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Post by GSV3MIaC on Sept 20, 2016 19:17:32 GMT
These are all just patches to a pre-fund system where everyone who wants some says so well in advance, and then MT does a bottom up allocation on release date, resulting in everyone knowing how much they got and the loan being 100% filled with no FFF needed. OK, in this case we have the 'gee the money may be late arriving from elsewhere' wrinkle, but in general the 24 hour limit and subsequent scrum, and the occasional mis-guess at what the initial limit should be, would all go away if all the bids were on the table up front (and Ed would have a better idea what the appetite actually was).
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james
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Post by james on Sept 20, 2016 21:26:53 GMT
a pre-fund system where everyone who wants some says so well in advance, and then MT does a bottom up allocation on release date, resulting in everyone knowing how much they got and the loan being 100% filled with no FFF needed. Just to be clear, here's a description of what I think bottom up allocation means: 1. Is there enough money to give everyone a penny of the loan? If no (Are there any bidders who are below the minimum amount they said they wanted? If yes, cancel the one that is most above its target in money terms and return money to the pot, then back to the start of 1. Randomly pick one if there's a draw.). If no more bids to cancel, randomly pick who gets the odd pennies and stop after that. 2. Allocate everyone a penny. 3. If all money not allocated yet and there are still unfulfilled bids, back to step 1. That is the sort of system that I'd like to see. Keeps adding pennies to everyone until the money runs out. If that leaves someone getting less than their minimum they get their money back and their chunk is redistributed among the rest. That maximises the participation level while letting those who don't want small change, for whatever their definition of small change is, avoid it without having to use the secondary market. So the maximum amount possible is spread around as much as possible. One tweak to help people to keep money invested is to maintain for each lender a count of the amount of money they have had in repaid loans and decrement that as they reinvest. Allocate say 10% of each the loan in equal chunks first to those who have unused repaid capital to help them stay invested. Rollovers not counted, those stay 100% as now. Ignore money only invested in say the last two months of a loan to avoid things like buying this Cardiff loan just before repayment to get priority after it repays. Decrease the balance by say 0.2% a day so you can't jump out then back in after a year to a large uninvested high priority balance. Yes, anti-gaming measures matter.
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ben
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Post by ben on Sept 20, 2016 21:33:10 GMT
I think it works ok as it is although collateral have the bid limit for shorter time ie few hours so everyone that wants some gets a fair chance before someone comes along and hovvers it all up. Just invested on PP and they use the percentage of investment so everybody gets the same percentage of what they wanted, with the MT model this would probably work to as people have to actually have the funds there rather then a fictional amount like you saw on SS.
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sam i am
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Post by sam i am on Sept 20, 2016 22:20:07 GMT
Sorry but not well done. This is one of the few occasions where I have an issue with MT. I fully understand the desire for limits and have no problem with them at all. What I have a problem with is being told that there are no limits, selling my loans on another platform to invest on MT and then find out later that limits have been introduced. MoneyThing , please be clear from the outset and don't change your mind as you go along. Agreed. Apologies. Regards, Ed. Accepted of course. Thank you.
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Post by harvey on Sept 20, 2016 23:10:48 GMT
Not as yet, but we do anticipate it will be repaid before 4pm tomorrow. Will let everyone know as soon as we receive the funds. Regards, Ed ...having said that, and not sure how popular it would be, we could potentially delay the launch of the loan by a day or two if there is the chance that Cardiff doesn't repay tomorrow? Just a thought... I'd be a bit miffed if you did that. I think I'm probably not alone in making personal plans to ensure I'm available and online at the launch times of MT loans I'd like to invest in and in sorting out my finances so they are available at the given time. I had an appointment for a flu jab late on Wednesday PM and I went to the trouble of changing my appointment after I got the first 4pm Wed go live email (with no restriction on it). Possibly others arrange their days around these launch events as well. I understand that unavoidable delays can occur and that's fine but changing a loan launch time without an unavoidable reason after people have gone to trouble to meet it, isn't a good idea IMO. Not a criticism as I realise you were just floating the idea with the best of intentions - just offering my opinion.
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arbster
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Post by arbster on Sept 21, 2016 6:33:14 GMT
MoneyThing or bengilbert: Could you please help me understand the LTV calculation for Tranche A? I can't quite get my head around it, and I suspect it may just be the complexities of the BO first loss amount, or something. Working on the basis that there is a separate £1,700,000 facility which ranks equally, and ignoring Tranche B as it ranks behind this, I make that a total of £2,300,000 against a £4,000,000 asset. Which would be 57.5% LTV, ignoring the BO first loss, or 54.6% taking it into account (assuming BO take 5% of the total facility). The text on the site suggests the initial lender LTV for Tranche A is 41.2%. Where am I going wrong?
