Loans repaid, defaulted or recovered

Morning gusgorilla,

We do not currently have a column on the completed loans page that shows the loan outcome. I agree that this should be present and it is on our to do list, however so far we have not had any loans go into default or are distressed in any way and therefore have dropped it down the list of tasks for the time being. (For clarity, there have been underlying defaults under the MPs, however these have been swapped out for good loans.)

I agree that we need a good statistics page on the marketing site. We have a number of areas on the site we wish to bring up to date and refresh content. 

No ETA on these items just yet but shouldn't be long....

Kind regards,

Ed

Afternoon,

There is varying terminology that is used in the industry to describe the status of a loan default which is usually defined in terms of the trigger event and timescales involved (e.g. non-performing loans, distressed, impaired, in arrears, etc.)

We employ a few different loan agreements due to the different customer and asset types we lend against. In addition, whilst we pay lenders on a monthly basis, the borrower interest repayments vary between drawdown, monthly or term. Regardless of when interest is serviced by the borrower, we closely monitor the loans and have various provisions in place within our agreements for us to be able to step in early on if we believe a default situation is likely.


Loan Extension

There may be times when a borrower wishes to simply extend a loan for a fixed period of time and so long as we have been satisfied that repayment will happen, we will create a new loan which will be titled the same as the original loan with 'EXTENSION' at the end. 

In this scenario, lenders will likely be given the opportunity to opt-in to rollover their investment. The SM would also continue to operate.

Since we maintain regular contact with the borrowers, we should be able to communicate this with lenders well in advance of the loan end date.


Default

In the event of a 'default', from a platform perspective the loan would work in a similar way to a 'renewal' whereby a new loan is created (which would share the same title as the loan but with 'DEFAULT' at the end rather than 'RENEWAL'). Unlike a renewal, all subscribed investors would automatically be carried over into the 'default' loan.

For the majority of our loan contracts, there is a higher default rate of interest charged to the borrower and therefore the newly created default loan will have a higher interest rate to lenders (e.g. 18% pa). However, interest will not be paid out until such time as the loan is either repaid or the security is disposed of through the recovery process. The SM market would also be suspended.

Regular updates will be communicated to investors through the platform as to our course of action & progress.


a) Default + Recovery

If the borrower then repays the loan in full OR the asset is disposed of and full recovery takes place (capital + interest + disposal/recovery costs), the loan will end on the platform and all outstanding accrued interest is credited back to lenders.


b) Default + Loss

In the event the asset is disposed of and full recovery is not possible, the loan will end and lenders will be credited an amount that is proportional to their % holding of the total amount recovered minus disposal/recovery costs.


We are in the process of reviewing all the content on our website to bring it up to date.


Kind regards,

Ed

I know I am in the minority on here but I am willing to accept slightly less to have a provision fund, although I do invest in sites without them. So I would be all for a provision fund (obviously at a reasonable cost)

Or how about a Provision Fund that the borrowers pays into?