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Post by bengilbert on Oct 26, 2015 19:25:08 GMT
For those not on the MoneyThing mailing list, Ed from MoneyThing has just announced a partnership with us at Broadoak Private Finance. Broadoak is a short-term property lender, and we'll be bringing deals to the MoneyThing platform. I'm here to answer questions you might have about the partnership - I'm a co-founder of Broadoak. Aha ( #lightbulbmoment ) I knew the name Ben Gilbert was familiar when I read it in the email. All becomes clear. Good to have a loan originator who knows the experience from the point of view of the private lender. All very promising. I would say 'welcome aboard' but you know us already Thank you! I really do hope that my experience on the other side will help us to build something that is distinctive and fits the needs of investors (though I know we're a diverse bunch).
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Post by bengilbert on Oct 26, 2015 20:50:42 GMT
The relationship works in the same way as the Cash Shop partner loans whereby the borrower borrows from BPF (BPF hold the 1st charge on the property as loan originator). The loan is assigned to MT under a Deed of Assignment which gives MT the equitable interest in the underlying security and explicitly states the rate of interest. This assignment agreement is then mirrored with the MT investors (apportioned to individual % interest in the loan. The 5% BPF hold on a 1st-loss basis will be done via the MT platform under the schedule (within the Deed of Assignment), which will detail the 'priority' whereby the investors (collective), being priority 1 and BPF being second. I haven't invested with MT despite signing up a few months ago so I'm showing my ignorance here but I'm still not 100% clear on the counter-party structure. You seem to be implying that BPF is still the lender of record and MT is then assigned an equitable interest but what are the investors legal rights over the property? The statement that "This assignment agreement is then mirrored with the MT investors" is ambiguous. Is this genuine P2P in the sense that the property is legally owned by the investors or in a bankrupcty-remote SPV? Or is the property held in trust (i.e equity belongs to the investors through a secuitization or sub-participation)? Or is BPF or MT the lender of record and we just have a receivable vs. MT (so effectively unsecured lending). Thanks Thanks for the questions, samford71. -BPF is the lender of record. -MT will have a subcharge on the property - this subcharge is listed at the Land Registry, which means that MT's interest will be registered at the Land Registry. -The assignment agreement between MT and investors gives those investors the right to receive their capital and interest from sums due under the loan. So, my understanding is that investors are secured creditors of MT, with their security consisting of the underlying loan and the right to enforce repayment of that loan from the end borrower. Should MT not repay the money they are due, the investors have the right to receive their repayments out of the sums due under the loan, and to enforce the security should the end borrower not repay.
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Post by Deleted on Oct 27, 2015 8:15:24 GMT
What is your best guess on number of deals per annum ? We are ambitious but I don't want to put a number on this just yet. Our focus is on making sure that the deals are all of high quality. Sorry for the waffly answer but it's the best I can do right now. We will do our best to give a clear picture of how the pipeline looks once we have a good handle on the appetite from the platform investors. Good, I've had enough of Portals that commit and fail to deliver.
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unmadem
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Post by unmadem on Oct 27, 2015 11:19:41 GMT
Short term property deals have tendency to over run and/or default, how will this be approached ? Who deals with the lender borrower, Money Thing or Broadoak Private Finance ?
Edit - I meant borrower, thanks arbster
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arbster
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Post by arbster on Oct 27, 2015 11:22:10 GMT
Short term property deals have tendency to over run and/or default, how will this be approached ? Who deals with the lender, Money Thing or Broadoak Private Finance ? Do you mean "borrower"?
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Post by bengilbert on Oct 27, 2015 12:28:28 GMT
Short term property deals have tendency to over run and/or default, how will this be approached ? Who deals with the lender, Money Thing or Broadoak Private Finance ? I agree 100% that managing the risk of overruns and defaults is key to running a short-term property lender. To answer your questions: -Broadoak will deal with the borrower. When we assign loans to MoneyThing, the agreement includes a commitment from Broadoak to manage loans throughout their life, including dealing with overruns and defaults. MoneyThing will, however, retain the right to step in to take control of the process. -For each loan we set milestones during their life. For example, evidence of progress towards refinance 3 months before due repayment date, or regular monitoring of progress on a development to ensure that properties will be ready for sale/refinance on time. If there is evidence that the loan may not repay on time, we will work with the borrower to try to speed up progress, while preparing alternative exit possibilities. If a loan enters default, we want to be ready to take action immediately, eg to instruct a receiver, which requires lining everything up in advance. So, there's plenty that can be done during the life of a loan to reduce the risk of a problematic default. -If a borrower requests an extension, and we are satisfied that there is a credible exit at the end of the extension period, we will do one of two things. Either Broadoak will repurchase MT investor loan holdings on the original repayment date, so that investors get repaid when they expected; or we will put the extension request to a vote, with MT investors voting on whether to grant the extension (votes weighted by holding in the loan). -If a loan goes into default, investors will accrue interest at 1.5% per month while we work on recovering the money. When we have funds available, we will look to repurchase the defaulting loan from MT investors so that they are repaid on the original due repayment date. However, we can give no guarantee that we will be in a position to do this, and investors should be aware that there may be delays in recovering their money in a default, with a risk of not recovering all capital. We have long-standing relationships with LPA receivers, legal teams and auctioneers which we can call on in the event of default.
