Invest Yrefy

[paul e]

Anybody have experience with, or know anybody who's invested in this product?
https://www.investyrefy.com/

Yrefy
Yrefy is a company that specializes in refinancing private student loans for borrowers who are in default or delinquent. Yrefy does not work with federal loans.

Collateralized portfolio investment
Yrefy offers a collateralized portfolio investment opportunity for accredited investors with a minimum investment of $50,000. This investment offers fixed interest rates of up to 10.25% and durations of one to five years.

They claim to have a default rate < 2% and doesnt seem any riskier than high yield funds. Rather, the principal is protected and it seems very flexible. In retirement, and with falling interest rates impacting a chunk of my income, would this be crazy to add to a portfolio?

[hammockhiker]

Anybody have experience with, or know anybody who's invested in this product?
https://www.investyrefy.com/

Yrefy
Yrefy is a company that specializes in refinancing private student loans for borrowers who are in default or delinquent. Yrefy does not work with federal loans.

Collateralized portfolio investment
Yrefy offers a collateralized portfolio investment opportunity for accredited investors with a minimum investment of $50,000. This investment offers fixed interest rates of up to 10.25% and durations of one to five years.

They claim to have a default rate < 2% and doesnt seem any riskier than high yield funds. Rather, the principal is protected and it seems very flexible. In retirement, and with falling interest rates impacting a chunk of my income, would this be crazy to add to a portfolio?

No experience other than some cursory research at my Dad's request. The company has been around since about 2017, so there's that. The 10.25 percent rate seems to be only available if you go for the five year duration. Minimum is one year and that was listed, when I looked, at something like 6.25 percent. As you noted, one must be an accredited investor to participate. My father is not and so quickly lost interest (thank goodness).

What I gathered in my cursory reading was that they work with people who have already defaulted on private student loans, to whom they charge between 6 and 8 percent to consolidate those defaulted loans into some sort of payback schedule. How they can charge 6-8 percent and yet pay out up to 10.25 percent to investors is beyond me and sounds risky.

The relatively non-liquid nature of the product and the inherent riskiness of turning already defaulted loans into some kind of income stream didn't give me a warm fuzzy feeling. If I'm going to tie up money for one to five years it's going to a CD at a bank, not Yrefy.

[Hacksawdave]

No, but in very light gray text on the link I did read this:

Regulation D 506c Mandated Legend

Any historical performance data represents past performance. Past performance does not guarantee future results; Current performance may be different than the performance data presented; The Company is not required by law to follow any standard methodology when calculating and representing performance data; The performance of the Company may not be directly comparable to the performance of other private or registered funds or companies; The securities are being offered in reliance on an exemption from the registration requirements, and therefore are not required to comply with certain specific disclosure requirements; The Securities and Exchange Commission has not passed upon the merits of or approved the securities, the terms of the offering, or the accuracy of the materials.

I am in early retirement year 6 and would not add it to mine as it violates the IPS on what can (and cannot) go into my portfolio. it violates rule number one of my IPS.

“Only registered securities that trade on a major exchange or tradable in good delivery order tangibles are allowed into the portfolio. There are no private ventures, joint businesses, limited partnerships, loans, promissory notes, joint real estate, etc.”

[White Coat Investor]

Anybody have experience with, or know anybody who's invested in this product?
https://www.investyrefy.com/

Yrefy
Yrefy is a company that specializes in refinancing private student loans for borrowers who are in default or delinquent. Yrefy does not work with federal loans.

Collateralized portfolio investment
Yrefy offers a collateralized portfolio investment opportunity for accredited investors with a minimum investment of $50,000. This investment offers fixed interest rates of up to 10.25% and durations of one to five years.

They claim to have a default rate < 2% and doesnt seem any riskier than high yield funds. Rather, the principal is protected and it seems very flexible. In retirement, and with falling interest rates impacting a chunk of my income, would this be crazy to add to a portfolio?

10% isn't enough interest to lend money to people who are in default or delinquent. You'd likely need 20-30% yield to have a decent return on that type of investment. 2% default seems ridiculously optimistic. These are just peer to peer loans aren't they?

[paul e]

Anybody have experience with, or know anybody who's invested in this product?
https://www.investyrefy.com/

Yrefy
Yrefy is a company that specializes in refinancing private student loans for borrowers who are in default or delinquent. Yrefy does not work with federal loans.

Collateralized portfolio investment
Yrefy offers a collateralized portfolio investment opportunity for accredited investors with a minimum investment of $50,000. This investment offers fixed interest rates of up to 10.25% and durations of one to five years.

