eeyore
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Post by eeyore on Aug 15, 2019 17:19:15 GMT
The world of P2P has finally woken up and now no longer investing in assets with crazy valuations with little chance of full return in a fire sale. If only it were that simple ... Proplend have funded a £1.4m loan in less than 10 minutes this afternoon (A tranche 11.25% 50% LTV / B tranche 15.45% 65% LTV before PL fee deduction) secured against 2 commercial premises with permission for religious use (and in use by a religious charity). At one of the sites the buildings are fit for nothing but demolition. No current or previous permissions exist for redevelopment to residential but that is what the valuer implies would be the most appropriate use for the sites if placed on the open market.
I have a niggling concern that too many lenders regard the past history of a p2p platform with regard to defaults as a major factor when deciding whether or not to lend on any given loan. Any relatively new platform will of course have had very few defaults (1 in the case of PL declared recently).
I'm completely bemused by the speed with which that PL loan has just filled, the VR's didn't sugar coat / spin the assets. Which makes it very difficult for MT to predict the appetite for any given loan on their platform.
I agree! Contrast the speed with which today's loan at Proplend has been gobbled (TrancheA £1.15M @ 11.25%) with the immediately preceding loan B***** H** Refinance (TrancheA £2.125M @ 7.2%) which was available for over two weeks (and was only filled by, I assume, underwriters). Unless it's the interest rate on offer which is the overriding factor: this Oxfordshire loan also has a low rate (in comparison with other MT loans) and it's barely moved.
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madpierre
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Post by madpierre on Aug 15, 2019 19:01:08 GMT
In the words of MT this is "the first new loan since we announced a change in our strategy. Moving forward, we will be offering lower risk and lower return loans to lenders."
This loan isn't a great start but hopefully is not included in the "moving forward" statement. A couple of years ago I had well over £100,000 in MT loans but sold out more recently and have only (far too many) defaults remaining. I'd like to put that money back (including returns on defaults). I HATE Fundingsecure with all my soul, and Collateral and Lendy have gone to the wall. Other 12% platforms are still in suspect territory. MT was always my favourite and refreshingly sincere, so please, restore my confidence.
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KoR_Wraith
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Post by KoR_Wraith on Aug 15, 2019 22:06:24 GMT
I think MoneyThing have explained the offering as well as can be explained through the FAQs but unfortunately the loan doesn't seem to be filling. I can't help but feel that, as suggested by mrclondon , lender engagement is being heavily swayed by significant delays in loan repayments (MT), platform mismanagement (FS) and platform collapse (Lendy/Col). Whilst I don't find the 90-day valuation of £5.5 million to be particularly convincing, I also don't believe this loan falls into the 'Lendy' category - for that to the case I'd expect a £3-4 million fundraise against the same security (just 50% LTV!). Another factor likely affecting the whole self-select P2P industry is the sheer amount of lenders' money tied up in Lendy's administration; £152 million of funds that at some point in the past was available to fund new loans is now indefinitely frozen (and reduced). Regardless, of the root cause, a finite lender base will struggle to fund new loans if their lending capital is tied up in illiquid legacy debt. As fewer lenders have access to capital to (re)invest, it's a harder task to convince enough lenders to stump up enough money to fund new loans. Unless the rate of filling increases over the next 24 hours, I think it very unlikely this loan will fill in its current form. Increasing the offered rates to 10% and 13% would stimulate more investment but I'd be surprised if it would stimulate enough. Better yet, improving the loan security through a charge on the borrower's house would drastically shift the risk profile, however, given part of the reason the borrower wants this loan is to remove a charge on their house I doubt they would be overly pleased with this suggestion.
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amwinv
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Post by amwinv on Aug 15, 2019 22:17:36 GMT
To me, I think the main reason it isn't filling is that it was bought for £1 million a few years ago. But "planning permission" has supposedly increased it to £6 million. And the only reply MT have to these questions seems to be "because the valuation says so".
