shimself
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Post by shimself on Feb 17, 2020 15:04:04 GMT
I imagine the penny may possibly have dropped in 2017, after he sent those letters out to his tenants. Remind me please
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shimself
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Post by shimself on Feb 17, 2020 15:08:24 GMT
Guys ... A prudent p2p investor spreads risk amongst platforms and individual loans, so the failure of one loan (or platform) does not have a significant impact on their overall portfolio. In this loan there is still a good hope of achieving some recovery through the security that has been taken. So even if the return is only 50 pence in the pound, then if we have 100 loans in our overall portfolio, then this is only a small loss of capital on a portfolio basis. ... Charles Yes. But the problem which gives AC the collywobbles is that the people in GBBA got the opposite of diversification, that many got (most, all, nearly all) their GBBA holding put into this one loan
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Post by buzzablinio on Feb 17, 2020 15:31:29 GMT
A prudent p2p investor spreads risk amongst platforms and individual loans, so the failure of one loan (or platform) does not have a significant impact on their overall portfolio. In this loan there is still a good hope of achieving some recovery through the security that has been taken. So even if the return is only 50 pence in the pound, then if we have 100 loans in our overall portfolio, then this is only a small loss of capital on a portfolio basis. I personally have many more loans than that in my portfolio and the interest return will soon cover this kind of capital loss. Charlie, I admire your coolness regarding this loan - tell me - what kind of figure do you have invested in it given that you're happy to see 50% written off...3 figure? 4 figures? Perhaps even a five figure sum? As someone who was black box "diversified" in to this mess to the tune of 5 figures I for one will not be so chilled at waving goodbye to 50% of my "investment" so go on....how much are you in for?
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Post by bracknellboy on Feb 17, 2020 16:46:59 GMT
...only to find that an enormously disproportionate investment had been made on my behalf in the GBBA. That is where the grievance lies, and it is heartfelt not only by me but countless others who were let down by an apparently badly designed algorithm. I'm not so sure that the "algorithm" was "badly designed" as such, rather that the outcomes acheived (the massive holdings not the non-payment) are exactly what was designed for.
In hindsight, I think it has become clear that these accounts were not originally launched with the primary function of providing black box diversification to lenders, regardless of how they were "advertised" - rather their primary function was, for all practical purposes, to provide an underwriting function for large loans. This allowed AC to take on large loans which they might otherwise have struggled to fill - other than via additional fees to underwriters, and even then maybe not.
With that view, filling lenders accounts at least initially with a high percentage holding in individual (large) loans was not so much an accident of bad design but a deliberate strategy: even if not, it was an outcome which could and should have been completely predictable based on what AC knew of their loan pipeline, business they were looking to do, and what account-loan eligibility criteria they were going to apply.
This might have worked out OK, but it would have required a coincidence of a number of events, e.g. a significant stream of large loans (to provide sufficient "swap in" value to dilute holdings); sufficient lender funds to provide the "swap out" side; sufficient downstream MLIA interest to help with dilution; and these loans to not go into non-performing relatively early in their lifecycle leaving them non-tradeable and stuck with the original accounts.
In other words, I think AC were taking a huge risk on our behalf, which they certainly at least partly knew and understood: and if they didn't think the rest of it all the way through, they should have done.
EDIT: some minor tidy up.
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cb25
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Post by cb25 on Feb 17, 2020 17:45:25 GMT
I also think this loan only managed to get listed because AC used the final value of plot development in calculating day 1 LTV, rather than - as seems to be the case with (all?) other development loans - calculating day 1 LTV from existing assets only (excluding the value added by the developments).
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Post by charlie on Feb 17, 2020 18:56:21 GMT
A prudent p2p investor spreads risk amongst platforms and individual loans, so the failure of one loan (or platform) does not have a significant impact on their overall portfolio. In this loan there is still a good hope of achieving some recovery through the security that has been taken. So even if the return is only 50 pence in the pound, then if we have 100 loans in our overall portfolio, then this is only a small loss of capital on a portfolio basis. I personally have many more loans than that in my portfolio and the interest return will soon cover this kind of capital loss. Charlie, I admire your coolness regarding this loan - tell me - what kind of figure do you have invested in it given that you're happy to see 50% written off...3 figure? 4 figures? Perhaps even a five figure sum? As someone who was black box "diversified" in to this mess to the tune of 5 figures I for one will not be so chilled at waving goodbye to 50% of my "investment" so go on....how much are you in for? Hi I do understand how upset you are if you have been forced into a loan for a disproportionate sum based on an algorithm you have no control over. Im exposed for about £400. So I agree it is easier for me to write off a smaller amount. I would say there is still a chance of a good recovery on the loan but this will take time. Patience is key although the slow pace of the resolution process must be very frustrating for you with a large exposure to the loan. I’m certain Stuart and his team are doing all them can to obtain the best outcome for all stakeholders. Charlie.
