SteveT
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Post by SteveT on Nov 3, 2017 12:45:02 GMT
Collateral Rep , now that you have (without prior discussion with or agreement from your lenders) adopted the approach of extending property loans rather than offering them up for renewal, the only way that lenders who want repayment after 6 months (as originally advertised) can exit the loan is to sell via the SM, potentially losing out on days / weeks / months of interest in the process. Given this, I'd ask you to review (and change) your policy of diverting lenders' interest into your own coffers when parts are offered for sale on the SM, at least as it applies to property loans and especially to those you decide to extend rather than renew. To lock your lenders into an extended loan term and then charge them (via confiscated interest) for wanting to get out on time cannot reasonably be justified, IMHO.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Nov 3, 2017 13:06:03 GMT
Agree, extending without the Lender Option to "Get Out" at no cost is not on.
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oldgrumpy
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Post by oldgrumpy on Nov 3, 2017 13:08:19 GMT
Quite right! If COL alters the loan length, it is insulting to lenders to confiscate interest for the "crime" of trying to exit the loan at the agreed time via the SM. As with Lendy, COL (in effect) charges a lender more and more as the time taken to sell increases. 1% for a month, 1.5% for six weeks; 2% for eight weeks etc.
Collateral are charging lenders for the waiting, not for the selling, and the longer lenders have to wait, the more money (interest) Collateral saves! Not a pretty policy collateral . It is a blemish on quite a favoured platform. |
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Post by Collateral Rep on Nov 3, 2017 13:30:59 GMT
Hi SteveT, We have been discussing this internally and are looking at applying interest to loan parts being sold in the extended period (only in the extended period of the loan), the initial loan period will remain the same as now. However we are conscious of how this could affect the SM. I will update early next week with when this will be implemented. Many thanks, Gordon |
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m2btj
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Post by m2btj on Nov 3, 2017 13:31:48 GMT
I'm in total agreement with the above! Great policy for Collateral but unfairly penalises lenders!
PS. Glad to see that Gordon is now reviewing this policy!
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SteveT
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Post by SteveT on Nov 3, 2017 13:38:19 GMT
Hi SteveT, We have been discussing this internally and are looking at applying interest to loan parts being sold in the extended period (only in the extended period of the loan), the initial loan period will remain the same as now. However we are conscious of how this could affect the SM. I will update early next week with when this will be implemented. Many thanks, Gordon I presume this change would apply to parts already patiently queued for sale at the time a loan enters the extended period, as well as parts added to the queue thereafter? Frankly, I would much prefer that you stop confiscating lenders’ interest altogether (which a platform should have no right to do whilst it is the lender’s capital that is at risk). If you feel there needs to be some cost for selling to prevent long SM queues forming then apply a standard selling charge (eg. 0.1% - 0.25%) but waive this for extended loans. Put another way, why should it cost nothing to sell part of a small, popular loan but potentially 1%/2%/3% to sell part of a large, unpopular loan. This simply discourages investment in the large loans that you most want our help to fill.
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elliotn
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Post by elliotn on Nov 4, 2017 4:08:19 GMT
Hi SteveT, We have been discussing this internally and are looking at applying interest to loan parts being sold in the extended period (only in the extended period of the loan), the initial loan period will remain the same as now. However we are conscious of how this could affect the SM. I will update early next week with when this will be implemented. Many thanks, Gordon I presume this change would apply to parts already patiently queued for sale at the time a loan enters the extended period, as well as parts added to the queue thereafter? Frankly, I would much prefer that you stop confiscating lenders’ interest altogether (which a platform should have no right to do whilst it is the lender’s capital that is at risk). If you feel there needs to be some cost for selling to prevent long SM queues forming then apply a standard selling charge (eg. 0.1% - 0.25%) but waive this for extended loans. Put another way, why should it cost nothing to sell part of a small, popular loan but potentially 1%/2%/3% to sell part of a large, unpopular loan. This simply discourages investment in the large loans that you most want our help to fill. One effect of a blanket SM charge could be investors invest less at go live to avoid future charges recycling, the opposite effect Coll need for larger develpment loans (where CB at drawdown gets the loans filled and positively encourages flipping). I typically avoid platforms with SM charges ie LLI, PL and am prepared to run the risk of some cash drag if my financial circumstances change and I no longer wish to hold a loan to term. Tricky balance. Edit - as the perfect platform doesn't exist, I actually appreciate the differences from dumping on MT to get a paid Q position, dumping on Ly out of desperation, taking a market price on abl or timing nuances on Coll vs Q recycling, keeps us on our toes (that said the regular Chelsea dumps are becoming rather tedious 😉 ).
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bfish
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Post by bfish on Nov 4, 2017 8:13:40 GMT
Try as I might I can find no mention in COL's Terms or FAQ warning lenders who sell on the SM that their interest payments will be docked. Can anyone point me in the right direction, please ?
