (including Peter Renton) and all of our customers, investors, lenders and business partners who continue to believe in and support our mission.

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Ever since LendingClub announced they were shutting down their retail investment platform, we’ve seen an increased interest from their former investors here at PeerStreet. That makes sense because PeerStreet offers a similar product and experience to LendingClub, but with what we believe is a more interesting asset class. 

Instead of consumer debt, PeerStreet’s investments are backed by real estate debt. The primary difference between the two is that unlike consumer debt, where there is little hope for recourse and repayment if a borrower stops paying, PeerStreet’s investments are backed by actual real property that we can foreclose on if a borrower stops paying. While not completely removing the risk of principal loss, the underlying security and the ability to easily diversify across multiple investments helps limit investor portfolios’ exposure to individual non-performing loans. Our recently published loan performance report speaks to that.

We were saddened to see LendingClub shut down their retail platform because they and Prosper were pioneers in allowing individuals to invest fractionally in loans. This allowed people to access debt as a fixed income asset class more easily, transparently and directly than ever before. In many ways, these pioneering platforms were inspirations to PeerStreet. Unlike those platforms, however, we chose to focus specifically on real estate debt because we felt it was a better and untapped market for investors. The reason is twofold. 

First, we believe that debt collateralized by real estate has a better risk-return profile for investors than consumer debt. Second, we feel that connecting investors more easily and directly to real estate debt has the potential to create much more value for society in a way that doesn’t exist with other asset classes - when investors buy loans through PeerStreet, their capital supports small business lenders and real estate entrepreneurs, creating opportunity for them to grow their businesses and invest in their communities. 

With these factors in mind, we created an investment platform that made it easy for individuals, family offices, RIAs and institutions to invest in real estate debt across nearly all 50 states. Over the past several years, close to $4 Billion has been invested through our marketplace, earning investors hundreds of millions of dollars of interest income and powering thousands of real estate entrepreneurs, who in turn invested that capital into thousands of projects in communities throughout the country.

From the founding of PeerStreet, we have remained dedicated to leveling the playing field between Wall Street and Main Street. Our first investors transacted through our retail platform at PeerStreet.com, and while they were later joined by institutional investors, providing access to individual accredited investors remains at the heart of our philosophy. We were one of the very first companies in the real estate space to develop a platform for individuals to access real estate debt investments, and today, we’re one of the few left standing. Our commitment to individual investors has never been stronger and we remain focused on building more features to make investing even better, easier, and more transparent than ever before.

We continue to focus on providing retail investors with new ways to invest and tools and resources investors need to research, select, and invest to build their own real estate debt portfolios. In fact, we’ve recently launched the Credit Opportunity fund and added features to Automated Investing, both aimed at providing an easy and accessible experience to investors. At PeerStreet, we remain dedicated to our fractional investment platform and remain committed as ever to providing investors with the opportunity to access real estate debt.

To previous Lending Club investors and new investors visiting PeerStreet for the first time - we welcome you and look forward to helping you better understand and use our platform.

PeerStreet is honored to be named a “Top Real Estate Platform” Finalist by the team at Lendit. This is a big honor for us, especially since we won in our category for Top Emerging Real Estate Platform in 2017. 

What’s more, the Lendit community and conferences hold a special place in our hearts. We have been to many of their shows over the years, usually with a tradeshow booth, several members of our team and a speaking slot or two at the panel sessions. They are great events for connecting with our peers in the community, whether directly in our space or in the industry as a whole.

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That’s why this year we’re excited to still be attending Lendit virtually. Join us there from September 29th through October 2nd.  

Our co-founder and COO, Brett Crosby, will be speaking on a panel about the “Transformation of Real Estate Tech and Lending” on October 1st from 11:25-12:05pm PT. Among other things, the panel will cover why direct real estate investing continues to attract capital. Make sure to catch him on the screen!

If you’d like to attend, you can get a 15% discount with code “SPEAKERVIP”. Hope to see you there!

At PeerStreet, we take our culture seriously. Passionate people help make the magic happen. That’s why we couldn’t be more honored to be recognized as a Timmy Awards Best Tech Work Culture finalist! Now we’d love your help in bringing home the trophy by voting for PeerStreet. Each person can vote up to once per day, so think of us when you’re having your morning coffee or afternoon tea!

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Fresh off being selected as part of CB Insights FinTech 250 and having our CEO nominated as an EY Entrepreneur of the Year, PeerStreet was also recently named among Forbes’ Best Startup Employers for 2020, one of the Best Places to Work in Los Angeles in 2019 by Comparably, an American Banker’s Best Fintechs to Work For in 2020 and a Top 25 Fastest-Growing Tech Company in Deloitte’s Fast 500. We appreciate the accolades!

