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Post by scepticalinvestor on Sept 23, 2017 20:50:34 GMT
Edit: Not allowed to post the link or search terms since it identifies borrowers (tbh not sure how it makes any difference given that it's the Telegraph identifying the borrower in a publicly available news article link but fair enough, rules are rules).
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hazellend
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Post by hazellend on Sept 23, 2017 21:24:52 GMT
It is good to see articles like this highlighting the main problem - inaccurate valuations.
Lendy is not the only lender with this problem.
I think the P2P lending community as a whole is growing wise to the problem with VRs and am hopeful that progress will be made amongst the biggest asset backed P2P lenders.
I would also like to see the amount paid by the borrower for the asset included in the information given to the lenders.
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Post by martin44 on Sept 23, 2017 23:49:39 GMT
scepticalinvestor can you make the link more specific please, i can't find the info you refer too. edit its here <link to article naming borrowers redacted> Edit. Oops Apologies. Brain not in gear again. 
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Post by martin44 on Sept 23, 2017 23:57:57 GMT
"The FCA is investigating how peer-to-peer lenders disclose default rates as part of a delayed consultation into the burgeoning industry." I never like the phrase "burgeoning industry"  from the article. A study of Lendy’s loan book reveals that almost 25pc of loans, worth £47.2m, are outside original terms, meaning repayments can be one day to 434 days overdue. Industry practitioners said that typical lending practices should mean any loan that does not meet a repayment date is considered a default. However, Lendy says that just 14.5pc of its loan book is “currently in default as defined by our agreements with lenders, and in line with the wider bridging and development finance market”. BS. |
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mikes1531
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Post by mikes1531 on Sept 24, 2017 1:00:25 GMT
from the article. A study of Lendy’s loan book reveals that almost 25pc of loans, worth £47.2m, are outside original terms, meaning repayments can be one day to 434 days overdue. Industry practitioners said that typical lending practices should mean any loan that does not meet a repayment date is considered a default. However, Lendy says that just 14.5pc of its loan book is “currently in default as defined by our agreements with lenders, and in line with the wider bridging and development finance market”. ISTM that having even 14.5% of the loans in default is rather an abysmal track record!
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btc
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Post by btc on Sept 24, 2017 5:45:10 GMT
The FCA should also investigate fundingsecure .The pawn model (lend and forget for 6 months) should not be used for large investments since Funding Secure can't handle recoveries properly. |
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Post by scepticalinvestor on Sept 24, 2017 6:31:36 GMT
I've been digging a bit further and it seems that the couple in question had quite a chequered past starting from well before Lendy ever lent them any money. Surprising that Lendy weren't more careful.
Lots of stuff in local newspapers.
Edit: Removed search terms as it breaks forum rules. Apologies.
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Post by scrooge on Sept 24, 2017 6:40:38 GMT
scepticalinvestor can you make the link more specific please, i can't find the info you refer too. edit its here <link to article naming borrowers redacted> Just Google "L***y" and "Sunday Telegraph".
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ashtondav
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Post by ashtondav on Sept 24, 2017 6:57:33 GMT
Get that barge pole out. 12%! Bonkers, 24 carat gold bonkers...
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Post by loftankerman on Sept 24, 2017 7:15:45 GMT
Well, on the up side, this story is unlikely to have any real world impact on imagined benefits derived from sponsoring Cowes Week.
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MarkT
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Post by MarkT on Sept 24, 2017 7:21:51 GMT
I'm not sure that the article tells those of us here anything we didn't already know.
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ben
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Post by ben on Sept 24, 2017 7:35:46 GMT
I've been digging a bit further and it seems that the couple in question had quite a chequered past starting from well before Lendy ever lent them any money. Surprising that Lendy weren't more careful. Lots of stuff in local newspapers. Edit: Removed search terms as it breaks forum rules. Apologies. Not to worry as Lendy have previously told us the borrower history does not matter the important thing is the value of the security. Buying property/land is like buying a car unless you are buying a desirable property the chances are the buyer will not pay what the valuation states, just like I am sure many on here did not pay the valuation for there own property. So the actual value of the property is what they paid for it but unfortunately a lot of p2p sites seem to be unaware of that and are happy to lend more/equal to what the person brought the asset for and then state its 70% LTV loan. So win win for borrowers and p2p site whatever happens.
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dzo
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Post by dzo on Sept 24, 2017 10:10:49 GMT
It's nothing we haven't all known for months.
Lendy's definition of a default is a bit arbitrary, but they at least make it clear. The failure to disclose relevant information about borrowers is more concerning because few lenders visit these forums.
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Post by charliebrown on Sept 24, 2017 12:01:52 GMT
You have to wonder whether 12%, or even less in some cases, is really worth the risk. Poor due diligence, wildly inaccurate valuations, dodgy borrowers and withheld information are all common and are examples of the “avoidable” risks that can hit investors. When you add in the “unavoidable” risks such as economic downturn, property market crash and development complications then the risks become even more pronounced. Whether you see defaults at 14% (per Lendy) or 25% (per The Telegraph article) both seem unsustainably bad.
The only thing that’s keeping me invested at the moment is that, so far, there has been no capital losses. Once I hit a situation where I’ve lost a significant wedge of capital (looks likely as I’m in both Exeter loans) I’m going to look for a different place to invest with a better risk/ reward.
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r1200gs
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Post by r1200gs on Sept 24, 2017 12:32:46 GMT
You have to wonder whether 12%, or even less in some cases, is really worth the risk. Poor due diligence, wildly inaccurate valuations, dodgy borrowers and withheld information are all common and are examples of the “avoidable” risks that can hit investors. When you add in the “unavoidable” risks such as economic downturn, property market crash and development complications then the risks become even more pronounced. Whether you see defaults at 14% (per Lendy) or 25% (per The Telegraph article) both seem unsustainably bad. The only thing that’s keeping me invested at the moment is that, so far, there has been no capital losses. Once I hit a situation where I’ve lost a significant wedge of capital (looks likely as I’m in both Exeter loans) I’m going to look for a different place to invest with a better risk/ reward. The defaults are inevitable, the rest is not. If the valuations were accurate then the defaults would be a nuisance and little more. Yup, not just a little out on the valuations but absolutely outrageously overvalued! If you set out to do business with a sly old fox that intends to take you to the cleaners and has a history of doing so with much bigger fish than Lendy, then you should expect more of the same which is what Lendy got. Actually, what lenders got. This despite warnings from people like me. More by luck than judgement I have avoided getting tied in to the worst on Lendy(small part of 002) but FS have taught me a lesson with Whitehaven and the turbine loan. I'm winding down with Lendy while I reassess just how much I should be trusting them as a platform and how much I trust their business model. While it is not clear what is going on with Exeter, it demonstrates to me that there is clearly more going on than a simple loan tied to security and it's not a good idea to be investing in something you don't understand, and you never will unless you get told the whole story. A transparent explanation of what the hell has gone on at Exeter would be a good start, though I won't be holding my breath.
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