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Post by roedvin on Mar 26, 2015 14:58:45 GMT
The marks (blue spots) which shows in which loan someone is already invested, disappeared today from secondary market. I hope, it will be back soon.
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olavi
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Post by olavi on Apr 14, 2015 12:34:05 GMT
martins could you please clarify what happens to overdue interest if you automatically repurchase a loan? According to Assignment Agreement: 9.5. If the Mintos has decided to use its repurchase rights, the repurchase price of the Claim paid by Mintos to the Assignee for re-transfer is equal to the total amount of the remaining principal amount of the Claim and accumulated and outstanding Interest specified in the Portal. Late payment fee in this case is not distributed to investors as we have not received it from the borrower. Do I understand it correctly that repurchasing is an option and should not be taken for granted? Do you plan to repurchase loans that have vehicles as collateral? Please excuse me if I am wrong but it seems that if Mintos is only cherry picking the loans that it decides to repurchase then it is not a win-win situation. If Mintos only picks loans that have easy to liquidate sufficient collateral (by Mintos evaluation), they have actual contact with borrower (they know it is not fraud) and the time frame for whole process is reasonable, then excuse my language but they are screwing the lenders. In this scenario lenders will loose out on late payment fees and Mintos will make quick cash. Bankrupt loan A (good collateral, actual contact with borrower) Current claim on day 1: principal+interest+late payment fee+penalties and fees Mintos knows the progress of court proceedings and decides to repurchase before this info becomes available to investors Day 2: investors receive principal+interest Day 3: Court makes decision to start execution proceedings Day 4: Bailiff sells property Day 5: Mintos cashes in principal+interest+late payment fees+penalties and fees (obviously this will NOT happen in 5 days but this is just to illustrate) Bankrupt loan B (dodgy collateral, suspicion of fraud) Mintos will not repurchase, investors bear all losses and loan will be eventually written off. Again, I am not saying this is how things will work, but I would like Mintos to comment on this. It seems that selective repurchasing is very slippery road.
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debeast
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Post by debeast on Apr 15, 2015 13:56:33 GMT
Thanks for repurchasing but you see Olavi makes a very good point. I'm not sure what the solution is though but would love to hear your thoughts
/beastie
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Post by zakaz on Apr 15, 2015 19:41:05 GMT
According to Assignment Agreement: 9.5. If the Mintos has decided to use its repurchase rights, the repurchase price of the Claim paid by Mintos to the Assignee for re-transfer is equal to the total amount of the remaining principal amount of the Claim and accumulated and outstanding Interest specified in the Portal. Late payment fee in this case is not distributed to investors as we have not received it from the borrower. Do I understand it correctly that repurchasing is an option and should not be taken for granted? Do you plan to repurchase loans that have vehicles as collateral? Please excuse me if I am wrong but it seems that if Mintos is only cherry picking the loans that it decides to repurchase then it is not a win-win situation. If Mintos only picks loans that have easy to liquidate sufficient collateral (by Mintos evaluation), they have actual contact with borrower (they know it is not fraud) and the time frame for whole process is reasonable, then excuse my language but they are screwing the lenders. In this scenario lenders will loose out on late payment fees and Mintos will make quick cash. Bankrupt loan A (good collateral, actual contact with borrower) Current claim on day 1: principal+interest+late payment fee+penalties and fees Mintos knows the progress of court proceedings and decides to repurchase before this info becomes available to investors Day 2: investors receive principal+interest Day 3: Court makes decision to start execution proceedings Day 4: Bailiff sells property Day 5: Mintos cashes in principal+interest+late payment fees+penalties and fees (obviously this will NOT happen in 5 days but this is just to illustrate) Bankrupt loan B (dodgy collateral, suspicion of fraud) Mintos will not repurchase, investors bear all losses and loan will be eventually written off. Again, I am not saying this is how things will work, but I would like Mintos to comment on this. It seems that selective repurchasing is very slippery road. You got the idea right, but in case they wouldn't repurchase you would still not get the whole collateral as the price, but you would get the money later. Another thing is, when selling collateral they don't have the right to keep the whole price of the sale, the rest still goes back to the former collateral owner.
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olavi
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Post by olavi on Apr 15, 2015 22:02:12 GMT
You got the idea right, but in case they wouldn't repurchase you would still not get the whole collateral as the price, but you would get the money later. Another thing is, when selling collateral they don't have the right to keep the whole price of the sale, the rest still goes back to the former collateral owner. I wasn't trying to say that Mintos or investors would claim whatever is left over the collateral. I was saying that with selective purchasing there is a possibility for Mintos to gain accrued penalties. I will try to explain the situation in another way. Lets say that loan defaults. Mintos will look at the information they have about the lender and assess the situation as SAFE. They will repurchase, investors will get principal+interest (and pay service fee?). Now at this point there should be a minimum of 3 months worth of late payment fees but most likely 5 or even more months. These late payment fees have been generated by investors funds but Mintos will claim these fees on top of all costs they will have because all costs will be covered by collateral. I am sure they are wise enough to show costs in a way that covers their funds being tied up in the process of selling collateral. Based on my calculations late payment fee is 0,6% a day (16.14 eur was generated by payment of 248.29 being late for 15 days). This is rather substantial amount. I tried to calculate XIRR in all scenarios but I am not sure I got it right so I will not publish these numbers. It actually depends on many things like average time that it takes to sell collateral and whether interest/late fees will continue to be calculated once loan goes bankrupt or not etc. I will emphasize again, that this is just a theoretical scenario.
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Post by martins on Apr 15, 2015 23:20:09 GMT
Thank you for your questions and in-depth comments.
