|
Post by markp2p on Jun 17, 2016 23:03:52 GMT
Maybe a slightly odd question but how does MT make money? Is it on a commission basis with the borrower paying some kind of arrangement fee? I couldnt see anything in the T&Cs about it.
|
|
SteveT
Member of DD Central
Posts: 6,873
Likes: 7,918
|
Post by SteveT on Jun 18, 2016 5:30:29 GMT
Maybe a slightly odd question but how does MT make money? Is it on a commission basis with the borrower paying some kind of arrangement fee? I couldnt see anything in the T&Cs about it. By charging the borrowers a higher rate than is paid to lenders, just like a bank.
|
|
|
Post by markp2p on Jun 18, 2016 8:56:10 GMT
Maybe a slightly odd question but how does MT make money? Is it on a commission basis with the borrower paying some kind of arrangement fee? I couldnt see anything in the T&Cs about it. By charging the borrowers a higher rate than is paid to lenders, just like a bank. Hmm, I don't think I understand exactly how that works. The Terms and Conditions say that lenders are lending to the borrowers directly, rather than lending to MT. They don't say this explicitly but it seems to be the case that MT lends money to borrower, and then that agreement is partly assigned to lenders as lenders buy loan parts. But if there is an assignment of the loan how can the terms be different? If MT lends to B at 14%, and L1 buys one tenth of that loan, then if L1 is assigned one tenth of the loan, obviously L1 will have the benefit of a 14% interest loan too. The terms of repayment cannot be different because then that would not be an assignment. And L1 cannot be assigned some slightly smaller than one tenth fraction of the loan to make the interest rate effectively 12% because then the capital repayment would not work properly. The bank example is not really analogous at all because in that case there are two completely separate contracts (Lender to Bank) (Bank to Borrower) and one does not affect the other.
|
|
|
Post by flobberchops on Jun 18, 2016 11:54:00 GMT
AFAIK it's not strictly a P2P loan, MT covers the initial loan completely before its offered to lenders. MT makes its profit through the margin between what they're taking from the borrower and what they pay out to the lenders.
Perhaps one of the Things could clarify?..
|
|
|
Post by markp2p on Jun 18, 2016 12:36:28 GMT
AFAIK it's not strictly a P2P loan, MT covers the initial loan completely before its offered to lenders. MT makes its profit through the margin between what they're taking from the borrower and what they pay out to the lenders. Perhaps one of the Things could clarify?.. If that is the case then the loan is not *assigned* to the lenders as the T&Cs states.
|
|
fp
Posts: 1,008
Likes: 853
|
Post by fp on Jun 18, 2016 13:48:10 GMT
I'm not sure how MT works, but as an example, if you go to the home page of another P2P site, you can lend from them at rates starting at 2.4% per month, and typically when you underwrite a loan by investing in it on their site, you receive 1% per month on your money, I am guessing MT works in a similar way
|
|
|
Post by SophieThing on Jun 18, 2016 18:07:49 GMT
Hi All,
Our structure is that we have MoneyThing Security Trustee Limited that holds the security of the loans. The 'loan participants' within that loan can be both MoneyThing and lenders. In addition, MoneyThing is the Platform Operator and for that we charge an interest rate over that paid out to lenders.
Hope that helps.
Kind regards
Sophie
|
|
|
Post by markp2p on Jun 18, 2016 18:59:09 GMT
No, sorry, don't understand at all. If borrower is paying MT, say, 18%, and lender is going to receive 12%, how can that be structured as an *assignment* of MTs rights under the loan?
Take as a really simple example, MT lends £500k at 18%. A Big Hitter comes along and buys all £500k on terms that he will receive 12%. What is assigned to BH? Not the entire loan, because then he would receive 18% interest. And not 2/3rds of the loan, with MT retaining the other 1/3rd, because then although BH would effectively get 12% interest, he will be very sad when the capital gets repaid and he only gets 2/3rds of his investment back. And you can't assign "the benefit of the borrowers duty to pay 12% interest" because the borrower has no such duty.
The only way I can understand it as working is if MT declares itself trustee of its right to receive 18% interest from the borrower in the appropriate shares (2/3rds to BH, 1/3rd to itself). But then that is not an assignment which the T&Cs claim (a trust not being the same thing as an equitable assignment).
Just to make clear I am not for a moment suggesting that there is something untoward going on, but as I have moved a moderate (for me) amount on to the site I would like to be sure that, in the event of something going wrong with the platform, I have rights against the borrowers, not just contractual claims against MT. I am happy to take it on trust that there is some kind of "assignment" going on but only if I understand exactly what rights it is that have been assigned.
|
|
|
Post by SophieThing on Jun 18, 2016 19:52:29 GMT
Evening,
I have been back and forth with our solicitors and the FCA a few times to make sure we get the structure right so that lenders are protected and do have direct security from the borrower and not MT.
A number of P2P platforms use the same structure as us whereby the security is held 'in trustee'.
In our loan agreements, there are 3 parties: MT SecurityTrustee, the 'loan participants' and the 'platform operator'. The loan participants are lenders and because MT pre-funds loans, at the start of the loan it is also MT. The lenders earn interest and have the security assigned to them in proportion to the loan parts they buy.
The Security Trustee acts on their behalf and in their interests.
The platform operator facilitates the loan, collects payments and operates the client account, and manages the borrower relationship. The platform operator charges interest for this role.
Kind regards
Sophie
|
|