They claim to have a default rate < 2% and doesnt seem any riskier than high yield funds. Rather, the principal is protected and it seems very flexible. In retirement, and with falling interest rates impacting a chunk of my income, would this be crazy to add to a portfolio?

10% isn't enough interest to lend money to people who are in default or delinquent. You'd likely need 20-30% yield to have a decent return on that type of investment. 2% default seems ridiculously optimistic. These are just peer to peer loans aren't they?

Youre not lending money to debtors.. Thats not how it works. In a nutshell:

"Yrefy’s business model works by buying private student loans that are in trouble, usually paying only 35% to 40% of the loan’s original balance. After that, they refinance your loan and charge you a fixed interest rate averaging around 3.9%.

The difference between what they paid for your loan and what you repay (called the “spread”) is how they make a big part of their profit.

In addition to the interest, Yrefy also charges a 5% fee when you refinance your loan. This helps cover costs, increases their income, and supports their investment opportunity.

Yrefy also attracts accredited investors by offering them a guaranteed return of 10.25% on their investments. This is possible because of the interest payments you make. Since Yrefy buys loans at a discount, they’re able to give investors solid returns while still earning a profit themselves."

[White Coat Investor]

10% isn't enough interest to lend money to people who are in default or delinquent. You'd likely need 20-30% yield to have a decent return on that type of investment. 2% default seems ridiculously optimistic. These are just peer to peer loans aren't they?

Youre not lending money to debtors.. Thats not how it works. In a nutshell:

"Yrefy’s business model works by buying private student loans that are in trouble, usually paying only 35% to 40% of the loan’s original balance. After that, they refinance your loan and charge you a fixed interest rate averaging around 3.9%.

The difference between what they paid for your loan and what you repay (called the “spread”) is how they make a big part of their profit.

In addition to the interest, Yrefy also charges a 5% fee when you refinance your loan. This helps cover costs, increases their income, and supports their investment opportunity.

Yrefy also attracts accredited investors by offering them a guaranteed return of 10.25% on their investments. This is possible because of the interest payments you make. Since Yrefy buys loans at a discount, they’re able to give investors solid returns while still earning a profit themselves."

Buying them at a discount would help, but the underlying source of return for the investment is still the debtors making payments, no? If they don't pay you lose your principal and any earnings.

[paul e]

Youre not lending money to debtors.. Thats not how it works. In a nutshell:

"Yrefy’s business model works by buying private student loans that are in trouble, usually paying only 35% to 40% of the loan’s original balance. After that, they refinance your loan and charge you a fixed interest rate averaging around 3.9%.

The difference between what they paid for your loan and what you repay (called the “spread”) is how they make a big part of their profit.

In addition to the interest, Yrefy also charges a 5% fee when you refinance your loan. This helps cover costs, increases their income, and supports their investment opportunity.

Yrefy also attracts accredited investors by offering them a guaranteed return of 10.25% on their investments. This is possible because of the interest payments you make. Since Yrefy buys loans at a discount, they’re able to give investors solid returns while still earning a profit themselves."

Buying them at a discount would help, but the underlying source of return for the investment is still the debtors making payments, no? If they don't pay you lose your principal and any earnings.

The debtors dont pay the investor; they pay the lender .. I wouldnt be the lender. What you describe, if the debtor doesnt pay, would be considered a default, which the company claims is less than 2%. I havent drilled down enough yet to determine if that is accurate or pie in the sky.

[nisiprius]

Before looking into the actual financial and business details, I think there is a much broader question to be answered up front: "Should I be investing in private placements?"

From investyrefy's FAQ:

What is a Private Placement Reg D 506(c) offering?

A Private Placement Reg D 506(c) offering is a type of securities offering that allows private companies to raise capital from accredited investors and is filed with the securities with the U.S. Securities and Exchange Commission (SEC). It falls under Regulation D (Reg D) of the Securities Act of 1933. The "c" in 506(c) refers to the specific rule under Regulation D that permits companies to use general solicitation and advertising to attract investors.

In other words, one could define three categories of investor protection. From most to least protected:

1) Mutual funds and ETFs (protected by the Investment Company Act of 1940)
2) Registered securities (like most individual stocks)
3) Unregistered securities offered through private placement.

Invest Yrefy is in the third category.

The SEC has an article on Private Placements under Regulation D. In part:

What is a private placement?

Under the federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration is available. Offerings exempt from the SEC’s registration requirements pursuant to Securities Act Section 4(a)(2) or its safe harbor under Regulation D of the Securities Act are often referred to as private placements....

