cwah
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Post by cwah on Sept 17, 2017 18:19:31 GMT
Hello,
I see so many tranches in the pipelines... and I can't see any in the live loans....
So how are they added? Do they increase the LTV? Or do they pop into the secondary market taking priority over the current loans for sale?
Thanks
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ilmoro
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Post by ilmoro on Sept 17, 2017 18:52:21 GMT
Hello, I see so many tranches in the pipelines... and I can't see any in the live loans.... So how are they added? Do they increase the LTV? Or do they pop into the secondary market taking priority over the current loans for sale? Thanks They are merged into the existing loans when they go live. As DFL display the Loan to Gross Development Value, the LTV wont actually increase on the site. In reality the LTV based on the current value of the site it probably will increase, unless the sum advanced corresponds to the increase in the site value from work done. As Lendy dont provided IMS reports to lenders or revised valuations with each drawdown the actual current LTV is impossible to know. They are funded through prefunding allocations with any residual going to the front of the exisitng loan queue on the SM when the loan is merged in on launch. They are never listed independently unless there is a cashback reward for primary investments on a tranche. In that case the loan will show seperately on the SM until it is filled when it will be merged with the existing loan.
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cwah
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Post by cwah on Sept 17, 2017 20:25:43 GMT
Is that the reason why the big loans can never be sold on the secondary market? By the time I go a bit higher up in the queue, there are few hundred ££ more added to my queue!
But if some money is added to the loan, I assume even if the gross value doesn't increase, the total lended or loan value should increase isn't it? So the LTV should decrease over time no?
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mikes1531
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Post by mikes1531 on Sept 17, 2017 21:30:50 GMT
As DFL display the Loan to Gross Development Value, the LTV wont actually increase on the site. : ISTM that, since the LTV shown is the total loan divided by the GDV, whenever a new tranche is merged with the existing loan the loan amount increases and the LTGDV displayed increases. Unless I'm mistaken, that's what I've seen happen in the past. They are never listed independently unless there is a cashback reward for primary investments on a tranche. In that case the loan will show seperately on the SM until it is filled when it will be merged with the existing loan. I thought they stayed separate until the cashback was paid, and only then were they merged with the main loan. IIRC, it's possible to buy one of the cashback parts in the month that the tranche goes live and receive the cashback. (Not that there are many investors who'd be selling those parts. You'd probably need a very fast finger to buy any that did appear on the SM.)
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ilmoro
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Post by ilmoro on Sept 17, 2017 22:20:58 GMT
As DFL display the Loan to Gross Development Value, the LTV wont actually increase on the site. : ISTM that, since the LTV shown is the total loan divided by the GDV, whenever a new tranche is merged with the existing loan the loan amount increases and the LTGDV displayed increases. Unless I'm mistaken, that's what I've seen happen in the past. They are never listed independently unless there is a cashback reward for primary investments on a tranche. In that case the loan will show seperately on the SM until it is filled when it will be merged with the existing loan. I thought they stayed separate until the cashback was paid, and only then were they merged with the main loan. IIRC, it's possible to buy one of the cashback parts in the month that the tranche goes live and receive the cashback. (Not that there are many investors who'd be selling those parts. You'd probably need a very fast finger to buy any that did appear on the SM.) You are probably correct on both, dont really pay much attention to tranches as I rarely invest in them.
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ilmoro
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Post by ilmoro on Sept 17, 2017 22:26:32 GMT
Is that the reason why the big loans can never be sold on the secondary market? By the time I go a bit higher up in the queue, there are few hundred ££ more added to my queue! But if some money is added to the loan, I assume even if the gross value doesn't increase, the total lended or loan value should increase isn't it? So the LTV should decrease over time no? It only changed at the beginning of the month, previously it went to the back of the queue. The reason the big loans are harder to sell is most people will have a decent holding in them already and if they want more they are more likely to invest in a new tranche using prefunding so you are largely reliant on new money coming on to the platform for the SM to move a great deal. Not happening currently. Yes you are right on the second point. I dont really pay that much attention to tranches nowadays.
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mikes1531
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Post by mikes1531 on Sept 18, 2017 2:35:26 GMT
But if some money is added to the loan, I assume even if the gross value doesn't increase, the total lended or loan value should increase isn't it? So the LTV should decrease over time no? : I suspect the fourth word from the end of the above is a typo. If the amount lent increases every time a new tranche is issued and the GDV doesn't change, then the LTGDV will increase as the development progresses.
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twoheads
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Post by twoheads on Sept 18, 2017 9:32:03 GMT
They are never listed independently unless there is a cashback reward for primary investments on a tranche. In that case the loan will show seperately on the SM until it is filled when it will be merged with the existing loan. I thought they stayed separate until the cashback was paid, and only then were they merged with the main loan. IIRC, it's possible to buy one of the cashback parts in the month that the tranche goes live and receive the cashback. (Not that there are many investors who'd be selling those parts. You'd probably need a very fast finger to buy any that did appear on the SM.) There have been two cashback tranches so far: DFL019 tranche 2 and DFL024 tranche 4.
Both were listed in the pipeline without cashback on 06/07 and were 'upgraded' to include cashback on 12/07. Both went live either 12/07 or 13/07 (this broke my tracker, which couldn't cope with two live loans sharing same DFL number).
There was availability on the SM which was entirely bought up.
Both 'live' tranches were merged with their parent loans on 01/08 and the bonuses were paid along with the interest run on that date; to quote the Lendy interest e-mail on 01/08: The cashback for the two DFL tranches has also been credited and these tranches merged with the parent DFL loan.
