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Post by Deleted on Sept 1, 2016 9:31:31 GMT
I would like to read the opinions from more experienced FS lenders about the value given to a collection (for example the collection of books today on offer as security).
In general I am not convinced about using very specialist collections as security for a loan.
A collection is an item of interest of a very tiny community and in case of problems it might require years to sell and/or might attract very low offers. Housing is generally good as a security in normal times because you have a good demand behind to sustain the prices (with fluctuations of course), while collections have restricted market and might not easily be disposed of in reasonable times.
I also notice that FS does even put second and third (!) charges on them, which is a bit worrying....
Are lenders attracted by this sort of security and why?
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oldgrumpy
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Post by oldgrumpy on Sept 1, 2016 9:36:26 GMT
I have withdrawn from the Italian books loan now. I was only ever in the first charge tranche, and as the repeated renewals on this securityhave appeared the LTV has become higher and higher (wasn't it a about 17% initially?).
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SteveT
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Post by SteveT on Sept 1, 2016 9:50:58 GMT
I still have some funds in the 1st charge loan (LTV supposedly 17.5% against the "conservative" £3m valuation) but am rather dubious about the various additional loans taken out progressively over time (2nd charge facility, then 3rd charge facility) which presumably means the borrower has not yet stumped up any renewal interest since first borrowing from FS in Oct '14.
Interesting that FS have now stated in the email that "No further loans will be extended beyond this facility". At 17.5% notional LTV, I'm not too concerned about ultimate capital loss but I accept / expect that there could be a lengthy wait for repayment should the "very large multi-property development project" not generate funds to repay as hoped...
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Sept 6, 2016 21:43:48 GMT
I would like to read the opinions from more experienced FS lenders about the value given to a collection (for example the collection of books today on offer as security). In general I am not convinced about using very specialist collections as security for a loan. A collection is an item of interest of a very tiny community and in case of problems it might require years to sell and/or might attract very low offers. Housing is generally good as a security in normal times because you have a good demand behind to sustain the prices (with fluctuations of course), while collections have restricted market and might not easily be disposed of in reasonable times. I also notice that FS does even put second and third (!) charges on them, which is a bit worrying.... Are lenders attracted by this sort of security and why? I originally had a fairly large amount of money in the various tranches of the book loan, and after a couple of renewals I pulled most of it out of most of them for precisely the reason that you mention. The following quote is taken from some of the early loan documentation, and I think proves your point given where we are now: " ADDENDUM – 27th September 2014
A firm offer to purchase the collection is in final stages of agreement but,
due to the complexity of the sale, it will require several months to
complete. The owner is therefore renewing the loan for an additional
period."
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