The New York Department of Financial Services, the state’s financial regulator, launched a probe recently into the lending actives of more than two dozen online lenders, according to a report from Reuters.
The Reuters report, written by Suzanne Barlyn and Michael Erman, states that the NYDFS sent a letter to 28 companies this week, requesting information about their lending practices (including mortgage lending) and licensing.
The New York Department of Financial Services sent the letter to San Francisco-based Prosper, the second largest online lender, as well as to Avant, Funding Circle, Upstart and others, according to the person, who was not authorized to publicly discuss the matter. Those companies could not be immediately reached for comment.
The department, in the letter, demanded "immediate compliance" with New York licensing requirements for debt collection, money transmission and mortgage lending activities. Companies that do not believe they require New York licenses must respond with information, such as descriptions of products and services the online lenders make available to New Yorkers, as well as cash flow charts, according to the letter dated Tuesday.
According to a previous Reuters report, the NYDFS began looking into online lenders as a result of the issues surrounding Lending Club, which is currently under investigation by the Department of Justice as well as the NYDFS over the activities that led to the departure of Lending Club’s CEO.
While Lending Club does not engage in mortgage lending, there are other online lenders that do, including SoFi, Sindeo, and Lenda – although it’s unknown if any of those lenders or other mortgage lenders were recipients of the NYDFS letter.
Click below for the full story from Reuters.