rogerthat
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Post by rogerthat on Jun 26, 2018 10:57:52 GMT
This case is rather self-inflicted since the recent 5th-ranking loan could presumably have been raised quite some time ago (the VR hasn't changed, AIUI) and certainly before the four 1st-tranking tranches all fell overdue too. Once they did, there became no realistic option but to follow the ranking priority. I don't think there's a fundamental need to change the FS lending model. Instead, the lesson should be to anticipate such problems once multiple tranches (with different priorities) get close to becoming overdue, and to react faster in getting renewals underway (obtaining interest from the borrower and/or raising further funds against the asset) I don't want to steal your thunder or negate the common sense in your post but i've whinged on about this, ad nauseam, in my waffle regarding the art/connected loan shambles. Much of this has been brought about by lack of oversight at HQ and implementing a policy of prevention rather than cure. More hands on deck are needed to spot the icebergs before the inevitable happens.
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adrian77
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Post by adrian77 on Jun 26, 2018 12:36:23 GMT
exactly - I would go futher and question if this is legal under the myriad of financial lending law? Illegal or not it looks dodgy to me.
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Post by charliebrown on Jun 26, 2018 14:57:31 GMT
Is it only the first charge that can default the loan? If the borrower continues to service and renew the first charge but leaves the 3rd charge in default without servicing the interest then is it possible that the 3rd charge lenders can default the loan and enforce the security even though the first charge lenders are happy with their position. All this is very confusing.
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r00lish67
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Post by r00lish67 on Jun 26, 2018 15:44:39 GMT
Is it only the first charge that can default the loan? If the borrower continues to service and renew the first charge but leaves the 3rd charge in default without servicing the interest then is it possible that the 3rd charge lenders can default the loan and enforce the security even though the first charge lenders are happy with their position. All this is very confusing. I replied to your post, but then had to delete it as I realised that what holds true in general does not actually apply to this very weird loan. I refer you to here, you'll see what I mean - you'll need to sign up to DDC though : p2pindependentforum.com/thread/11383/land-lytham-st-annesTo answer your question - It's complicated.
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adrian77
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Post by adrian77 on Jun 26, 2018 18:03:11 GMT
I would appreciate a second legal opinion but my understanding is a definite "yes" although I think they need to inform the first charge holders who get first dibs...
I have a nibble in this one and I am just clueless as to what is happening here and I don't like the smell of it. According to FS this site is now worth £4.3m per acre - you what!
I make the total owing, prior to this loan, to be £1.95m - please tell me I am wrong! This is a lot of money to be paying say 20% (over £33K pe month) whilst the applicant waits for planning with doubtless a tasty s106 "agreement"...this chap is borrowing money solely to keep afloat and I just can't see how he is going to realise this asset within 6 months. I would estiamte the chance of refinancing this site at £2m as somewhere south of zero.
If this was one of my sites I would be booking a one-way ticket to the BVI!
Pound to a penny this one will be another spectacular disaster - every day I seem to be adding another expected disaster to my FS league table...happy to be proven wrong
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mariner
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Post by mariner on Jun 26, 2018 18:55:48 GMT
As stated by many on here, FS just did not, & do not have the experience to participate in the property market
Running a pawn shop is an entirely different proposition from running a property funding company
They have lost control & it does not bode well for the future I am afraid to say, time will tell
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TheDriver
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Slightly bonkers
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Post by TheDriver on Jun 26, 2018 22:03:36 GMT
I would appreciate a second legal opinion but my understanding is a definite "yes" although I think they need to inform the first charge holders who get first dibs... I have a nibble in this one and I am just clueless as to what is happening here and I don't like the smell of it. According to FS this site is now worth £4.3m per acre - you what! I make the total owing, prior to this loan, to be £1.95m - please tell me I am wrong! This is a lot of money to be paying say 20% (over £33K pe month) whilst the applicant waits for planning with doubtless a tasty s106 "agreement"...this chap is borrowing money solely to keep afloat and I just can't see how he is going to realise this asset within 6 months. I would estiamte the chance of refinancing this site at £2m as somewhere south of zero. If this was one of my sites I would be booking a one-way ticket to the BVI! Pound to a penny this one will be another spectacular disaster - every day I seem to be adding another expected disaster to my FS league table...happy to be proven wrong Well, I agree with the charges bit AIUI, but in answer to your question, UNfortunately I think it's a NO ! The existing fourth tranche adds £500k, and the fifth has another £400k in the facility, not yet funded or drawn. So the total arrangement is for a cool £3,350k against a Residual Valuation which only allowed £1.7M interest (@5%) over the whole development. Half of that is likely to have been spent by the time planning is approved/refused! Oh yes, and the S106 did cross my mind, but there's no allowance for that or contingency. Please lend me your Smutty Stick.
