homes119
Member of DD Central
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Post by homes119 on Mar 10, 2016 21:06:54 GMT
Hello everyone, I've been pondering investing with Mintos for a while and found out we had access to the loan book so I decided to do a quick analysis. Here it is: First finding: It seems we have NO visibility on the default rate from the loan book. We have the catch-all term "Finished Prematurely" Status Business Loan Invoice Financing Mortgage Loan Personal Loan Secured Car Loan Grand Total Finished prematurely % of Grand total 16.72% 11.72% 7.29% 22.01% 23.32% 20.15% Percentage calculated on euros not number of loansYes there is a buyback guarantee but how often is it triggered? What percentage of that is due to defaults vs early repayment from borrower vs buyout from originator? Wouldn't you like to know? If 90% of "Finished prematurely" were defaults, would you still have confidence in the Buyback guarantee? What if it was 50%? It may still be profitable for the Originator and for investors should the buyback guarantee be maintained. But should the buyback guarantee be revoked, wouldn't it be 0% for at least a couple of loan types? I'm an amateur by the way so please do let me know if my analysis is completely of the mark. What is your view on this?
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p2pmaster
investment is life.
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Post by p2pmaster on Mar 11, 2016 8:26:51 GMT
Business loans, invoice financing and mortgage loans do not offer buyback guarantee, thus it must be early repayment.
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jimc99
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Post by jimc99 on Mar 11, 2016 8:45:59 GMT
I only invest in loans with buy back guarantee and so far have always been repaid.
I assume that levels of default are the same now for those businesses than they were before they joined the Mintos platform. They coped with the default levels before and should continue to do so now.
The companies are using our investments to expand their businesses which makes sense.
The level of return to us is OK for the risk we take in my opinion.
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homes119
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Post by homes119 on Mar 11, 2016 11:39:39 GMT
The level of return to us is OK for the risk we take in my opinion. Fair enough, but do you know the underlying default rate for the loans with buyback guarantee? In Mogo's case I couldn't find it. My issue is precisely related to the fact that I cannot assess the risk and cannot judge the level of return I require because I don't know the underlying true default rate. If it's higher than 10% then it's a lot more risky than 1-5%. Also, there is no way to track the trend in default rates, so if there is a substantial spike in default rates you may benefit from the buyback guarantee until it's too late. Just saying. I like the fact that there is a buyback guarantee as much as the next guy but I am bit uncomfortable that there is currently not much transparency, through the Mintos platform (I don't know if the originators regularly report on default rates apart from the yearly financials), on the underlying default rates. It's nice to get a buyback but if it gets bad the buybacks will stop and then the news will be out and everyone will rush for the exits... I would be comfortable putting a lot more money in if I can set myself an exit target should underlying default rates get to X % and I can reduce my exposure without making significant losses and ideally bagging in some profit. I guess i'm more on the conservative side.
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homes119
Member of DD Central
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Post by homes119 on Mar 11, 2016 11:46:51 GMT
Business loans, invoice financing and mortgage loans do not offer buyback guarantee, thus it must be early repayment. Thanks, I was aware of that actually, and if i'm not mistaken I think there may have been a couple of business loans with buyback guarantee. If I understand correctly, for non buyback guarantee loans 60+ days late = default since 100% of "Finished Prematurely" is early repayment?
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Post by lmrpereira on Apr 12, 2016 21:11:01 GMT
Hi Homes
I was doing the same analysis and have the same doubts. I drop Mintos support an email, lets see what they reply.
Cheers
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Post by wiseclerk on Apr 12, 2016 21:47:16 GMT
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Post by lmrpereira on Apr 13, 2016 11:58:26 GMT
Mintos Reply
Question: I'm looking to your loan book to define my loan strategy and need you to help by clarifying what is the definition of Loan status "Finished prematurely". In what conditions a loan is classified like this.
Reply: At the moment under this status are loans which are paid faster than end of term and loans which are bought-back by loan originators. Now we have invented more detailed reasons for finishing loans and in the nearest time for future finished loans will be more detailed reason in this field.
It looks like that there is more people failing their payments than what is reflected on the bad debt rate, but buy the buy back is activated you don't really know how that turns out. This raises the concern about the loan originators risk and this are manly non-banks not sure if regulated as banks iwrt to capital racios. However looks like Mintos is going on the right directions to provide more transparency but still some doubts in the air.