The repurchase is an option and not a guarantee. While we (or rather Mogo) intend to exercise our buyback rights in every situation the loan goes delinquent for extended period, we do not provide a binding guarantee.
We are a lending marketplace that connects borrowers and investors; for every investment investor enters in a direct assignment agreement with respective borrower/loan. Each investment is responsibility and as with most forms of investment, peer-to-peer lending carries a degree of risk to invested capital. Having realizable security on each loan obviously minimizes the associated risks.
We (or rather Mogo with who we are partnering for vehicle secured loans) plans to exercise buyback rights in a similar manner as we have done with real estate backed loans.
Re cherry picking. We are not looking to cherry pick loans or make business on late payment fees. Screwing investors would be the last thing we are looking to do with repurchasing. Quite the contrary, in fact, at the moment we repurchase loans we take a risk (and actually rather substantial risk) on our books that we will not be able to realize the collateral in a timely manner and/or at full amount to cover borrower liabilities. We are buying back loans for principal + accrued interest, both of which at that moment we cannot be 100% sure to collect from realizing collateral. That way we believe to significantly reduce risk to investors that at the buyback receive expected return they were looking for when investing in the respective loan.
Thanks again for starting discussion and let us know if you have further questions or comments.
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Post by zakaz on Apr 16, 2015 7:43:49 GMT
You got the idea right, but in case they wouldn't repurchase you would still not get the whole collateral as the price, but you would get the money later. Another thing is, when selling collateral they don't have the right to keep the whole price of the sale, the rest still goes back to the former collateral owner. I wasn't trying to say that Mintos or investors would claim whatever is left over the collateral. I was saying that with selective purchasing there is a possibility for Mintos to gain accrued penalties. I will try to explain the situation in another way. Lets say that loan defaults. Mintos will look at the information they have about the lender and assess the situation as SAFE. They will repurchase, investors will get principal+interest (and pay service fee?). Now at this point there should be a minimum of 3 months worth of late payment fees but most likely 5 or even more months. These late payment fees have been generated by investors funds but Mintos will claim these fees on top of all costs they will have because all costs will be covered by collateral. I am sure they are wise enough to show costs in a way that covers their funds being tied up in the process of selling collateral. Based on my calculations late payment fee is 0,6% a day (16.14 eur was generated by payment of 248.29 being late for 15 days). This is rather substantial amount. I tried to calculate XIRR in all scenarios but I am not sure I got it right so I will not publish these numbers. It actually depends on many things like average time that it takes to sell collateral and whether interest/late fees will continue to be calculated once loan goes bankrupt or not etc. I will emphasize again, that this is just a theoretical scenario. You are right, they might benefit from it, but they also might lose from it. Since they take part of the risk why not make a profit out of it, but what is the harm here? From a perspective of an investor it seems that security and timely capital return is much more important then extra 1-2% on a 100 EUR loan.
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olavi
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Post by olavi on Apr 16, 2015 8:07:53 GMT
Thanks again for starting discussion and let us know if you have further questions or comments. Thank you for your answer. Now that the intent has been said out loud I will personally take it as truth until proven otherwise. Time will tell how things go.
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Post by roedvin on Apr 19, 2015 12:27:32 GMT
I really see the problem from another side. As long as they offered only loans from Latvia, there was enough cashback from us investors and they had money for repurchasing and for them to earn the late payment fees. But what will happen, when they furthermore almost only invest in estonian car financing ? In this moment those loans make appr. 80%, but only a few investors participate in that. Then at any time they will draw the option, not to repurchase. From my point of view it is not really a serious problem. I invest in a risky matter and have to calculate a certain loss. As long as they repurchase, I'm very happy. If not, I just have to wait for a while, since I only invest in loans which are secured by real estate and not in junk cars. We should not complain about their option. That's better than on most other p2p-platforms. Maybe we can complain about those many car loans which in my opinion are really high risky (un-)secured. LTV of up to 90% is absolutely rediculous unrealistic.
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Post by zakaz on Apr 21, 2015 9:27:29 GMT
I wouldn't say that car loans are riskier. Estonia and Latvia have pretty efficient Credit History mechanisms, fully functional and easily available online and over financial organizations networks. Secondly cars are easier and faster to sell and since they are insured this is even faster and easier. Real Estate on the other hand has reached it's historic peak by now, so there is high chance it will go down in price in the coming 3-4 years. Also Baltic States have a pretty active car market(Russians come and buy cars very often. Sold my Cadillac Escalade to a guy from Saint Petersburg some years ago) and quality online car trading services.
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Post by roedvin on Apr 24, 2015 11:52:20 GMT
Sure are cars faster and easier to sell than real estate. But as already said in previous posts.......not really realistic with LTV above 50% and not a car with engine failure ore crash damage.
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Post by zakaz on Apr 24, 2015 12:35:35 GMT
From my point of view even LTV over 30% is too high. For real estate or not.
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Post by captainconfident on Apr 24, 2015 19:25:34 GMT
Fair enough, but you won't find much to invest in.<br>Ah, on closer investigation there are low ltv cars. I do beg your pardon! I have never widened my horizons to the Estonian banger market. Latvian bricks and mortar just seems less risky<br>
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Post by roedvin on Apr 25, 2015 11:13:55 GMT
From my point of view even LTV over 30% is too high. For real estate or not. And from my point of view with a very low LTV I would ask myself, why he does not go to a bank or if possibly there is not more left to secure.
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Post by roedvin on Apr 28, 2015 11:33:57 GMT
Today we have the next loan from Latvia in recovery. Let's see, what will happen. I hope, they will repurchase it too.
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