Prop in B***et W****** Rd (1107680318 - final) DEFAULT (FS)

Yes 2nd charge; not good at the moment on FS in respect of defaults, learned my lesson, I dont invest in 2nds or tranches that rank behind

Shurely shome mishtake adrian77? ........ hic!   

But Zoopla current estimate £1,237,000

Prices in that area fell 1.7% last year.

I will have a small chunk.

FS have had some excellent new loans in the last few days. This, in my view, is not one of them. This one actually made me wince when it came up.

Two not remotely unlikely scenarios, based upon past experience:

1) Borrower upsets 1st chargeholder in some way, probably by not repaying their money when they expect it. 1st chargeholder calls in debt, FS loan defaults.

2) Property is attempted to be sold at an unrealistic price, which it does not achieve. Even with a semi-realistic price, they only have 6 months before renewal comes up. As, ahem, beautiful as this house looks, it's a possibility. FS highly unlikely to extend a 2C loan beyond an already eye-watering nominal 68.5% LTV. 

Impact of either scenario: Property is sold as a distressed sale in an auction, for probably a large fraction of the price paid in 2015 - £725k. Let's say £600k perhaps. That leaves £600k- £441k = £159k before all fees coming back to us. Less those fees, probably no more than £140k. Result, capital loss for FS investors of just under 50%.

I took one look at the valuation, one look at the house and literally burst out laughing.


Absolutely not a shred of sensible DD done, not after the explosive laughter episode.

I would have avoided this even if it was a 1st charge. Prices in London are falling for a start and combine in the fact that 1st charge holders will get back all interest before we get a dime of capital, it is far too risky for 13%

Wottashame.