With these low documentation loans, Citadel provides the funding for borrowers and also services the loans. The company claims that this arrangement cuts down on potential risk since the Citadel can assess how loans are performing.
According to Citadel, these loans are performing astonishingly well. In a sponsored post on HousingWire.com, CSC claims that these “non-prime” loans have a 3% delinquency rate since 2011. According to the Federal Reserve, the average delinquency rates since 2011 for all commercial banks is 8.51%. The high end of this average was 10.68% in Q3 of 2012 while the low end was 5.17% in Q4 of 2015.
The average reader might find the assumption that loans with poor underwriting standards outperforming those across to the nation to be a bit suspicious. In that case, that reader may do well to be wary about working with CSC, who controls the whole process from underwriting to funding to servicing a loan.