And they say that to us, a crowd of staggeringly-untrusting-of-valuations lenders, many of whom who have been burned time and again by inflated valuations not worth the paper they are written on.
Just my two pennies.
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invester
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Post by invester on Aug 15, 2019 23:39:11 GMT
It's better for everyone if the loan doesn't fill so borrowers stop bringing these things around. The platforms don't care as they have nothing at stake.
Such a deal would be better suited to equity finance.
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keystone
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Post by keystone on Aug 15, 2019 23:47:33 GMT
To me, I think the main reason it isn't filling is that it was bought for £1 million a few years ago. But "planning permission" has supposedly increased it to £6 million. And the only reply MT have to these questions seems to be "because the valuation says so". And they say that to us, a crowd of staggeringly-untrusting-of-valuations lenders, many of whom who have been burned time and again by inflated valuations not worth the paper they are written on. Just my two pennies. To be fair its not the only reply MT have, they also have the classic we can only go on what the borrower has disclosed to us. The borrower has told us they are magic beans so we are offering it as magic beans. I don't believe for one moment MT are as gullible as they make out they are. And this isn't specific to just MT. In any event all my funds with MT are in default or tied up until who knows when so I won't be investing in any event.
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r1200gs
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Post by r1200gs on Aug 16, 2019 7:25:49 GMT
I think MoneyThing have explained the offering as well as can be explained through the FAQs but unfortunately the loan doesn't seem to be filling. I can't help but feel that, as suggested by mrclondon , lender engagement is being heavily swayed by significant delays in loan repayments (MT), platform mismanagement (FS) and platform collapse (Lendy/Col). Whilst I don't find the 90-day valuation of £5.5 million to be particularly convincing, I also don't believe this loan falls into the 'Lendy' category - for that to the case I'd expect a £3-4 million fundraise against the same security (just 50% LTV!). Another factor likely affecting the whole self-select P2P industry is the sheer amount of lenders' money tied up in Lendy's administration; £152 million of funds that at some point in the past was available to fund new loans is now indefinitely frozen (and reduced). Regardless, of the root cause, a finite lender base will struggle to fund new loans if their lending capital is tied up in illiquid legacy debt. As fewer lenders have access to capital to (re)invest, it's a harder task to convince enough lenders to stump up enough money to fund new loans. Unless the rate of filling increases over the next 24 hours, I think it very unlikely this loan will fill in its current form. Increasing the offered rates to 10% and 13% would stimulate more investment but I'd be surprised if it would stimulate enough. Better yet, improving the loan security through a charge on the borrower's house would drastically shift the risk profile, however, given part of the reason the borrower wants this loan is to remove a charge on their house I doubt they would be overly pleased with this suggestion. In the simplest terms, I have had my fingers burnt and I am reluctant to put my hand in yet another loan on a building site that has magically quadrupled in value without a single workman on site. Been there, got the T shirt, now poorer for it. MT are going to have to do better for me to put my hand in my pocket.
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withnell
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Post by withnell on Aug 16, 2019 8:10:57 GMT
I wonder how much of this is presentational - if the loan valuation came to a figure a bit closer to what people felt was reasonable, would that aid confidence? Eg if the valuation was shown as £2.2m, giving LTV of 47%/70% for the charges.