According to Lendy's FAQs: At the end of the month cash back will be paid along with interest to whoever is holding the fully paid for loan part at the time [link to article]. Logically, I would expect the primary purchaser to receive the cashback - they are the ones Lendy needs to encourage to get the initial funding into the platform. Selling on the SM doesn't make any difference to Lendy because the money's already in - just being moved amongst investors. However, Lendy indicate that the final holder at merge time receives the cashback.
Assumption: if the cashback tranche has not filled by the end of the month then it would roll over to the next month.
I would also assume that once filled, the tranche will be drawn down pretty much immediately. This may have happened in the case of the two mentioned above but their DrawnDown indication remained NO for their entire duration.
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cwah
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Post by cwah on Sept 18, 2017 17:58:17 GMT
Ok, it starts to make sense now.
So if I can summarise:
1. The initial loan of 50% LTV is attributed. Lets assume I buy some part of this initial loan.
2. Then additional tranche comes in, each tranche increase the LTV. As more tranche kicks in, the LTV gets higher and higher. Usually lendy puts a text saying it won't get higher than 70% GDV.
3. As the secondary market piles up, I decide to buy some additional loan parts. I do not know if these loan are tranche or the initial loan.
4. Now let's assume the loan default and only recover a small % of the initial loan. How does the money gets re-distributed?
Is it fair to assume the lender of the initial loan are getting paid back first, because the initial investors would lend considering a LTV much lower than the final one?
Or is it in pro rata of each lender amount?
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ilmoro
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Post by ilmoro on Sept 18, 2017 18:30:01 GMT
Ok, it starts to make sense now. So if I can summarise: 1. The initial loan of 50% LTV is attributed. Lets assume I buy some part of this initial loan. 2. Then additional tranche comes in, each tranche increase the LTV. As more tranche kicks in, the LTV gets higher and higher. Usually lendy puts a text saying it won't get higher than 70% GDV. 3. As the secondary market piles up, I decide to buy some additional loan parts. I do not know if these loan are tranche or the initial loan. 4. Now let's assume the loan default and only recover a small % of the initial loan. How does the money gets re-distributed? Is it fair to assume the lender of the initial loan are getting paid back first, because the initial investors would lend considering a LTV much lower than the final one? Or is it in pro rata of each lender amount? Its pro rata. There is only one loan, each tranche ceases to exist after it is merged into the main loan, doesnt matter if you invest when loan first goes live, via the last tranche or on the SM everyone ranks equally or pari passu as the legal term is. So if 50% of the loan value is recovered, everyone gets 50% of their capital back, if 105% of the loan value is recovered then every one gets 100% of their capital and every one gets a proportion of the remaining 5% towards any accrued interest, bonus etc. Thats why if you are investing in a tranched loan you need to understand that the LTV will increase over time and invest on that basis. Thats also why there should be a clear cap on the max LTV that is permitted against current site value.
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Post by GSV3MIaC on Sept 18, 2017 20:18:17 GMT
That's a nice idea but the 'current site value' of a half-demolished/half-built project is somewhere between 'unknown' and 'NaN'. Worst case (if some clown has mis-built the wrong thing) it is less than you started with. 8<. Sort of like what's the value of £30 of knitting wool when it's half knitted into a pullover the wrong size.
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twoheads
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Post by twoheads on Sept 18, 2017 21:05:17 GMT
That's a nice idea but the 'current site value' of a half-demolished/half-built project is somewhere between 'unknown' and 'NaN'. Worst case (if some clown has mis-built the wrong thing) it is less than you started with. 8<. Sort of like what's the value of £30 of knitting wool when it's half knitted into a pullover the wrong size. Love the use of NaN... first I've seen on the forum... Excellent!
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p2p2p
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Post by p2p2p on Sept 18, 2017 22:36:28 GMT
It would be useful if Loan Particulars quoted the end loan amount and LTV as well as the intermediate ones, rather than have the information buried in the loan description. I don't think it could be added as columns in the tabular displays because it would clutter them too much, but there is space on that page
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cwah
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Post by cwah on Sept 18, 2017 23:01:26 GMT
That is very misleading information then.
When I see Woltherhampton or Arboretum loan they are all around 50% LTV.
That is why I invested quite a lot in these loan... thinking that with 50% LTV there shouldn't be too much risk.
But then if over time the LTV increase to 70%, it's not the same story at all!! I wouldn't invest in it knowing that.
It's really misleading toward taking much more risk than wanted... the main LTV displayed in big is not the one the investor is getting at the end of the loan!!!!
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mary
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Post by mary on Sept 19, 2017 8:47:13 GMT
That is very misleading information then. When I see Woltherhampton or Arboretum loan they are all around 50% LTV. That is why I invested quite a lot in these loan... thinking that with 50% LTV there shouldn't be too much risk. But then if over time the LTV increase to 70%, it's not the same story at all!! I wouldn't invest in it knowing that. It's really misleading toward taking much more risk than wanted... the main LTV displayed in big is not the one the investor is getting at the end of the loan!!!! It is clearly stated in the loan particulars that the total, final LTV will not exceed x%, usually 70%, of the final GDV. Therefore the LTV is almost never a true, current state. A half complete DFL will not have reached the final GDV (obviously as it's not finished). If the project were to halt prior to completion (see DFL01) then it is highly possible that the loan could exceed the disposal value and your capital could be at risk. This is why the DFL loans are released in tranches, each new tranche only being made available when it is confirmed that the previous tranche has been well spent and the project is on track (this is not infallible, again see DFL01).
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