Axos Financial (AX) Faces Allegations of Concealing Risks and Unconventional Lending Practices

Core Viewpoint - Axos Financial, Inc. is facing serious allegations from Hindenburg Research regarding the concealment of risks associated with its lending practices and the overall health of its loan portfolio [1][4]. Group 1: Commercial Real Estate Exposure - Axos Financial has significantly increased its exposure to commercial real estate (CRE) loans, which now make up more than 50% of its total loan portfolio, contrasting sharply with the industry average of 16.5% as reported by Moody's in 2023 [2]. Group 2: Underwriting Standards - Concerns have been raised about Axos' underwriting standards, with reports indicating that the bank may have lent to borrowers rejected by other institutions, including those with criminal histories and unstable financial situations, potentially leading to a high rate of loan defaults in the future [3]. Group 3: Accounting Practices - The investigation has highlighted questionable accounting practices at Axos, with doubts about the accuracy of its credit metrics. Loan-to-value ratios appear lower than industry norms, and non-performing loan rates remain suspiciously stable, suggesting possible manipulation of figures to present a more favorable outlook to investors [4].