james
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Post by james on Jul 7, 2016 19:06:31 GMT
Jonah, as you've probably seen but just in case you haven't, andrewholgate has replied to my post questioning his and now essentially says roughly what I said, though with an aside about CIS rules that wouldn't apply either unless the platform was doing it on behalf of lenders.
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Post by markp2p on Jul 7, 2016 21:31:22 GMT
Jonah, as you've probably seen but just in case you haven't, andrewholgate has replied to my post questioning his and now essentially says roughly what I said, though with an aside about CIS rules that wouldn't apply either unless the platform was doing it on behalf of lenders. FWIW (not a lot), I agree with you that once a loan is fully taken up by members of the site it is from that point on a 36H loan. However, I am not sure what would happen if the loan is not fully taken up (i.e. it's a 'yellow loan' on MT). If I understood you correctly then you are saying that there are multiple loans (the ones to members of the site being 36H and the one to the site itself not being 36H). I would have thought that there was only one loan, and it was not a 36H loan while the site had even £0.01 of interest in it.
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james
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Post by james on Jul 7, 2016 22:03:50 GMT
However, I am not sure what would happen if the loan is not fully taken up (i.e. it's a 'yellow loan' on MT). If I understood you correctly then you are saying that there are multiple loans (the ones to members of the site being 36H and the one to the site itself not being 36H). I would have thought that there was only one loan, and it was not a 36H loan while the site had even £0.01 of interest in it. I'll start out a little pedantically, just to assure clarity. It's unlikely that there will be one loan because one of the practical effects of 36H lending is that if two or more individuals lend, there are two loans, because each loan is required by 36H to be directly between lender and borrower. But of course you were really thinking of the combination of all of the individual P2P loans, not each one individually. Say you have a personal loan and apply for a credit card with a money transfer offer intending to fully repay the personal loan but you only get half of the value as your credit limit. You use that half and you now have two borrowings, half of the original loan and half in the form of the credit card balance, which could as easily be a new personal loan instead of the credit card. The same could happen in the P2P space where bridging finance is used. If the 36H lending isn't enough to repay the full bridging amount, it could be used to repay part of it instead if the platform is willing to accept that and leave its capital tied up. Or it could say to the borrower sorry, the loan wasn't funded and once the bridging term ends you need new finance. Or maybe the platform has underwriters lined up who take the risk after the agreed 36H marketing time has expired. In those cases there could be a collection of 36H loans and one or more non-36H loans that meet the borrower's total need. I'm not aware of anything that bars the borrower from having more than one loan and that's what would be required to prohibit such combined structures, at least as I understand the relevant regulations and assuming that the platform or its underwriters or other sources of finance have the required permissions.
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Post by markp2p on Jul 7, 2016 22:28:51 GMT
However, I am not sure what would happen if the loan is not fully taken up (i.e. it's a 'yellow loan' on MT). If I understood you correctly then you are saying that there are multiple loans (the ones to members of the site being 36H and the one to the site itself not being 36H). I would have thought that there was only one loan, and it was not a 36H loan while the site had even £0.01 of interest in it. I'll start out a little pedantically, just to assure clarity. It's unlikely that there will be one loan because one of the practical effects of 36H lending is that if two or more individuals lend, there are two loans, because each loan is required by 36H to be directly between lender and borrower. But of course you were really thinking of the combination of all of the individual P2P loans, not each one individually. Hmm, then if that is what 36H requires, I don't see how it is ever satisfied. There is only one loan contract, between Moneything and the Borrower. When users buy parts of a loan, they receive an equitable assignment of part of the benefit of that single contract. The borrower's only duty under the contract is to pay Moneything. There is no loan directly between end user and borrower. (As I understand it). To make it work your way I would have thought there would need to be a novation (i.e. the creation of entirely new contracts) rather than an assignment of the benefit of the existing contract.
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Jul 7, 2016 23:44:14 GMT
My understanding is that MT are effectively underwriting all their loans. Other platforms have underwriters and their loans are classed as H36 compliant. The only drawback is that Moneything only have enough funds to underwrite 1 or 2 loans at a time. I think that encourages the platform to only offer loans that we like, and when there are surplus loans in the pipeline we get cashback.
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james
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Post by james on Jul 8, 2016 2:37:22 GMT
I'll start out a little pedantically, just to assure clarity. It's unlikely that there will be one loan because one of the practical effects of 36H lending is that if two or more individuals lend, there are two loans, because each loan is required by 36H to be directly between lender and borrower. But of course you were really thinking of the combination of all of the individual P2P loans, not each one individually. Hmm, then if that is what 36H requires, I don't see how it is ever satisfied. There is only one loan contract, between Moneything and the Borrower. When users buy parts of a loan, they receive an equitable assignment of part of the benefit of that single contract. The borrower's only duty under the contract is to pay Moneything. There is no loan directly between end user and borrower. (As I understand it). To make it work your way I would have thought there would need to be a novation (i.e. the creation of entirely new contracts) rather than an assignment of the benefit of the existing contract. I'll leave it to MoneyThing to comment on that aspect with regard to how the platform currently operates or might in the future operate to achieve those direct loans or loan. However, there is another structure, most often one I've seen used by Ablrate in this P2P context: the SPV. A special purpose vehicle is in this context a middleman company established to do the final lending to the ultimate borrower. The 36H lenders lend to the SPV so the ultimate borrower sees no change in contract and no more agreements than the original one, it's the SPV that the platform can control that has the change of lender. But Ablrate doesn't use its SPVs for this purpose, at least not in general. Instead they have been used for things like adding an extra management layer or dealing with exchange and maintenance issues so that the underlying security is taken care of properly. I don't think that MoneyThing is using this SPV structure, just mentioning it because it's a way to do what you were describing.
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