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adrian77
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Post by adrian77 on Jun 27, 2018 7:23:43 GMT
sorry I missed some of this loan - this is as wind-up right?
be interested in what others developers think but I totally ignore residual valuations when buying my sites - this loan seems, to me, to be over 3 times the site disposal value! if we take interest at 1.5% pcm that is about 20% viz £670K, £50K per month or over £1800 per day!
If I went to my bank and asked to refinance £3.4m against a 1.3 acres site awaiting final planning they would fall about laughing...
So have FS got audited accounts of where this massive sum has gone?
And you thought Whitehaven was bad - I give up!
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lucky
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Post by lucky on Jun 27, 2018 8:04:39 GMT
FS have postponed the loan listing today at 11am due to queries raised concerning tranche repayment order.
The site is 1.3 acres and according to the valuation has a GDV of £5,650.000!!! Sounds a tad optimistic.
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r00lish67
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Post by r00lish67 on Jun 27, 2018 8:24:36 GMT
FS have postponed the loan listing today at 11am due to queries raised concerning tranche repayment order. The site is 1.3 acres and according to the valuation has a GDV of £5,650.000!!! Sounds a tad optimistic. It was actually due to be posted yesterday morning. Our discussion clearly gave FS a rather large amount of food for thought. Not entirely sure whether that's a good thing, we'll see. Re: Adrian's comment - I'm no developer, but being in possession of my GCSE maths qualification and my General Studies A level is quite sufficient to avoid this one. In fact, just these 2 points alone are enough to send me running to the hills: 1) This loan has 5 facilities and yet is not only not out of the ground, it not only doesn't have planning permission - it hasn't even been submitted yet. 2) I have not located a charge registered in FundingSecure's favour for the land.
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lucky
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Post by lucky on Jun 27, 2018 8:41:53 GMT
FS have postponed the loan listing today at 11am due to queries raised concerning tranche repayment order. The site is 1.3 acres and according to the valuation has a GDV of £5,650.000!!! Sounds a tad optimistic. It was actually due to be posted yesterday morning. Our discussion clearly gave FS a rather large amount of food for thought. Not entirely sure whether that's a good thing, we'll see. Re: Adrian's comment - I'm no developer, but being in possession of my GCSE maths qualification and my General Studies A level is quite sufficient to avoid this one. In fact, just these 2 points alone are enough to send me running to the hills: 1) This loan has 5 facilities and yet is not only not out of the ground, it not only doesn't have planning permission - it hasn't even been submitted yet. 2) I have not located a charge registered in FundingSecure's favour for the land. Apologies, dates confused. I’m not invested in this loan but reading through the thread makes very disconcerting reading.
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r00lish67
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Post by r00lish67 on Jun 29, 2018 14:05:50 GMT
The renewal question still being considered 3 days later, it seems... fundingsecure if we can distract you for a moment from pumping out brand new loans, could we please have renewals (or even just updates) for this one, the overdue Stretford, H***own Formby, and C****r house loans please? Every little helps in reducing that overdue loan statistic
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Post by charliebrown on Jul 9, 2018 12:02:19 GMT
Looks like the queries raised have meant they’ve decided to just not bother renewing any of the loans at all. What might have been seen as a legitimate objection has backfired on all of us.
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rs
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Post by rs on Jul 9, 2018 12:19:23 GMT
I suspect they have had to get their legal team involved and go to borrower to resolve impending crisis.
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adrian77
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Post by adrian77 on Jul 9, 2018 17:48:04 GMT
Have the FS team been smelling the sales-rep glue samples or what?
Could anybody with specific local expertise comment on the site value as to me it looks like £0.5-£1m tops...I may well be wrong but I just don't see where on earth the £3.4M valuation comes from - and however much is this chap racking up in interest.
Have this one down as yet another FA premier team i.e. over 74% capital loss...
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