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Post by bengilbert on Oct 27, 2015 14:23:59 GMT
Hi, How will BPF "get a good handle on the appetite from platform investors"? The speed with which deals fill should help us understand what size and type of deals will work on the platform.
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Post by bengilbert on Oct 27, 2015 14:29:43 GMT
What is BPF's definition of "default" or "in default"? Every loan agreement specifies a list of 'Events of default'. These will vary depending on the details of the deal but will include failing to pay any sum payable under the loan agreement, failing to comply with any other provision of the loan documents, and any event occurring which in our reasonable opinion is likely to materially and adversely affect the borrower's ability to perform any of its obligations.
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paulg
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Post by paulg on Oct 27, 2015 14:48:56 GMT
-Deal-specific interest rates of 9-12%, with investors earning interest immediately. I'm new to MT but all the references to interest rates which I've read have quoted 12%. Is the 9-12% a change in direction for MT?
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jonbvn
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Post by jonbvn on Oct 27, 2015 15:57:59 GMT
-Deal-specific interest rates of 9-12%, with investors earning interest immediately. I'm new to MT but all the references to interest rates which I've read have quoted 12%. Is the 9-12% a change in direction for MT? In a word? Yes!
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arbster
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Post by arbster on Oct 27, 2015 16:26:01 GMT
But not necessarily a bad change, so long as the risk associated with the lower rate loans is proportionally lower, and that MT/BPF provide us with sufficient information to assess this, and ideally insight into their rationale for believing it to be the case (whilst obviously not providing advice).
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Post by Deleted on Oct 27, 2015 16:29:12 GMT
I'm new to MT but all the references to interest rates which I've read have quoted 12%. Is the 9-12% a change in direction for MT? In a word? Yes! Well spotted guys. All very exciting. Certainly a change in direction for MT and a bit surprising in this development stage of MT, the danger is, of course, that we go from 100% 12%, to mainly 12% to mainly 9% and finally 100% 9%. Upside for MT is it wins more business and grows. I'm going to guess it is granular (either 12% or 9% not 11.34%). Not sure where the model of varying interest rates really falls, I guess either the net asset value is being judged less risky or the chance of the achieving payback is seen as less risky. Since the LTVs are designed to be pretty "safe", see all the good work done by Ed over the last 6/9 months. Does this mean we are entering into a measure of risk of the borrower? I struggle with that as an idea given the great intro work from Broadoak, but ... time will tell. Perhaps another day when this has all settled Ed could give us a view of the "level" ideas he is developing? Let's hope not A+ and A or we'll all go mad
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paulgul
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Post by paulgul on Oct 27, 2015 16:33:52 GMT
I'm new to MT but all the references to interest rates which I've read have quoted 12%. Is the 9-12% a change in direction for MT? In a word? Yes! I don't think I'll be happy at anything less than 12% unless the LTV was *very* low and there was nothing around on other platforms
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Post by bengilbert on Oct 27, 2015 16:40:24 GMT
-Deal-specific interest rates of 9-12%, with investors earning interest immediately. I'm new to MT but all the references to interest rates which I've read have quoted 12%. Is the 9-12% a change in direction for MT? In terms of the platform strategy, this is one for Ed to answer. From our side, some flexibility in the rates is very important in allowing us to bring high quality deals to the platform. Some of our borrowers have access to funds at sub-1% per month. We may be able to charge marginally more in return for the speed and consistency of our service, but there are plenty of good deals that wouldn’t be economical with a 12% interest rate. We’d like to be able to offer these deals to you, as well as those paying higher rates.
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ilmoro
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Post by ilmoro on Oct 27, 2015 17:08:01 GMT
Well spotted guys. All very exciting. Certainly an change in direction for MT and a bit surprising in this development stage of MT, the danger is, of course, that we go from 100% 12%, to mainly 12% to mainly 9% and finally 100% 9%. Upside for MT is it wins more business and grows. I'm going to guess it is granular (either 12% or 9% not 11.34%). Not sure where the model of varying interest rates really falls, I guess either the net asset value is being judged less risky or the chance of the achieving payback is seen as less risky. Since the LTVs are designed to be pretty "safe", see all the good work done by Ed over the last 6/9 months. Does this mean we are entering into a measure of risk of the borrower? I struggle with that as an idea given the great intro work from Broadoak, but ... time will tell. Perhaps another day when this has all settled Ed could give us a view of the "level" ideas he is developing? Let's hope not A+ and A or we'll all go mad The risk has changed significantly as there is no guarentee buyback on these loans from the partner, as has been the case with the CS loans, nor I suspect will MT be able to cover them as it does with its own loans so default becomes a risk whereas it wasnt before, just platform/partner failure. There is also the fact that in the case of a default interest is accrued until recovery so that adds risk not in the current proposition. All this will need to be clearly spelt out on the MT platform, T&Cs amended as necessary & BPF specific FAQs provided I would think. None of this is necessarily bad, just needs clear comms.
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