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Post by rollercoaster on Feb 5, 2018 6:58:28 GMT
This looks to be an approach to mitigate problems with completion of existing loans. However it feels to me like platforms didn't really consider that the value of property could actually decrease. I think that will be the trigger for consolidation, and I wonder when that will hit.
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archie
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Post by archie on Feb 5, 2018 8:00:53 GMT
I really don't get the reactions here. Would you rather it carried on as now and put the platform at risk?
If a lot of lenders choose not to rollover loans the cost/risk to the platform will be unsustainable.
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Post by oktaeder on Feb 6, 2018 16:12:06 GMT
pacta sunt servanda. if I bought a loan with a definite end I want that I could end at this time. MT can change the rule for future loans but those that are sold should not be changed.
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Post by richardthe4th on Feb 6, 2018 20:32:46 GMT
Does this not mean that I'm lending money on an open-ended arrangement.
If the borrower wishes to renew but i don't then, as far as I can see, it's tough luck and I have to try and sell on the SM.
This wasn't what I signed up for....
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hazellend
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Post by hazellend on Feb 6, 2018 21:27:13 GMT
Does this not mean that I'm lending money on an open-ended arrangement. If the borrower wishes to renew but i don't then, as far as I can see, it's tough luck and I have to try and sell on the SM. This wasn't what I signed up for.... Welcome to the the Wild West of high interest P2P. It can be an unpredictable and sometimes tough place.
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jlend
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Post by jlend on Feb 7, 2018 10:05:30 GMT
Does this not mean that I'm lending money on an open-ended arrangement. If the borrower wishes to renew but i don't then, as far as I can see, it's tough luck and I have to try and sell on the SM. This wasn't what I signed up for.... Welcome to the the Wild West of high interest P2P. It can be an unpredictable and sometimes tough place. My thoughts for what it is worth I can see AC at least often ask lenders to vote on material things and in some cases extensions to loans. I've never seen a vote request from MT but then perhaps a suitable situation for a vote has never occurred. It will be interesting to see if MT ever ask lenders if they wish to extend a loan or ask the borrower to repay the loan and seek alternative sources of funding. This may be a suitable approach in some circumstances? The alternative is that MT make all the decisions themselves and hence take at least some accountability for their thought process and decision.
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bugs4me
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Post by bugs4me on Feb 7, 2018 11:17:34 GMT
The problem (for myself and maybe others) is that there may be a few loans due for renewal in the not too distant future that MT’s existing lenders may be unwilling to fund.
Taking extremes, if I subscribe to a loan at say a LTV of 10% for 6 months and then at renewal time the LTV has jumped to say 90% then I’ll probably not be inclined to renew. Under the latest ‘rules’ I have no option apart from offering my loan parts on the SM which will probably have few, if any, takers.
Platforms in general seem to believe there is a bottomless pit of funds with existing lenders. If there’s £XXm in default they genuinely believe IMO that’s not a problem. It is guys and most folks that are already committed to a platform do not wish to exceed their exposure further and frankly why should they - that’s assuming the bottomless pit exists.
Many platforms are running with some serious defaults and until they get that under control the days of P2P, especially at 12% may be coming to a gradual end.
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empirica
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Post by empirica on Feb 7, 2018 11:43:26 GMT
Been pondering this, and as a result, my whole participation in P2P.
If there were a voting system and the current investors chose not to allow the loan to renew, what would happen?
There may be other options, but I suspect the borrower would have to source alternative financing or sell the asset, and if those drew a blank, allow the asset to be seized and distress sold. Pretty much the same thing as when a loan defaults, except on this occasion, the investors are calling 'default' not the platform.
I'd be comfortable with that, even though it could mean a significant period where no interest was paid and capital were tied up. After all, this is secured lending not a savings account.
That said, it would probably mean that I'd make a far smaller investment in any one loan. (At present it's typically 2% but I'd probably drop that to 0.5% - and as long as I am working / earning, I'm happy to be in cash.)
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empirica
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Post by empirica on Feb 7, 2018 11:46:57 GMT
pacta sunt servanda. if I bought a loan with a definite end I want that I could end at this time. MT can change the rule for future loans but those that are sold should not be changed. Had to look that up! Isn't that what has happened though? On signing with the platform, investors agreed the platform can run things and make changes as they thought necessary? And have you ever invested in a loan with a truly 'definite' end date?
