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Post by swfab on Feb 24, 2016 16:27:16 GMT
Hello all, Is there anywhere, when logged into my account, where I can find information for: * Historical monthly amount in claims made against the PF? * Historical total claims made against the PF? * Performance/amount and success rate of recovery of those historical total claims? * Performance/amount and success rate of recovery against secured assets. Thanks.
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jonah
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Post by jonah on Feb 24, 2016 20:42:33 GMT
Hello all, Is there anywhere, when logged into my account, where I can find information for: * Historical monthly amount in claims made against the PF? * Historical total claims made against the PF? * Performance/amount and success rate of recovery of those historical total claims? * Performance/amount and success rate of recovery against secured assets. Thanks. I don't believe any of that is published info. That said, claims against the PF will be 100% as RS hasn't (yet) lost anyone a penny! If you meant to ask claims by the PF against borrowers in default, I will defer to westonkevRS although that would likely be relatively confidential info.
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Post by westonkevRS on Feb 24, 2016 21:43:14 GMT
Hi swfab
I'm afraid the answers are only partly helpful:* Historical monthly amount in claims made against the PF? Annual cohort performance of actual defaults against expected can be found here: > members.ratesetter.com/ratesetter_info/provision_fund.aspx
These are percentages rather than actual default amounts, although with some analysis of the loan book, you could calculate actual amounts by looking at the bad debt balance within: > members.ratesetter.com/ratesetter_info/loanbook.aspx
* Historical total claims made against the PF? The amounts can be summed from the loan book. The default balance is the original amount taken over by the fund (a high water mark), the bad debt balance is the amount owed today. The difference isn't quite pure recoveries, as bad debt will include missed payments not yet defaulted.* Performance/amount and success rate of recovery of those historical total claims? From the loan book, simply compare the bad debt balance against the default balance, only where the default balance > £0 (to exclude only missed payments). I can say that the recovered balances post 2 years of the default is approximately 20% across all Provision Fund step-ins, i.e. this covers everything from deceased, payment arrangements, restructured loans, pure defaults, IVAs, bankruptcies, etc.
* Performance/amount and success rate of recovery against secured assets. No secured assets have ever defaulted, so performance is n/a or unknown.
Just FYI, there has been an industry trend in recent years (partly driven by ambulance chasing advertisers) of customers going onto debt management plans to reduce payments, therefore the recoveries % will increase as will will get this money it'll just take longer. This is partly due to slightly higher default rates than I would have expected 2 years ago. Although we use the term "default" whenever a loan is taken over by the Provision Fund, this can include all sorts of almost innocent reasons. For example a customer requiring a term extension or payment holidays, RateSetter lenders cannot have missed payments and the Provision Fund has always stepped in. Whereas a bank would simply make the loan schedule changes and put back "hidden" into the portfolio. This form of "re-aging" was prevalent at Northern Rock, where the stock market thought they had the cleanest portfolio but those in the know, knew it was dirty as hell.
The need for RateSetter lenders to receive every penny on time every month, keeps us honest!
Kevin.
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Post by swfab on Feb 24, 2016 22:39:21 GMT
Thank you jonah and westonkevRS (you read my mind) for the extra information. I will crunch some numbers from the loan book (starting from 2014, 2-year old loans, as it seems this is where currently most 'defaults' are occurring well above the expected rate). It is difficult to get such info from any 'p2x' platforms (wether it has a PF or not) as nothing is standardised (yet) with regards to performance and recovery reporting and no api exist, even with license (as far as I know) to develop an extra layer of software (like a mobile app) to access and crunch those numbers. Thanks again
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Post by westonkevRS on Feb 25, 2016 8:29:49 GMT
Loans originated in 2014 are performing less well than 2012-2013, and 2015 onwards. This isn't random, 2014 saw higher acceptance rates than previously as we looked to get the risk appetite right, but in addition this cohort includes some instutional lending that generally prefers higher rates.... Also a bit of bad luck. 2015 onwards saw a partial pull-back in risk appetite, change in partners, and many other things including a number of risk management improvements. This covered many things, but for example the introduction of Equifax in a multi-bureaux environment: www.ratesetter.com/pressreleases/ratesetter_and_equifax.pdfI won't and can't go into specific changes in risk appetite, partners, approval rates or other risk management improvements for obvious reasons. Please don't ask, transparency only goes so far. My point being is that your analysis will be partly backward looking and not reflective of the current process or the future, additionally you don't know the "type" of defaults we now get and therefore the probable recovery expectations. If you want to know this in every detail, you'll need to apply for a job in our analytics team! Kevin.