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Post by bengilbert on Sept 21, 2016 7:54:02 GMT
MoneyThing or bengilbert : Could you please help me understand the LTV calculation for Tranche A? I can't quite get my head around it, and I suspect it may just be the complexities of the BO first loss amount, or something. Working on the basis that there is a separate £1,700,000 facility which ranks equally, and ignoring Tranche B as it ranks behind this, I make that a total of £2,300,000 against a £4,000,000 asset. Which would be 57.5% LTV, ignoring the BO first loss, or 54.6% taking it into account (assuming BO take 5% of the total facility). The text on the site suggests the initial lender LTV for Tranche A is 41.2%. Where am I going wrong? The key point is that our first loss holding is only there to protect MT's investment. It doesn't cover the other investors. And the tranche A / tranche B division is only internal to the MT portion of the investment. Tranche B does not rank behind other (non-MT) investors in the loan, it's just about how funds are allocated between the different investors on MT. So actually, the calculation is as follows: Tranche A LTV: 570,000 / (4,000,000 * 900,000 / 2,600,000) = 41.2% 570,000 = the amount investors will have in tranche A (after deducting BPF's first loss holding of 30,000 in this tranche) 4,000,000 * 900,000 / 2,600,000 = MT's portion of the security (having 900,000 out of a total loan of 2,600,000) Combined A & B LTV: 855,000 / (4,000,000 * 900,000 / 2,600,000) = 61.8% 855,000 = the amount investors will have in both tranches (after deducting BPF's first loss holding of 45,000) Hope this makes things clearer but please let me know if you're still unsure about anything.
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stevio
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Post by stevio on Sept 21, 2016 7:56:59 GMT
We've had some questions about where MoneyThing ranks relative to our other investors in this loan. MoneyThing's total investment ranks equally with the other investors. MoneyThing has £900,000 out of a total loan of £2,600,000, so will receive (9/26) of the proceeds of any repayments. Within MoneyThing's holding, there are the 2 tranches, with tranche A ranking ahead of tranche B. However, this only affects the order in which MoneyThing investors would be repaid any sums received on the loan - it's just internal to MoneyThing. MoneyThing's total holding is pari passu with all the others. Also, to be clear, Broadoak holds a first and only charge over the property. Example: -loan defaults and £2,000,000 is recovered. -MoneyThing receives (2,000,000 * 9 / 26) = £692,308 -of this, £600,000 goes to tranche A holders (who are repaid in full), and the £92,308 remaining goes to tranche B holders Sorry - we could have made this clearer in the description and will do our best to do so going forward. thanks bengilbertI note the laon details state 'Further drawdowns up to a total of £600,000 may be granted, but the combined LTV for MoneyThing investors will be capped at 69% throughout the course of the loan.' How will further drawdowns rank? As per other persons comments, could you please provide the calculation for the LTV's provided? Also I note you have used the 'current market value' valuation of £4m. Is this realistic should the loan default and would the 'forced sale' valuation not be a more realistic figure?
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Post by bengilbert on Sept 21, 2016 8:12:07 GMT
thanks bengilbert I note the laon details state 'Further drawdowns up to a total of £600,000 may be granted, but the combined LTV for MoneyThing investors will be capped at 69% throughout the course of the loan.' How will further drawdowns rank? As per other persons comments, could you please provide the calculation for the LTV's provided? Also I note you have used the 'current market value' valuation of £4m. Is this realistic should the loan default and would the 'forced sale' valuation not be a more realistic figure? LTV calculations are above, but please let me know if there are any queries about them. Further drawdowns will rank equally with the initial loan, subject to the MT lender LTV (on A & B combined) against the most recent valuation received remaining at 69% or under. If any drawdowns would take the LTV over 69%, they will be funded by Broadoak and subordinated behind MT to keep the lender LTV to 69%. On all our loans, we express the LTV with reference to the open market valuation. I think this is the case with other loans on the platform, and I'm not sure there are any platforms that use the forced sale value in their headline LTV (happy to be corrected) - in fact, sometimes they use GDV, or initial LTV even when they know it's likely to rise during the course of the loan. So, for consistency and comparability, we use the open market value. But I do agree that it's important to look at the forced sale value as part of evaluating the security.