Important risk considerations. As further detailed below, these are some important considerations to take into account when considering an investment in a private placement:

• Ability to weather a total loss. Companies engaging in private placements may be early stage and high risk. You should be able to afford the increased risk of loss with such investments, including the potential of a total loss.
• Illiquid investment. Unlike an investment purchased on a stock exchange, an investment in a private placement is highly illiquid. You will mostly likely be investing in restricted securities, may have difficulty finding a buyer for the securities when you can resell and, as a result, may need to hold the securities indefinitely.
• Limited disclosure. Companies engaging in private placements are not required to provide the disclosure that would be required in a registered offering. You may have less information to make an informed investment decision than, for example, stock purchased on a stock exchange, including information that may help you determine whether the price asked for the investment is a fair price.

Possibly the most relevant one here is "limited disclosure."

The investyrefy FAQ goes on to say:

Accredited investors are individuals who meet one of the following criteria: a net worth over $1 million (excluding their primary residence), individual income exceeding $200,000, or household income exceeding $300,000 for each of the previous two years, with a reasonable expectation of maintaining the same income level for the current year.

I assume you have already determined that you meet one of those criteria. Here's the part they are not explaining as clearly as the SEC:

One reason these offerings are limited to accredited investors is to ensure that all participating investors are financially sophisticated and able to fend for themselves or sustain the risk of loss, thus rendering less necessary the protections that come from a registered offering.

[White Coat Investor]

Buying them at a discount would help, but the underlying source of return for the investment is still the debtors making payments, no? If they don't pay you lose your principal and any earnings.

The debtors dont pay the investor; they pay the lender .. I wouldnt be the lender. What you describe, if the debtor doesnt pay, would be considered a default, which the company claims is less than 2%. I havent drilled down enough yet to determine if that is accurate or pie in the sky.

Who do you think the lender is with this investment? Unless I'm understanding it wrong, it's your money that is being lent out so you're the lender.

[paul e]

Thanks guys. After reading your comments, I think its a little riskier than I had thought.. Id better park my money elsewhere. Im well invested in a variation of the 3 fund portfolio, and its throwing off decent income. Ive been doing really well with the cash portion over the last year as Im sure you know.. But I fear thats gonna dry up some with the Fed cutting thats going on. Ive got a large CD at 5.3% coming due in March and id like to find a way to replace that income, which is why I let myself be titillated by the Yrefy offering. Clearly, Ill have to find a better option.

[nisiprius]

This is odd: these are Yrefy's endorsements. If we look at the eleven of them who are not athletes, they have a consistent political alignment. Sincerely, I don't know what to make of that, nor how it should factor into an investment decision. You can listen to a collection of these endorsements here. I the ones I listened to, the endorsers all said the same things as each other, almost identically, word for word. Skillful deliveries, full of eloquence and individual personality--yet almost exactly the same words. And they said almost exactly the same things as the website.

The list of endorsers is:

Larry Elder; Sean Hannity; Charlie Kirk; Dennis Prager;
Jay Feely; Sebastion Gorka; Riley Gaines; James T Harris;
Seth Leibsohn; Jody Jackson; Vince Marotta; Shane Doan;
Tom Chambers; Brandon Webbl Brian Kilmeade; Joe Piscopo.

[paul e]

This is odd. These are Yrefy's endorsements. If we look at the eleven of them who are not athletes, they have a consistent political alignment. Sincerely, I don't know what to make of that, nor how it should factor into an investment decision. You can listen to a collection of these endorsements here. I the ones I listened to, the endorsers all said the same things as each other, almost identically, word for word. Skillful deliveries, full of eloquence and individual personality--yet almost exactly the same words. And they said almost exactly the same things as the website.

The list of endorsers is:

Larry Elder; Sean Hannity; Charlie Kirk; Dennis Prager;
Jay Feely; Sebastion Gorka; Riley Gaines; James T Harris;
Seth Leibsohn; Jody Jackson; Vince Marotta; Shane Doan;
Tom Chambers; Brandon Webbl Brian Kilmeade; Joe Piscopo.

Yeah, I found that odd too, and it spooked me more than a little. How did you find those sound bites? At any rate, theyre all reading from the same script. Maybe Fox News has some connection with the company.. Very sus indeed

[Hacksawdave]

Thanks guys. After reading your comments, I think its a little riskier than I had thought.. Id better park my money elsewhere. Im well invested in a variation of the 3 fund portfolio, and its throwing off decent income. Ive been doing really well with the cash portion over the last year as Im sure you know.. But I fear thats gonna dry up some with the Fed cutting thats going on. Ive got a large CD at 5.3% coming due in March and id like to find a way to replace that income, which is why I let myself be titillated by the Yrefy offering. Clearly, Ill have to find a better option.

