pikestaff
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Post by pikestaff on Sept 25, 2014 16:26:02 GMT
I've had strongly worded updates this afternoon on several of the defaulted bridging loans: Ips****, Epp***, South Manc******, Hack***.
It looks like some or all of these will be moving into "get tough" territory soon. We could soon be finding out the real LTVs...
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oldgrumpy
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Post by oldgrumpy on Sept 25, 2014 16:40:12 GMT
Interesting times. Andrew & Co must be gearing up for a "robust" period during the next couple of months. Progress will influence whether anyone will touch AC bridging loans in the future. OK, we are fairly aware that repayment at the end of bridging loans is "on the dot" is often unrealistic , and anything up to a month beyond the usual six would not be a cause for concern. What happens next is of concern.
AC has (apparently) always been meticulous to make security and legal documents absolutely watertight - no wriggle-room for errant borrowers' "clever" lawyers.....
I will be watching with even more curiosity (can't use the word "interest") as bridging loans on FC and SS come up for repayment. How well will their legal teams have secured those loans?
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pikestaff
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Post by pikestaff on Sept 25, 2014 16:57:34 GMT
Indeed so. One has to think AC will be at the better end of the spectrum.
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mikes1531
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Post by mikes1531 on Sept 25, 2014 17:08:28 GMT
Indeed so. One has to think AC will be at the better end of the spectrum. We can but hope. It will be interesting to watch this develop to see whether a full recovery can be made on 70% LTV loans and how long drawn out, the process is. If we're really earning 18% during the process, then that will ease the pain, but I expect a certain amount of nailbiting will be required. I note that on one loan, on 17/Sep AC said things were progressing towards a settlement within two weeks, but today they said they've given the borrower until 30/Sep to repay or they'll call in the LPA receiver on 1/Oct. That seems a bit hasty considering the previous willingness to wait for two weeks, but perhaps they've learned something in the past week that suggests that progress has ground to a halt and they're not going to give the borrower any more slack at all.
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pikestaff
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Post by pikestaff on Sept 25, 2014 18:11:15 GMT
The actual words are "...we will be issuing a formal demand for full repayment on Wednesday 1 October 2014 with a view to appointing an LPA Receiver...".
I don't think the receiver is appointed straight away. The borrower probably gets a variable amount of time before that happens, depending on progress / other circumstances. For now they are just ramping up the pressure and making sure that they can appoint the receiver as soon as needed.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Sept 25, 2014 19:01:45 GMT
Indeed so. One has to think AC will be at the better end of the spectrum. We can but hope. It will be interesting to watch this develop to see whether a full recovery can be made on 70% LTV loans and how long drawn out, the process is. If we're really earning 18% during the process, then that will ease the pain, but I expect a certain amount of nailbiting will be required. I note that on one loan, on 17/Sep AC said things were progressing towards a settlement within two weeks, but today they said they've given the borrower until 30/Sep to repay or they'll call in the LPA receiver on 1/Oct. That seems a bit hasty considering the previous willingness to wait for two weeks, but perhaps they've learned something in the past week that suggests that progress has ground to a halt and they're not going to give the borrower any more slack at all. I think AC have come to the conclusion that these loans are starting to undermine the credibility of the platform. While default rates are very nice if allowed to run too long there is a danger on some loans that full recovery becomes less likely. B***** has pretty much reached the point that the main security does not cover the repayment required, leaving full recovery dependent on being able to enforce a PG.
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kermie
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Post by kermie on Sept 25, 2014 19:27:05 GMT
It's true that there are now a spate of bridging loans that are looking uncomfortable. However, I still take the view that each must be considered on its merits on a case by case basis. Even with hindsight, I would still be comfortable getting in my theoretical time machine and investing in any of these loans back when they were first drawn down. However, I hope I would have had the good sense to get out in time! Indeed, I was disappointed to miss out on the recent E***x loan as it went so quickly. Joking aside, I tend to reduce my exposure over time to allow rebalancing, but rarely bale out totally unless the writing is on the wall. Even if I bale, however, there is always someone left holding the baby at the end of the term, and it's AC's job to ensure that those people do not get burnt, and not just the fly-by-night cowboys such as me who run scared  . (I actually think one or two of these loans are still solid and increased by exposure this week in preparation for default rates). I might regret that yet. |
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shimself
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Post by shimself on Sept 25, 2014 21:00:28 GMT
This is the bit which most caught my attention
A meeting took place last week with the borrower to discuss the potential refinance of the I**** Bridging Loan onto a longer term loan serviced by rental income from the student accommodation. Unfortunately, our due diligence has demonstrated that such a loan will be unable to be serviced by the either the current or expected level of rental income.
If the rental income doesn't pay the loan doesn't that imply the valuation will have to come down, and in fact that the valuation wasn't right in the first place?
