paulb
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Post by paulb on Apr 9, 2019 10:00:54 GMT
It appears that a fair number of "6 month" loans have just received updates where FS have "elected to use our discretion to allow the earlier tranches to remain open", i.e. increasing the term of the loan when the loan is already significantly overdue, and in some cases where Formal Demands have already been sent. Of course "interest will continue to accrue".
The update doesn't appear to have yet been added to all tranches of loans, so double-check All Active Loans if you want to be sure if your loans are included in this new (unannounced?) policy.
The loan statistics page has always had a "loans with agreed extension" disclaimer at the bottom, so I assume this was already going on, but it's never been clear (to me, at least) which loans they were, so I guess it's better that these are being declared.
Paul.
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adrian77
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Post by adrian77 on Apr 9, 2019 10:14:26 GMT
I thought I signed up to 6 month contracts...maybe this should have been thought about before millions of pounds was advanced and not after? All late running loans will need the projects to complete to cash realisation for an amount greater than current value plus say 20% for this stunt to work - personally I think in a lot of cases it won't but it will be interesting to see how they pan out...the housing market is not exactly increasing at 20% pa at the moment
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rs
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Post by rs on Apr 9, 2019 10:25:37 GMT
FS have also retroactively increased loan term on a jewellery loan (1077219898 - Various jewellery). Clearly they are very thorough with the updates!
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paulb
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Post by paulb on Apr 9, 2019 10:25:58 GMT
I've just noticed that the same update has been added to one of the Italian Library loans - I'm sure investors will be please to learn that this development is nearing completion.....
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arby
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Post by arby on Apr 9, 2019 10:32:47 GMT
I thought I signed up to 6 month contracts...maybe this should have been thought about before millions of pounds was advanced and not after? All late running loans will need the projects to complete to cash realisation for an amount greater than current value plus say 20% for this stunt to work - personally I think in a lot of cases it won't but it will be interesting to see how they pan out...the housing market is not exactly increasing at 20% pa at the moment We may not like it, but it was clearly stated in the T&Cs that a 6 month contract doesn't guarantee a 6 month term. Your point about how to pay 20% interest over multiple years is however completely valid. "6.5 FundingSecure may, at its discretion, elect to delay enforcement of the default procedures if it believes the debt will be repaid by the borrower and that, by not enforcing the default procedures, a better outcome will be achieved for investors."
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paulb
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Post by paulb on Apr 9, 2019 11:12:03 GMT
Surely then, this is an admission by FS that the security isn't sufficient to back the loan? As the best outcome available is a return of all capital with all accrued interest, if FS believe that not enforcing the default will lead to a better outcome than actually enforcing it this means that they believe the receivers would not be able to recover the full amount outstanding.
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Post by mrclondon on Apr 9, 2019 11:25:21 GMT
Most of the updates have now been deleted as made erroneously.
It seems the update was intended to apply to West Bromwich and Weston Rhyn (same borrower) and Be******d St, Wirral (although the update has been deleted from at least one tranche of the latter).
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jonno
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nil satis nisi optimum
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Post by jonno on Apr 9, 2019 11:28:59 GMT
As I see it, this is FS officially admitting that the Pawn model is no longer (never has been) appropriate for their evolved business model.
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Post by mrclondon on Apr 9, 2019 11:38:41 GMT
Surely then, this is an admission by FS that the security isn't sufficient to back the loan? As the best outcome available is a return of all capital with all accrued interest, if FS believe that not enforcing the default will lead to a better outcome than actually enforcing it this means that they believe the receivers would not be able to recover the full amount outstanding. I'm not sure thats necessarily correct ... I think a better interpretation is the 70% LTV doesn't provide adequate headroom for development cost and finance costs, or put another way the 30% would represent an excessive developer's profit, so the fact a proportion of it is needed to cover finance costs is not that surprising.
Those lending on AC have access to full unredacted monthly monitoring suveyors reports, and it is interesting to see how contingencies in the development budget can quickly be used up for any manner of reasons, generally technical - ground conditions affecting cost of foundations for example, but all too frequent enhanced build specification is the (unnecssary) cause. (However in recent times all AC development loans have worked on the retained interest model)
Apart from my concerns on the SM for longer term loans, the risk in interest roll up loans for periods longer than 6 months is considerable, and I have concerns that FS will apply repayments incl interest to the senior tranches first (cf Stretford where junior tranches have been paid in full with interest, but senior tranches remain outstanding). I'm far from convinced FS have thought through the implications of introducing longer terms for development loans.
Those on TC with an interest in the infamous Camden Town loan, will fully appreciate the risks of long term interest rollup development loans. (I'm in the senior tranche and expect a full capital repayment and around 3 years of rolled up interest ... the latter will wipe out the capital of most of the junior tranches)
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Post by multiaccountmanager on Apr 9, 2019 13:00:39 GMT
Most of the updates have now been deleted as made erroneously.
It seems the update was intended to apply to West Bromwich and Weston Rhyn (same borrower) and Be******d St, Wirral (although the update has been deleted from at least one tranche of the latter).
It seems to me that these officially extended loans should be allowed to be sold on the SM as they are no longer within 30 days of maturity?
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rocky1
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Post by rocky1 on Apr 9, 2019 13:01:20 GMT
I elected to use my discretion a long time ago.when my accrued interest reached £10k between main account and ifisa and 180 day loans turned to over 1000 days and still active and accruing interest.looking forward to seeing my capital and interest back in years to come.dream on myself.
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adrian77
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Post by adrian77 on Apr 9, 2019 15:30:05 GMT
Neither am I - 20% pa is more than my (unused) overdraft facility - time will tell but "cart" and "horse" along with "stable door" comes to mind...
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