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Post by rollercoaster on Feb 7, 2018 12:22:36 GMT
There may be other options, but I suspect the borrower would have to source alternative financing or sell the asset, and if those drew a blank, allow the asset to be seized and distress sold. Pretty much the same thing as when a loan defaults, except on this occasion, the investors are calling 'default' not the platform I thought the loan was in default the moment the agreed repayment terms were not met. I think what you are talking about is the response to that default. Be it an extension, or a new loan with new terms. Or recovery. As a lender you sign up to the original deal. A small extension to allow repayment uber the original terms is probably justified. But needs bounding (e.g 10% of term max. Part repayment where possible) If LTV has altered dramatically then in my view it is new loan terms, or recovery as per the original deal.
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niceguy37
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Post by niceguy37 on Feb 7, 2018 14:50:46 GMT
I can entirely see MT's need to change to a more sustainable model.
However, at least with AC's model investors get to vote on proposals by the borrower, meaning the borrower may need to offer a little extra interest to get an extension granted.
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bugs4me
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Post by bugs4me on Feb 7, 2018 16:51:50 GMT
I can entirely see MT's need to change to a more sustainable model. However, at least with AC's model investors get to vote on proposals by the borrower, meaning the borrower may need to offer a little extra interest to get an extension granted. Possibly the change is acceptable but should have been for future loans. It is then entirely up to the MT lending community as to whether they wish to participate in an opportunity or not. What does seem to have ruffled the heckles somewhat is the change being applied to existing loans and this move is extremely poor marketing on the part of MT. A sad state of affairs IMO especially as the amount of time and effort MT have devoted to building up what was an excellent reputation. Whether it stays that way or not we shall just have to wait and see.
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Post by Badly Drawn Stickman on Feb 7, 2018 17:39:50 GMT
I can entirely see MT's need to change to a more sustainable model. However, at least with AC's model investors get to vote on proposals by the borrower, meaning the borrower may need to offer a little extra interest to get an extension granted. Possibly the change is acceptable but should have been for future loans. It is then entirely up to the MT lending community as to whether they wish to participate in an opportunity or not. What does seem to have ruffled the heckles somewhat is the change being applied to existing loans and this move is extremely poor marketing on the part of MT. A sad state of affairs IMO especially as the amount of time and effort MT have devoted to building up what was an excellent reputation. Whether it stays that way or not we shall just have to wait and see. There are inevitably things we don't know, and always will be. On this occasion we probably know enough, its very unlikely that if 'custom and practice' had been applied a good few of the loans would have rolled over/extended on the open market. That would have created a serious problem for moneything so they took the path of least resistance (accepting in the process - presumably - a loss of lender goodwill) Others have mentioned it, and I would agree that an increase in rate applied for the period of the 'extension/roll over' would have been appropriate. At the end of the day all platforms do what is best for them at the time, funding Circle and Lendy have proved that in the past. Why would we not expect the others to eventually follow.
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empirica
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Post by empirica on Feb 7, 2018 18:56:28 GMT
There may be other options, but I suspect the borrower would have to source alternative financing or sell the asset, and if those drew a blank, allow the asset to be seized and distress sold. Pretty much the same thing as when a loan defaults, except on this occasion, the investors are calling 'default' not the platform I thought the loan was in default the moment the agreed repayment terms were not met. I think what you are talking about is the response to that default. Be it an extension, or a new loan with new terms. Or recovery. As a lender you sign up to the original deal. A small extension to allow repayment uber the original terms is probably justified. But needs bounding (e.g 10% of term max. Part repayment where possible) If LTV has altered dramatically then in my view it is new loan terms, or recovery as per the original deal. Yes but in the original deal there would have been an exit for repayment but if the borrower has not been able to realise that exit then the situation needs addressing. The original deal is the borrower might (should) repay at term not that they are guaranteed to repay. Investors have no cast iron right to expect repayment at term, which is what you appear to be suggesting. (My apologies if I have misunderstood.)
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Post by rollercoaster on Feb 7, 2018 21:13:53 GMT
I wasn't saying a right of repayment. But at the end of the loan the exit options are:
Repayment
Default.
There are only two outcomes! What I am then saying is it is the choices in response to the default. The point of secured loans is that there is a charge on the asset. So either the platform goes into full recovery mode. Or they agree to an extension (new agreement) with associated higher risk and interest.
Borrower is free to finance elsewhere and pay back as planned.
Maybe I'm just a bit harsh.
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