We are very honored to announce that our co-founder and CEO, Brew Johnson, has been selected as a finalist for Ernst and Young's Entrepreneur of the Year Award. 

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Brew is the entrepreneurial leader whose vision brought PeerStreet to life. He’s also been recognized as one of the best CEOs for women and diversity. Since starting the business in 2014, he has dedicated most of his waking hours to ensuring it grows, innovates and adapts. His background in real estate, law, technology and finance have become the cornerstones of the business. The idea behind PeerStreet has always been to improve the lives of participants (including investors, lenders and borrowers), but also neighborhoods and communities throughout the country. 

From EY, the Entrepreneur Of The Year program celebrates the unstoppable entrepreneurs whose unbounded ambitions deliver innovation, growth and prosperity that transform our world. That is exactly what Brew has done and will continue to do with PeerStreet.

“Building PeerStreet has been a dream of mine for a long time,” said Brew Johnson, “it is literally the culmination of years of research, career experiences and thinking. We’ve created a lot, but there is so much more left to do and I couldn’t be more excited about where we’re heading. This is my life’s passion.”

PeerStreet was also recently named among Forbes’ Best Startup Employers for 2020, one of the Best Places to Work in Los Angeles in 2019 by Comparably, an American Banker’s Best Fintechs to Work For in 2020 and a Top 25 Fastest-Growing Tech Company in Deloitte’s Fast 500.

PeerStreet has been selected as one of CB Insights’ prestigious Fintech 250, a select group of emerging private companies working on groundbreaking financial technology. In fact, PeerStreet has been included on the list since it was created in 2017. With the rapid surge of innovative companies in fintech, we are incredibly honored and humbled to be included alongside the most promising companies in fintech.

The CB Insights research team selected the Fintech 250 companies based on several factors, including data submitted by each company and their Mosaic Score. The Mosaic Score, based on CB Insights’ algorithm, measures the overall health and growth potential of private companies. Through this evidence-based, statistically driven approach, the Mosaic Score can help predict a company’s momentum, market health and financial viability.

PeerStreet has achieved many awards for culture, innovation, growth, technology and more. Being consistently included for the third time in a row on this list is an enduring testament to our team’s continued dedication to innovating and fundamentally changing our industry. 

PeerStreet was also recently named among Forbes’ Best Startup Employers for 2020, one of the Best Places to Work in Los Angeles in 2019 by Comparably, an American Banker’s Best Fintechs to Work For in 2020 and a Top 25 Fastest-Growing Tech Company in Deloitte’s Fast 500.

PeerStreet has always believed the more transparent, educational, and honest we are as a company, the better off all stakeholders in our marketplace will be. To that effect, PeerStreet continually strives to provide investors with more historical and current data of its loan performance. 

Now more than ever, it is important to analyze trends and metrics to understand how macroeconomic factors can affect your portfolio’s health. By surfacing granular data, our hope is investors can make more confident, data-driven investment decisions. Continued transparency is a mantra we are taking forward.

This report outlines the loan performance PeerStreet has seen historically and how that performance has been impacted by COVID-19. It is worth noting that, due to the pandemic, certain qualifying borrowers were granted mortgage payment deferrals. Deferred loans are categorized as paid current in the data sets below.

Key Definitions: 

L-30, L-60, L-90, L-120: Late 30, Late 60, Late 90, Late 120+ this means that a loan has not paid a payment in 30+ days.

Delinquent: PeerStreet classifies a loan as ‘delinquent’ when it is 60 or more days late (Late 60+). 

Foreclosure: The action of enforcing the lender’s rights under the loan documents, and potentially taking possession of the underlying property, when the borrower fails to keep up their payments. Once the foreclosure process starts, the most common outcomes are either: (i) the loan is reinstated or pays off before the property is foreclosed on or (ii) PeerStreet takes ownership of the property at auction resulting in an "REO". Properties taken over as REO are typically then marketed to be sold.

Default: A loan is labelled as being in “Default” when PeerStreet commences the foreclosure process. Foreclosure timelines vary from state to state.  

REO: “Real Estate Owned,” we have taken ownership of the property, usually as a result of the foreclosure process, but we have not yet sold it. 

REO Sale: Sold the property.