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Post by brightspark on Feb 17, 2020 20:05:36 GMT
If that happens at the end of February I shall review my position in AC. I am only a small player but most of my p to p investing is now with AC having 'lost' Lendy, Funding Secure, Collateral and given up on FC when black box came along. AC need always to show with borrowers that they mean business. This DM saga is sending out all the wrong confidence signals. But isn't the action taken determined by lender vote? If c90% of lenders are voting for the course of action that is being undertaken then what do you expect AC to do? Voting is weighted in favour of the amount an individual or company invests. So hundreds of small investors may want foreclosure but a minority in headage terms of large voters can allow matters to go on. It is opaque who has block voting clout. One can only surmise. At least a fair few investors were disproportionately placed in this loan by the BBA1 black box account. By the time it was realised that the algorithm had done no favours it was too late. Historically other now defunct platforms accumulated borrowers with the sort of track record of DM. Personally when I see this sort of shilly-shallying being treated as acceptable then I have to question my own commitment to the platform as a lender. I imagine no bank or building society would grant such latitude. I would add my actual investment in DM is small
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bg
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Post by bg on Feb 17, 2020 21:33:37 GMT
But isn't the action taken determined by lender vote? If c90% of lenders are voting for the course of action that is being undertaken then what do you expect AC to do? Voting is weighted in favour of the amount an individual or company invests. So hundreds of small investors may want foreclosure but a minority in headage terms of large voters can allow matters to go on. Surely that is how any shareholder vote is weighted and this is set in AC's terms. You can't expect AC to break those terms because you disagree with the outcome of the vote?
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Post by brightspark on Feb 18, 2020 8:47:53 GMT
perhaps the question needs reframing?
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Mick
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Post by Mick on Feb 18, 2020 10:28:51 GMT
I think a lot of the problem arises from the borrower having total control of the vote option process. Options, some attractive are being offered and we have no idea if they are feasible, experience tells us they aren't. We are fed a limited amount of information about the finances of this lifestyle business, I have no idea what payments the borrower and family are taking. I feel totally out of control with the entire process. Personally I think a professional, with only our interests should be inserted into the day to day and structural running of the business. and report back to us. this could be financed by a charge on the returns when they arrive. If they were paid a couple of thousand a week for a short period this is a drop in the ocean.
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cb25
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Post by cb25 on Feb 18, 2020 13:34:40 GMT
I think a lot of the problem arises from the borrower having total control of the vote option process. Options, some attractive are being offered and we have no idea if they are feasible, experience tells us they aren't. We are fed a limited amount of information about the finances of this lifestyle business, I have no idea what payments the borrower and family are taking. I feel totally out of control with the entire process. Personally I think a professional, with only our interests should be inserted into the day to day and structural running of the business. and report back to us. this could be financed by a charge on the returns when they arrive. If they were paid a couple of thousand a week for a short period this is a drop in the ocean. This has always looked odd to me. Is this the same for other AC loans? That's a good question. I believe AC have said in the past - as least in relation to this loan - that as long as the Borrower claims to be solvent (which AC don't check), then its for the Borrower to set the terms of any vote.
What makes me doubt that is the number of votes on other loans where option A is 'demand repayment'. Are we to believe those Borrowers declared themselves insolvent, or solvent but put forward 'demand repayment' as Option A? Somehow I doubt that. I think that in those cases AC either dictated the vote text or applied some form of pressure to get 'demand repayment' as Option A. They just don't do it with this loan (cynics think it's because the PF couldn't take the hit of this loan going belly up)
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Post by investor01010101 on Feb 18, 2020 21:44:34 GMT
Imagine if you had researched AC before applying for a 6 million pound loan. You could borrow 6 million and buy 3 million pounds of investment in that loan via AC, then invest the other 3 million knowing that no lender vote could ever be won to make you pay it back....................................just saying.
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SteveT
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Post by SteveT on Feb 19, 2020 9:08:21 GMT
Imagine if you had researched AC before applying for a 6 million pound loan. You could borrow 6 million and buy 3 million pounds of investment in that loan via AC, then invest the other 3 million knowing that no lender vote could ever be won to make you pay it back....................................just saying. AC have already stated in the Q&A that no single lender holds more than 1.6% of this loan (a little less than £100k) so your hypothetical scenario is irrelevant. Given the size of this loan and the fact it was reviewed and approved by the AC board before launch, I've little doubt it gets more time and attention from AC management than any other defaulted loan in the book. I strongly suspect that, if / when AC reach the point they feel appointing an Administrator is the best course, this will be obvious from the voting options presented.
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Post by investor01010101 on Feb 19, 2020 20:49:20 GMT
Imagine if you had researched AC before applying for a 6 million pound loan. You could borrow 6 million and buy 3 million pounds of investment in that loan via AC, then invest the other 3 million knowing that no lender vote could ever be won to make you pay it back....................................just saying. AC have already stated in the Q&A that no single lender holds more than 1.6% of this loan (a little less than £100k) so your hypothetical scenario is irrelevant. Given the size of this loan and the fact it was reviewed and approved by the AC board before launch, I've little doubt it gets more time and attention from AC management than any other defaulted loan in the book. I strongly suspect that, if / when AC reach the point they feel appointing an Administrator is the best course, this will be obvious from the voting options presented. No they won't, they have already stated they are acting as the agent for the loan and will only act as the loan holders instruct. to coin a phrase its "sh!t or bust" as far as they are concerned. But you are right that AC management give this loan more attention, they will do absolutely anything to prevent it showing as a loss on their accounts, including dragging it out until DM goes bust and the loan is in a fund long forgotten about.
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Post by investor01010101 on Feb 19, 2020 20:51:25 GMT
I see from the Q&A that the old dog is still up to his tricks. Lower offer than expected, now need a second valuation blah blah blah.
Strange that in November we were told the vote would be based on a completed offer. Clearly it wasn't that complete was it.
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