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homes119
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Post by homes119 on Apr 13, 2016 19:18:08 GMT
Mintos Reply Question: I'm looking to your loan book to define my loan strategy and need you to help by clarifying what is the definition of Loan status "Finished prematurely". In what conditions a loan is classified like this. Reply: At the moment under this status are loans which are paid faster than end of term and loans which are bought-back by loan originators. Now we have invented more detailed reasons for finishing loans and in the nearest time for future finished loans will be more detailed reason in this field. It looks like that there is more people failing their payments than what is reflected on the bad debt rate, but buy the buy back is activated you don't really know how that turns out. This raises the concern about the loan originators risk and this are manly non-banks not sure if regulated as banks iwrt to capital racios. However looks like Mintos is going on the right directions to provide more transparency but still some doubts in the air. Hello Imrpereira don't know if you've checked it out but as I meantioned on the other originator thread you have access to the financials of some of the originators. You can see there provisions for bad debts, etc. which will give you at least some more information. www.mintos.com/en/loan-originators/I have dipped a small toe into Mintos and will reassess after 6 months. I'm only confident dipping a toe in on two originators at the moment.
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Post by lmrpereira on Apr 14, 2016 7:58:05 GMT
Hi Homes
I overlooked that for some loan originators they have the financials, should be for all.. lets see if they put it in the near future.
Like you I'll also invest is loans from some originators, will be selective.
However I like Mintos support quick replies to the point and from the other P2P platforms I investigated, this is the most transparent one.
BTW which other P2P platforms you are also investing in ?
Cheers
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ivom
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Post by ivom on Apr 14, 2016 11:51:10 GMT
I would agree with homes119 and the statement that true default rate is unknown, but important. Especially, in the case of Mogo. Considering that almost all of the loans offered are issued in Latvia, Lithuania, Estonia and Georgia, there are substantial risks to consider even with the buyback offered. lmrpereira, I am also investing in Twino and Viventor. I am just a beginner, and the advantages over Mintos I see are that Twino and Viventor have closely related lending companies, giving them expertise also in the lending side of the business, which is crucial. Also they offer investing in loans from countries like Denmark (Twino) and Spain (Viventor) that I feel more secure investing in that Baltics or Georgia. And of course some nice diversification over several platforms to reduce risks.
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JamesFrance
Member of DD Central
Port Grimaud 1974
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Post by JamesFrance on Apr 14, 2016 13:22:30 GMT
Mintos originally financed all their mortgage loans themselves, then formed separate companies, Hipocredit issuing the loans and Mintos Marketplace offering P2P lending via many different loan originators including Hipocredit, so you could choose to invest only in those if you think that is an advantage. I prefer the wider diversification available with their marketplace and believe the risk is lower because of that.
Anyone lending to Spain through Bondora two years ago will not be so keen to lend there as default recovery has been very poor so far.
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ivom
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Post by ivom on Apr 14, 2016 14:03:36 GMT
Mintos originally financed all their mortgage loans themselves, then formed separate companies, Hipocredit issuing the loans and Mintos Marketplace offering P2P lending via many different loan originators including Hipocredit, so you could choose to invest only in those if you think that is an advantage. I prefer the wider diversification available with their marketplace and believe the risk is lower because of that. Anyone lending to Spain through Bondora two years ago will not be so keen to lend there as default recovery has been very poor so far. I prefer other loans over mortgage loans on Mintos, as I have practically no knowledge about Latvian real estate market. Not sure about possibility of selling a real estate property in Latvia if the borrower defaults, while this should not be so complicated in Southern Europe or UK. Never invested in Bondora, and not likely to give it a try - from what I read here and on other forums, I am surprised how the platform is still alive. Also all Latvian platforms use different model than Bondora - all loans are initially financed by loan originators = considerably reduced risk for us. I have had very good experience with Spain (via Viventor) so far, and will likely try other platforms working in Western and Southern Europe as well. Not sure what Bondora did there, but one company's mistakes shouldn't doom the whole region.
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homes119
Member of DD Central
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Post by homes119 on Apr 16, 2016 11:54:24 GMT
Hi Homes I overlooked that for some loan originators they have the financials, should be for all.. lets see if they put it in the near future. Like you I'll also invest is loans from some originators, will be selective. However I like Mintos support quick replies to the point and from the other P2P platforms I investigated, this is the most transparent one. BTW which other P2P platforms you are also investing in ? Cheers Started off in Bondora and sold out at a nice profit as soon as things started turning south. Then transitioned to SavingStream which is currently my biggest holding and the platform for which I have the most confidence. Dipped my toe in Mintos a month ago and will wait a few months to see if I add some more money. Right now i'm monitoring Moneything and will wait until indication they are profitable and for the total loanbook to increase a little bit. I much prefer having a smaller amount invested in p2p across platforms that meet my criteria for attempting to assess operational risk than a larger amount across a much wider variety of platforms
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