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bugs4me
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Post by bugs4me on Sept 25, 2014 21:23:17 GMT
This is the bit which most caught my attention A meeting took place last week with the borrower to discuss the potential refinance of the I**** Bridging Loan onto a longer term loan serviced by rental income from the student accommodation. Unfortunately, our due diligence has demonstrated that such a loan will be unable to be serviced by the either the current or expected level of rental income.
If the rental income doesn't pay the loan doesn't that imply the valuation will have to come down, and in fact that the valuation wasn't right in the first place? Valuations are always going to be a moot point and I will be looking more closely at these PBL's more in-depth in the future especially as we get closer to repayment time. Whether to hold or simply try and offload on the AM. Certainly though it looks like a 6 month PBL is far too short a time scale. Looks though like AC are in for a very busy couple of months over defaults - something they could have done without.
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Post by bracknellboy on Sept 25, 2014 21:24:39 GMT
This is the bit which most caught my attention A meeting took place last week with the borrower to discuss the potential refinance of the I**** Bridging Loan onto a longer term loan serviced by rental income from the student accommodation. Unfortunately, our due diligence has demonstrated that such a loan will be unable to be serviced by the either the current or expected level of rental income.
If the rental income doesn't pay the loan doesn't that imply the valuation will have to come down, and in fact that the valuation wasn't right in the first place? : essentially exactly what I posted in the AC Q&A thread in response to a post but which I deleted as I felt not appropriate for Q&A. Precisely my thoughts. The valuation would/should have been based on the potential rental based income. I think we are probably in for a bump in regards to the sale value.
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kermie
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Post by kermie on Sept 25, 2014 21:36:43 GMT
This is the bit which most caught my attention A meeting took place last week with the borrower to discuss the potential refinance of the I**** Bridging Loan onto a longer term loan serviced by rental income from the student accommodation. Unfortunately, our due diligence has demonstrated that such a loan will be unable to be serviced by the either the current or expected level of rental income.
If the rental income doesn't pay the loan doesn't that imply the valuation will have to come down, and in fact that the valuation wasn't right in the first place? : essentially exactly what I posted in the AC Q&A thread in response to a post but which I deleted as I felt not appropriate for Q&A. Precisely my thoughts. The valuation would/should have been based on the potential rental based income. I think we are probably in for a bump in regards to the sale value. Totally agree - I got a whiff of the fact that the rental income did not support the valuation some weeks ago (either via a Q&A on the AC site, a lender update from AC or this forum, can't recall which), and that was a BIG heads up for me. At that point, I got out quickly, expecting to see a capital loss on Ip***.
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bugs4me
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Post by bugs4me on Sept 25, 2014 22:03:00 GMT
shimself: essentially exactly what I posted in the AC Q&A thread in response to a post but which I deleted as I felt not appropriate for Q&A. Precisely my thoughts. The valuation would/should have been based on the potential rental based income. I think we are probably in for a bump in regards to the sale value. Totally agree - I got a whiff of the fact that the rental income did not support the valuation some weeks ago (either via a Q&A on the AC site, a lender update from AC or this forum, can't recall which), and that was a BIG heads up for me. At that point, I got out quickly, expecting to see a capital loss on Ip***. It would be good for AC to constantly monitor the LTV's especially where rental income plays a part but it seems as though they are stretched already so that's probably asking a bit too much.
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jjc
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Post by jjc on Sept 25, 2014 22:13:35 GMT
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jjc
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Post by jjc on Sept 25, 2014 22:24:57 GMT
"Looks though like AC are in for a very busy couple of months over defaults - something they could have done without."
We could look at it another way.. think of the calling card AC could make for themselves on the market if they manage to handle the BL's successfully...
prove your mettle in challenging conditions & you have won some serious sway with the lending community
at probably just about the perfect time for P2P lending too.. not long till ISA's & other things will make this baby go a whole lot bigger
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pikestaff
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Post by pikestaff on Sept 25, 2014 23:09:59 GMT
This is the bit which most caught my attention A meeting took place last week with the borrower to discuss the potential refinance of the I**** Bridging Loan onto a longer term loan serviced by rental income from the student accommodation. Unfortunately, our due diligence has demonstrated that such a loan will be unable to be serviced by the either the current or expected level of rental income.
If the rental income doesn't pay the loan doesn't that imply the valuation will have to come down, and in fact that the valuation wasn't right in the first place? : essentially exactly what I posted in the AC Q&A thread in response to a post but which I deleted as I felt not appropriate for Q&A. Precisely my thoughts. The valuation would/should have been based on the potential rental based income. I think we are probably in for a bump in regards to the sale value. The original valuation was based on a yield of 7%, so it was never likely that the income would be enough to support an AC loan with all-in costs to the borrower (including fees) of 12% ish. As to whether 7% was realistic, we are about to find out...
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