MT380

I'd like to think that you are correct on all counts PTR120 - I'm just not sure how they could indemnify us against currency losses in the event of say a bad loan on top of a possible Brexit?

Afternoon,

The borrower has been paid in EUR and the valuation is in EUR. In the event of default and that upon disposal there is a capital loss of say 50% and the value of the EUR to GBP drops (i.e. the loan is €130,000 and we have to sell the property and only recover €65,000), then participating lenders make a capital loss of 50% of the amount that they funded of the £104,727 and MoneyThing would step in to cover any shortfall to maintain the 50%.

(Participating lenders have an interest in the loan based on % of what they have funded out of the listed £104,727).

Vice versa, in the event that the value of EUR to GBP rises, then in the event that there is only a 50% recovery of the amount in EUR (€65,000) but the amount recovered in GBP is greater than 50% of £104,727, then the effective capital loss by investors is reduced. 


Following on from this example of 50% recovery:

If in 18 months €130,000 is only worth say £85,000 and therefore we sell the property for the equivalent of £42,500, then we would fund the difference of £9,863 to lenders ((50% of £104,727) - £42,500).  

If in 18 months €130,000 is worth say £125,000 and therefore we sell the property for the equivalent of £62,500, then the effective capital loss to investors will be reduced to £40.3%. 


I hope I have explained it clearly enough.

Kind regards,

Ed

Correct. Regards, Ed