Smart move. There are plenty of options available outside of these opaque things. If the Yrefy thing was so great, why are there no institutional investors, they are peddled to individual investors, and they rely on celebrity and athlete sound bites for endorsements?

Consider:

• Stock fund dividend distribution amounts have been and are increasing in size
• Bond fund/ETF per share distributions have been and are increasing
• Some stable value funds are still seeing an increase in yield payouts

While I have a municipal MMF VCTXX that has been starting to see lower monthly per share distributions, the other funds have made it stay somewhere around the same for monthly cashflow.

[stimulacra]

I've been seeing the service itself featured as a sponsor on the Dave Ramsey show and they have a discount/referral link for borrowers in default.

http://yrefy.com/ramsey

For a while, a noticeable portion of calls into the show was wondering if student loan forgiveness were going to happen or not.

I'm gonna wager that insiders either anticipate a wave of student loan defaults in the foreseeable future and/or want to signal that to their target audience.

[Investor727]

Am new to the form, I follow Jack Bogle investing advice on things.

Am currently invested with Yrefy, have 340K invested there between Tax account and IRA.
Have been invested there since 2023.

Before I invested there had a call with Laine Schoneberger, there CIO about there company.
Got the full picture on how there are able to offer the type of return.

When I see this type of return, first thing that come to mind is a ponzi scheme.

Have been very happy with what they have to offer.

[LadyGeek]

Am currently invested with Yrefy, have 340K invested there between tax account, and IRA.

Welcome! I'm curious about your IRA, as it's not something that we would recommend in this forum. From the yrefy FAQs:

Can I invest using funds from my retirement account, such as an IRA?

We work with several self-directed IRA custodians who can hold this investment on your behalf. These custodians handle all the tax reporting for the account. When the account is set up, they become the account owner, and you, as the investor, become the account beneficiary. As the beneficiary, you can direct those funds and choose from various investments, including our offering. While a bit more paperwork may be involved, we are here to assist you throughout the process to ensure a smooth experience.

A "bit more paperwork" is quite an understatement. Long story short, your investment is held in a self-directed IRA which has a ton of caveats and is intended for experienced investors who understand what this means.

The SEC has some background info: Investor Alert: Self-Directed IRAs and the Risk of Fraud | Investor.gov Please read it carefully and then read the above FAQ again. Note how it's worded in terms of "various investments, including our offering."

Additionally, your self-directed IRA is likely subject to additional expenses as defined by the custodian. From the FAQ:

Are there any additional fees or expenses associated with investing in Yrefy?

Beyond the early redemption of an investment (see the Private Placement Memorandum for a full explanation of the liquidity feature and costs associated), Yrefy charges no fees or expenses for an investment in Yrefy.

Please note that if you choose to invest through a self-directed IRA, use a third-party custodian, or use a financial advisor, CPA, lawyer, or other advisor in connection with your investment, you may encounter fees or other expenses. It is the investor’s responsibility to ask and understand these fees and expenses as they are not associated with Yrefy.

[nyeshua]

Anybody have experience with, or know anybody who's invested in this product?
https://www.investyrefy.com/

Yrefy
Yrefy is a company that specializes in refinancing private student loans for borrowers who are in default or delinquent. Yrefy does not work with federal loans.

Collateralized portfolio investment
Yrefy offers a collateralized portfolio investment opportunity for accredited investors with a minimum investment of $50,000. This investment offers fixed interest rates of up to 10.25% and durations of one to five years.

They claim to have a default rate < 2% and doesnt seem any riskier than high yield funds. Rather, the principal is protected and it seems very flexible. In retirement, and with falling interest rates impacting a chunk of my income, would this be crazy to add to a portfolio?

10% isn't enough interest to lend money to people who are in default or delinquent. You'd likely need 20-30% yield to have a decent return on that type of investment. 2% default seems ridiculously optimistic. These are just peer to peer loans aren't they?

And yet Yrefy has an A++ rating with better business bureau and is recommended by Dave Ramsey.

[nisiprius]

...And yet Yrefy has an A++ rating with better business bureau and is recommended by Dave Ramsey...

BBB and Dave Ramsey are rating the company's student loan refinancing business. Not their unregistered private placement investment opportunity.