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The Percent of L-30, L-60, and L-90 Late Paying Loans In The Overall Portfolio by Late Status (omitting L-120 and REOs, which are addressed further below) 

Key Takeaways: 

• The rate of missed payments on performing loans spiked in March and April as the uncertainty around COVID-19 hit the financial and real estate markets.
• The effects were first felt with performing loans missing one payment (the L-30 rate) followed by these loans moving to L-60 and then L-90 in the following months.
• Following the jump in March and April, delinquency rates for the L-30, L-60, and L-90 cohorts have subsequently declined from their COVID highs.

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Historical MoM Change in Loan Delinquency Status

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Key Takeaways: 

• Historically, the probability of a current loan missing a payment in a given month has been around 5%. Said another way, 95% of the time, a loan that is current continues to perform.
• Looking at the period between March and April, however, the incidence of current loans missing payments more than doubled to 12%. This was the spike in the green line shown in the previous exhibit. 
• Late 30 and Late 60 loans were also impacted, with more loans falling deeper into delinquency (the red bar) and fewer delinquent loans being brought current (the green bar).
• In July, the improvement rates (the green bars) on the Late 30, Late 60, and Late 90 loans came back towards historical averages and the missed payment rate of current loans dropped back down to 6%.
• Late 120+ is almost entirely blue indicating that these loans are unlikely to change statuses month-to-month. These are mainly loans in the foreclosure process which have an extended resolution timeline, so these loans typically remain in this status for extended periods of time.

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The Percent of All Cohorts of Late Paying Loans In The Overall Portfolio (including Late 120 and REOs)

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Key Takeaways: 

• The L-120+ rate (illustrated as the yellow line) continues to grow over time as more loans work through the foreclosure process.
• The foreclosure timeline varies by state and county. It can take anywhere from 5 months to 2+ years to foreclose on a property.
• Although the timing of cash flows may be impacted, loans in foreclosure do not necessarily result in loss of principal or less-than-expected interest.

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Total Numbers of Loans That Have Gone Into Foreclosure and Corresponding Returns 

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‍Key Takeaways: 

• Through August 2020, approximately 97% of paid off bridge loans funded through the PeerStreet marketplace had never gone through foreclosure.
• Of the 190 now-paid off loans for which a foreclosure action had been initiated, 87% were resolved prior to PeerStreet taking ownership of the property.
• Of the 6,050 loans that paid off by August 31, 2020, 25 loans (13%) had become REO and the properties were subsequently sold.

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Key Takeaways: 

• Returns vary for loans that go into foreclosure. Loans in foreclosure accrue default interest, and other fees, which may increase returns to investors if collected. At times, however, decreases in property values, foreclosure expenses, and other factors can also lead to losses.
• In some instances, the equity cushion on loans, which is the difference between the appraised value of the property and the loan amount, can help insulate investors from losses. 
• Historically, the median return on foreclosure loans has been higher than the expected investor rate, while the average has been lower. This implies that many defaults end in positive gains for investors, while a few large losses have driven down average returns.
• Diversification may partially mitigate the impact of any one negative investment.

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Loan Performance Based on FICO Score 

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Key Takeaways:

• This chart shows the relationship between FICO and delinquency in terms of “Ever Late” percentages. This is the historical probability that a given loan reached Late 60, Late 90 and Late 120 status at some point over its lifespan.
• Borrower FICO is negatively correlated with delinquency. As FICO goes down, probability of a loan going delinquent goes up. 800+ FICO loans have an Ever Late 60 rate of 3.6%, while Sub 620 FICO loans have an Ever Late 60 rate of 30.3%.
• While lower FICO loans have a higher delinquency rate, there are other factors to take into consideration including, but not limited to, lower FICO loans tending to have higher average investor rates, lower loan-to-value ratios (LTV), and greater equity cushions.

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Historical Probability of Delinquency as a Product of FICO and Loan Size 

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Key Takeaways: 

• FICO is not the only attribute correlated with delinquency. For example, among other factors, there is also a relationship between delinquency and loan size. 
• As indicated by the red shading, there is a multiplication effect when combining FICO with Loan Size. Increased loan size, when combined with lower FICO, has a more pronounced effect on delinquency than FICO alone.

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DISCLAIMER: the data provided herein was generated from PeerStreet’s portfolio performance to date, may not be exhaustive or reflect market-wide trends, and is provided solely for informational purposes. Past performance is not an indicator or predictor of future performance. PeerStreet is not an investment adviser and nothing contained herein is, or should be construed as, investment advice. Investors should not rely on PeerStreet to make investment decisions and should independently evaluate the risks and merits of any investment opportunity themselves or in consultation with their own professional advisors.