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"P2P platforms have high moral hazards and it's really easy to fake borrowers' information.
In a lending market with multiple lenders and multiple borrowers, information asymmetry (Akerlof 1970) is a common problem.
The illegal use and abuse of borrowers' information to get financial products is certainly different from the regular credit application scenario.
Neither should be allowed to sell borrowers' information to third parties without borrowers' permission -- a common practice today.
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But when there is more than one lender in town, such threats lose much of their power, especially when the lenders do not formally or informally share borrower information.
"Step 3, Borrower Information, is where the Account Executive gets on the Oasis of Rapport," the manual states.
The rules, which take effect in January 2014, require servicers to keep accessible records of borrower information and keep reliable, timely accounts of borrower payments.
Via a program nicknamed the Hustle, derived from the initials for "high speed swim lane," Countrywide's mortgage processors were "incentivized to, and repeatedly did, manipulate borrower information" like borrower income and other information so that the loans would qualify for federal mortgage guarantees, prosecutors said in their original lawsuit.
Asked during cross-examination whether he was doing something wrong by passing on borrower information that he knew to be false, he glared and replied, "Could be, but not never my responsibility to judge right or wrong".
How do the distance constraints faced by lenders in acquiring borrower information affect the design of bank loan contracts?
Perceived information integrity refers to the accuracy of a lender's perception and the completeness of borrower information (Kim et al. 2008).
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com