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arbster
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Post by arbster on Sept 21, 2016 8:27:22 GMT
Thanks bengilbert - I understand. Essentially the presence of Tranche B has a disproportionate effect on the LTV of Tranche A, acting as an effective second loss facility. Just as a further example of my paranoia - is this reflected in any legal agreements, given that both tranches are secured against the same first charge, or is the documentation on MoneyThing considered sufficient to be binding in the event of a recovery?
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stevio
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Post by stevio on Sept 21, 2016 8:28:02 GMT
thanks bengilbert I note the laon details state 'Further drawdowns up to a total of £600,000 may be granted, but the combined LTV for MoneyThing investors will be capped at 69% throughout the course of the loan.' How will further drawdowns rank? As per other persons comments, could you please provide the calculation for the LTV's provided? Also I note you have used the 'current market value' valuation of £4m. Is this realistic should the loan default and would the 'forced sale' valuation not be a more realistic figure? LTV calculations are above, but please let me know if there are any queries about them. Further drawdowns will rank equally with the initial loan, subject to the MT lender LTV (on A & B combined) against the most recent valuation received remaining at 69% or under. If any drawdowns would take the LTV over 69%, they will be funded by Broadoak and subordinated behind MT to keep the lender LTV to 69%. On all our loans, we express the LTV with reference to the open market valuation. I think this is the case with other loans on the platform, and I'm not sure there are any platforms that use the forced sale value in their headline LTV (happy to be corrected) - in fact, sometimes they use GDV, or initial LTV even when they know it's likely to rise during the course of the loan. So, for consistency and comparability, we use the open market value. But I do agree that it's important to look at the forced sale value as part of evaluating the security. So say the £600k mentioned was given as another tranche to MT if the LTV remained under 69%, total loan size would increase to £3.2m, using your example previously of any recovered funds, 15/32 would go to MT - is that correct? Personally, if I was looking at Tranche B, you would need the total loan of £2.6m to pay back for you to receive all your funds and I personally would use the forced sale valuation of £3.5. So about a 75% LTV for me. I note that you can receive 13% as standard now on FS with similar 'realistic' LTV or 12% with SS.
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Post by bengilbert on Sept 21, 2016 8:40:21 GMT
Thanks bengilbert - I understand. Essentially the presence of Tranche B has a disproportionate effect on the LTV of Tranche A, acting as an effective second loss facility. Just as a further example of my paranoia - is this reflected in any legal agreements, given that both tranches are secured against the same first charge, or is the documentation on MoneyThing considered sufficient to be binding in the event of a recovery? If the loan went into recovery, MT would receive its payments in accordance with its share of the first charge, with no reference to tranche A and B (which are internal to MT). How these are distributed are a matter for MT but my understanding is that MT provides for investors to be ranked by priority (this is how the Broadoak first loss investments can be ranked behind lenders - our investments are made via the platform and held on platform, so MT controls how they are repaid to us). So tranche B would be ranked behind tranche A. Perhaps Ed can confirm.
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am
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Post by am on Sept 21, 2016 9:47:27 GMT
I expect I am in much the same boat as a few other investors, unable to invest unless the Cardiff loan pays back and provides me with some funds, will be slightly miffed if I cannot. In hindsight the answer was to sell your Cardiff loans on the SM, except that if everybody tried that there wouldn't have been enough demand even with people looking for ultra-safe, ultra-short term loans. (Also in hindsight, I suppose I could have grabbed the float from a current account being used as a savings account, and joined in as a buyer rather than a seller.)
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arbster
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Post by arbster on Sept 21, 2016 9:51:06 GMT
In hindsight the answer was to sell your Cardiff loans on the SM, except that if everybody tried that there wouldn't have been enough demand even with people looking for ultra-safe, ultra-short term loans. (Also in hindsight, I suppose I could have grabbed the float from a current account being used as a savings account, and joined in as a buyer rather than a seller.) This is what I did. I am (hopefully very temporarily) overweight in P2P, but it hardly takes any effort to move money from a current account or two into MT and back out again a few days later.
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pom
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Post by pom on Sept 21, 2016 10:24:35 GMT
In hindsight the answer was to sell your Cardiff loans on the SM, except that if everybody tried that there wouldn't have been enough demand even with people looking for ultra-safe, ultra-short term loans. (Also in hindsight, I suppose I could have grabbed the float from a current account being used as a savings account, and joined in as a buyer rather than a seller.) This is what I did. I am (hopefully very temporarily) overweight in P2P, but it hardly takes any effort to move money from a current account or two into MT and back out again a few days later. Much less effort than a certain other platform
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