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What are Buyback Obligation and Cashflow Buffer?
Our Commitment to Secure Investing
At Income, we understand the importance of trust and security in the financial investment landscape. That’s why we’ve gone above and beyond to incorporate innovative security features into our platform, ensuring your investments are profitable and protected. Our unique security suite, including the BuyBack Obligation, Cashflow Buffer, and Junior Share, is designed to mitigate risks and safeguard against the unexpected. Investing with us means enjoying peace of mind, knowing your funds are shielded by our robust security measures.
Buyback Obligation
What is a Buyback Obligation?
A Buyback Obligation serves as a safeguard for investors, mandating Loan Originators to repurchase overdue loans. If a borrower fails to repay a loan for over 60 days, the loan originator must reimburse the investor’s principal amount and the accrued interest. This mechanism is designed to shield investors from the risk of non-performing loans, ensuring they are compensated for borrower defaults.
Investment platforms often feature buyback obligations to incentivize the collection of debts sold in the marketplace, effectively taking charge of loans in default. This mechanism ensures investors are relieved from overdue debts, recover their investments, and safeguard against borrower defaults and delayed payments.
Cashflow Buffer
Introduction to Cashflow Buffer
The Cashflow Buffer is an innovative security measure exclusive to the Income designed to protect investors against Loan Originators’ default risk. Unlike most platforms that rely solely on Buyback Obligations for protection, the Cashflow Buffer offers an additional layer of security, ensuring investor funds are safeguarded even in the event of a Loan Originator’s bankruptcy.
Setting the Cashflow Buffer
Our approach involves thorough due diligence on Loan Originators, focusing on loan quality, cash generation, and profitability. We evaluate various risk factors, including market fluctuations and potential crises, to determine the necessary Junior Share to ensure complete investor protection. The Cashflow Buffer is a culmination of these analyses, acting as a robust defense against Loan Originator default.
Operational Mechanism
In the event of a Loan Originator’s default, the Cashflow Buffer activates, prioritizing the repayment of principal and interest to investors from the collected funds. This system ensures that investors are the first to be compensated, with any remaining funds then transferred to the Loan Originator, thus offering unparalleled security in the loan investment marketplace.
Junior Share
Junior Share on the Income marketplace is akin to having “skin in the game” but with a significant distinction. It refers to the portion of the loan held by the Loan Originator that is unavailable for investors to invest in. Ensuring that the investor’s share is prioritized in the event of a default, with the Loan Originator’s share acting as a buffer to absorb losses.
Key Features
- Purpose: Serves as an additional security layer if the loan originator defaults, ensuring investors are reimbursed before the Loan Originator.
- Differentiation: Unlike “Skin in the Game,” Junior Share provides alignment and enhanced security, working in simple terms as a deposit.
- Operational Role: In default scenarios, the investor’s share is repaid first from any recoveries, with the loan originator’s Junior Share absorbing most losses.
The unique security features on Income are a testament to the Income’s commitment to investor protection, offering a more substantial security measure than traditional approaches. It embodies a dual role of aligning interests and safeguarding investments, making it a cornerstone of our platform’s safety features.
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