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oldtimer
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Post by oldtimer on Nov 4, 2017 8:23:29 GMT
When you put a loan up for sale you will get an email that says
Your part funding of £xx.00 for xxxx has now been made available for sale in the secondary funding market.
Please note that all interest on the £xx.00 made available will cease immediately.
Once your loan parts have been purchased we will credit the balance to your account, however any current available funding on this loan will take precedence over your selling loan parts until they are sold.
If you have any queries, please feel free to contact us.
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applets
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Post by applets on Nov 4, 2017 8:45:07 GMT
While COL now appear to extend loans rather than renew without giving lenders the chance to say they do not wish to extend, I wonder where authority for this actually comes from. I am happy for someone to show me otherwise, but as far as I can see there is no mention of the possibility/ right of extension in the details for individual loans or in the terms and conditions. Indeed, clause 10.12 of the terms and conditions says
"A Loan Agreement may be renewed at the end of the term by agreement in writing between Collateral and the Borrower where you have given specific consent in writing to the extension of the Loan Agreement term. We will ask you four weeks before the end of the term of the Loan Agreement what you want to do in respect of your Loan." (where clause 2.1 appears to define you as the investor or lender)"
Further, clause 10.2 4 d says that lenders authorise COL ....
"To enter into negotiations and make agreements on your behalf relating to the individual terms of any Loan that you make, are assigned or re-assigned (as applicable) provided that you do not receive less interest or enter into a longer term that was agreed at the time you made a Lending Commitment."
I am not therefore convinced that COL comply with their own terms and conditions.
Similarly, although we are regularly told that interest is not payable when a lender places a loan part for sale on the SM, I cannot see any provision for this in the terms and conditions, frequently asked questions or individual loan particulars.
Perhaps others can show where we sign up to loan extensions and withholding of interest when we enter into a contractual relationship with COL.
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bfish
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Post by bfish on Nov 4, 2017 8:55:18 GMT
When you put a loan up for sale you will get an email that says Your part funding of £xx.00 for xxxx has now been made available for sale in the secondary funding market.
Please note that all interest on the £xx.00 made available will cease immediately.
Once your loan parts have been purchased we will credit the balance to your account, however any current available funding on this loan will take precedence over your selling loan parts until they are sold.
If you have any queries, please feel free to contact us.Thanks, 'oldtimer' - seems I opted NOT to receive such emails !!! (Corrected now) But shouldn't the FAQ at least mention this . . . ?
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oldtimer
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Post by oldtimer on Nov 4, 2017 9:14:05 GMT
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star dust
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Post by star dust on Nov 4, 2017 9:19:04 GMT
Try as I might I can find no mention in COL's Terms or FAQ warning lenders who sell on the SM that their interest payments will be docked. Can anyone point me in the right direction, please ? When you put a loan part up for sale it reiterates what you are selling and how much and also says "Please note, once you confirm you are selling your loan part all interest on this part will stop. Once your loan parts have been purchased we will credit the balance to your account, however any available funding on the loan will take precedence over your selling loan parts until sold. Any unpaid interest accrued prior to sale will be credited at the end of the month as usual." You have to click the blue "sell loan part" button to implement it and put the loan part up for sale. Seems pretty clear to me 
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applets
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Post by applets on Nov 4, 2017 9:33:33 GMT
Try as I might I can find no mention in COL's Terms or FAQ warning lenders who sell on the SM that their interest payments will be docked. Can anyone point me in the right direction, please ? When you put a loan part up for sale it reiterates what you are selling and how much and also says "Please note, once you confirm you are selling your loan part all interest on this part will stop. Once your loan parts have been purchased we will credit the balance to your account, however any available funding on the loan will take precedence over your selling loan parts until sold. Any unpaid interest accrued prior to sale will be credited at the end of the month as usual." You have to click the blue "sell loan part" button to implement it and put the loan part up for sale. Seems pretty clear to me Yes, but the OP's point was you can't find this out in the terms and conditions, FAQs before you lend. You only find out when you come to sell. Many other platforms are more up front about their fees and charges.
A similar situation arises that COL will now unilaterally extend loans without the lender having the chance to say they agree/ disagree or do not wish to continue in the loan (unless they sell on the SM). Who knew this when they first joined COL or purchased an individual loan part?
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sirius
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Post by sirius on Nov 4, 2017 9:33:56 GMT
We have entered into a six month contract.
Any changes to the agreed terms of that contract MUST be by mutual agreement. However, as with credit card changes etc, if you do not object to their proposed changes, then it is deemed that you have given your tacit agreement to the changes. It works both ways of course.
If you do not agree to the extension, write (or email) COL and tell them so, but refer your letter to a flesh and blood wo/man, rather than to 'COL', (a 'dead' corporation), as you then tie that wo/man down to take the responsibility and liability should you need to make a lawful claim at a later date.
The above is only my view and is not to be construed as my giving legal/ lawful advice!
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