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Post by swfab on Feb 26, 2016 10:45:04 GMT
I might just apply then ;-)
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jimc99
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Post by jimc99 on Jun 16, 2016 19:29:19 GMT
A few months ago the PF passed £18M. Today it's just over £17.5M. The amount of active loans has increased.
Just an observation.
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jonah
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Post by jonah on Jun 16, 2016 21:08:36 GMT
A few months ago the PF passed £18M. Today it's just over £17.5M. The amount of active loans has increased. Just an observation. The ratio of PF to loans has gone from 3% to 2.88% in the last 25 days from what I can see. That rounded to 2dp so could be slightly misleading. I just noticed that RS has updated (20th may) their PF details page. If westonkevRS is around, it would be nice to know if that 140m+ Of security would be used to help cover 'our' interest / capital if the c17.5m PF ever ran dry*? The 'covers 130m of loans' bit confuses me as it suggests it could be ring fenced for specific elements. *subject to the usual caveats about not being guaranteed of course!
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Post by Deleted on Jun 17, 2016 6:52:13 GMT
I've been watching that metric too. Was around 3.2% at the start of the year. Fallen steadily since then.
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registerme
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Post by registerme on Jun 17, 2016 7:19:48 GMT
There's been a change in the way the provision fund is actually funded, from "all up front when a loan is written", to "through the life of the loan". If I remember / understand correctly this will end up with the PF in a better place, but the coverage ratio will look worse until the change has had enough time to propagate through the loan book ie new loans are written with the change and old loans roll off. westonkevRS, is that about right (I still need my first caffeine hit of the day)?
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Post by GSV3MIaC on Jun 17, 2016 7:41:46 GMT
And IIRC the 'security' in the PF is the non-performing loans it has taken over, much of which can be expected to be recovered (but not for a while).
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jimc99
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Post by jimc99 on Jun 17, 2016 12:01:50 GMT
There's been a change in the way the provision fund is actually funded, from "all up front when a loan is written", to "through the life of the loan". If I remember / understand correctly this will end up with the PF in a better place, but the coverage ratio will look worse until the change has had enough time to propagate through the loan book ie new loans are written with the change and old loans roll off. westonkevRS , is that about right (I still need my first caffeine hit of the day)? Yes this is my understanding too. But I think the new way of borrowers contributing to the PF through the life of the loan benefits the defaulters at the expense of those who do not default. At least under the up front method the defaulters have contributed something to the fund.
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alender
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Post by alender on Jun 17, 2016 12:16:01 GMT
There's been a change in the way the provision fund is actually funded, from "all up front when a loan is written", to "through the life of the loan". If I remember / understand correctly this will end up with the PF in a better place, but the coverage ratio will look worse until the change has had enough time to propagate through the loan book ie new loans are written with the change and old loans roll off. westonkevRS , is that about right (I still need my first caffeine hit of the day)? This change looks like it will make it cheaper for a borrower to repay early and refinance on the current lower interest rates as well as making the good borrowers pay more and the ones in default pay less.
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spiral
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Post by spiral on Jun 17, 2016 15:36:26 GMT
But I think the new way of borrowers contributing to the PF through the life of the loan I stand to be corrected but I took it that this change was an accounting change rather than a physical change. i.e. the borrower still pays the fee up front, its just not accounted for all in one go now. A bit like when a company buys a bit of kit costing £10m but writes it off on the accounts over 10 years at £1m per year.
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Post by westonkevRS on Jun 17, 2016 17:21:39 GMT
Everything written here recently is correct, we are switching payments slowly to the life. This will have a short to medium term impact, and make things look worse as currently we don't account for future income not yet received. It's also true that long term good customers will be paying for those customers that default earlier. But that's banking. If nobody defaulted it is possible (although knowing banks, not probable) that interest rates to borrowers could fall. spiral, this is an actual change. Fees are not pre-loaded on this type of loan. It should be noted we are only part way through this shift (~20%), it's a long term initiative. But it's a change the has to happen. P2P is an outlier with so many up-front fees. It is not an optimal product and will deter A* borrowers even if the APR is comparable. And unfortunately this does mean more early repayments as doing this they can avoid lifetime fees, which currently they cannot. Worse for lenders that don't like early repayments (although some do) It's all in the growing pains of P2P... I'm just glad RateSetter is big enough to make this change. Smaller less capitalised platforms cannot make this switch as they are reliant on the upfront fees. Kevin.
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