Alternatively, to aid a bit of weight to the £6m sales offer, could a few low-ball offers be documented to show interest in the market but at a level above the loan? eg couple of vulture funds giving an indicative view of £3m would encourage me to pile in some cash, but currently I don't have confidence that the recovery will be greater than the 1st tranche capital after recovery costs
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Greenwood2
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Post by Greenwood2 on Aug 16, 2019 8:21:05 GMT
I think MoneyThing have explained the offering as well as can be explained through the FAQs but unfortunately the loan doesn't seem to be filling. I can't help but feel that, as suggested by mrclondon , lender engagement is being heavily swayed by significant delays in loan repayments (MT), platform mismanagement (FS) and platform collapse (Lendy/Col). Whilst I don't find the 90-day valuation of £5.5 million to be particularly convincing, I also don't believe this loan falls into the 'Lendy' category - for that to the case I'd expect a £3-4 million fundraise against the same security (just 50% LTV!). Another factor likely affecting the whole self-select P2P industry is the sheer amount of lenders' money tied up in Lendy's administration; £152 million of funds that at some point in the past was available to fund new loans is now indefinitely frozen (and reduced). Regardless, of the root cause, a finite lender base will struggle to fund new loans if their lending capital is tied up in illiquid legacy debt. As fewer lenders have access to capital to (re)invest, it's a harder task to convince enough lenders to stump up enough money to fund new loans. Unless the rate of filling increases over the next 24 hours, I think it very unlikely this loan will fill in its current form. Increasing the offered rates to 10% and 13% would stimulate more investment but I'd be surprised if it would stimulate enough. Better yet, improving the loan security through a charge on the borrower's house would drastically shift the risk profile, however, given part of the reason the borrower wants this loan is to remove a charge on their house I doubt they would be overly pleased with this suggestion. In the simplest terms, I have had my fingers burnt and I am reluctant to put my hand in yet another loan on a building site that has magically quadrupled in value without a single workman on site. Been there, got the T shirt, now poorer for it. MT are going to have to do better for me to put my hand in my pocket. It seems amazing that lenders are still considering lending on these highly speculative GDV based loans, after all the uproar about them after the collapse of Lendy, no one (on here anyway) can claim to not understand the huge risk involved now surely.
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criston
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Post by criston on Aug 16, 2019 8:47:55 GMT
Why don't MS suspend the loan & get a second & third valuation to back up the figures.
Or keep the loan live, while further valuations are under way.
Or would MS still argue the valuers insurance covers this.
The retained interest, by the way, reduces the LTV by 1 to 2%.
If over £4 million confirmed, I am in.
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KoR_Wraith
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Post by KoR_Wraith on Aug 16, 2019 8:53:03 GMT
I wonder how much of this is presentational - if the loan valuation came to a figure a bit closer to what people felt was reasonable, would that aid confidence? Eg if the valuation was shown as £2.2m, giving LTV of 47%/70% for the charges. Alternatively, to aid a bit of weight to the £6m sales offer, could a few low-ball offers be documented to show interest in the market but at a level above the loan? eg couple of vulture funds giving an indicative view of £3m would encourage me to pile in some cash, but currently I don't have confidence that the recovery will be greater than the 1st tranche capital after recovery costs I completely agree, but MT don't seem willing to entertain that line of request. It seems amazing that lenders are still considering lending on these highly speculative GDV based loans, after all the uproar about them after the collapse of Lendy, no one (on here anyway) can claim to not understand the huge risk involved now surely. The valuer puts the GDV at £18,750,000. We are being asked to lend against a (seemingly optimistic) current state valuation, while obviously not unrelated to GDV (as all valuations are) this is clearly a step removed from development financing.
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hazellend
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Post by hazellend on Aug 16, 2019 8:53:48 GMT
Why don't MS suspend the loan & get a second & third valuation to back up the figures. Or keep the loan live, while further valuations are under way. Or would MS still argue the valuers insurance covers this. The retained interest, by the way, reduces the LTV by 1 to 2%. If over £4 million confirmed, I am in. Or even better, get the borrower to put more of their own money in, like 100 - 200k. Looks to me like the borrower wants to derisk their entire to date investment but maintain the potential upside.
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Post by mrclondon on Aug 19, 2019 10:49:24 GMT
Update on site - loan withdrawn "due to insufficient lender support." , but accompanied by a decent explanation.
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Post by spareapennyor2 on Aug 19, 2019 11:45:26 GMT
I had Deja vu with this loan Sure I've see it offered before? Didn't last long before
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bramhall17
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Post by bramhall17 on Aug 19, 2019 11:45:53 GMT
Until MT have successfully closed out some of the existing projects I doubt there is sufficient lender confidence for such loans. Far too much down-side risk IMO for the potential reward.
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