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Post by westonkevRS on Sept 30, 2016 17:31:36 GMT
propman, Our "default" process differs to Zopa. Remember that any non payment or change to original loan payment plan (even tiny ones) require the Provision Fund to take ownership. As a result it has many "defaults" that are actually pretty good loans that don't have any major problems. Personally I wouldn't really even call them defaults, and they make up a reasonable share of the PF assets. I'm not going to comment any more on the trust or debt sale, you've scared me with the thought of anything I write could end up in the "Court of Protection". Therefore if you have any specific questions, direct them to Customer Services. Kevin.
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jlend
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Post by jlend on Oct 1, 2016 6:38:17 GMT
Ratesetter use to formally assess for expected surplus around this time of year every year. I use to drop them an email every September asking for an update. I have just dropped them an email for this year to see if they have done the assessment The surplus calculation was only relevant for " the trust", and yes every year a short email was distributed to confirm that there was not a sufficient surplus to distribute. This was performed by the trustees, which I think was Peter Behrens and Rhydian Lewis (also the co-founders). Now "the trust" is receiving no new contributions either up-front or on older loans with lifetime payments. The "trust" is being used to pay down bad debts lcciring now across the entire portfolio. Therefore in all probability no monies will ever be returned to lenders. Therein lies one of the issues with the original concept of returning funds. Which lenders, which loans, which period, equitable or depending on your loan book, etc. A quagmire. The new Provision Fund structure and legal status as a Ltd company wholly owned by RMM Ltd means there will not be a distribution to lenders. Kevin. I have just re read the notice to investors on Dec 16th.Updating the structure of the Provision Fund. It states. - Does this change what RateSetter offers to investors? No, this does not change what we offer. Although like you I was never a fan of the concept of distributing excess funds it was a potential benefit of the fund. I am not sure the change has been communicated. I may have missed it. The notice also mentioned the 3rd independent director to ensure the "the Provision Fund is properly governed". We know this is not going ahead ahead now. It is important that these sort of things are whiter than white given this is not going ahead. I remain a big fan of ratesetter, I just hope things don't get pushed through without very clear governance and communication.
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jonbvn
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Post by jonbvn on Oct 8, 2016 12:40:08 GMT
My continued running down of my account continues. I have nothing more to add.... As does mine. I am now grateful for the defaults covered by the PF, since they accelerate the extrication process.
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jlend
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Post by jlend on Oct 21, 2016 12:39:00 GMT
Ratesetter use to formally assess for expected surplus around this time of year every year. I use to drop them an email every September asking for an update. I have just dropped them an email for this year to see if they have done the assessment The surplus calculation was only relevant for " the trust", and yes every year a short email was distributed to confirm that there was not a sufficient surplus to distribute. This was performed by the trustees, which I think was Peter Behrens and Rhydian Lewis (also the co-founders). Now "the trust" is receiving no new contributions either up-front or on older loans with lifetime payments. The "trust" is being used to pay down bad debts lcciring now across the entire portfolio. Therefore in all probability no monies will ever be returned to lenders. Therein lies one of the issues with the original concept of returning funds. Which lenders, which loans, which period, equitable or depending on your loan book, etc. A quagmire. The new Provision Fund structure and legal status as a Ltd company wholly owned by RMM Ltd means there will not be a distribution to lenders. Kevin. Do you know if there is still a 500k loan from ratesetter to the provision fund. I can't see a reference to it on the website any more but I may have missed it.
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Post by westonkevRS on Oct 21, 2016 13:18:26 GMT
I think the £500k loan has been paid back by the Provision Fund to RMM Ltd. A very good outcome because come a rainy day, this money probably wouldn't have been available to protect lenders. It was good for the brand image of the PF, not much else.
But if you want confirmation you'll need to ask RateSetter directly. I'm no longer in the office for the foreseeable future.
Kevin.
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adrianc
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Post by adrianc on Oct 21, 2016 14:18:31 GMT
But if you want confirmation you'll need to ask RateSetter directly. I'm no longer in the office for the foreseeable future. Whatever that means, good luck.
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ashtondav
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Post by ashtondav on Oct 21, 2016 17:18:58 GMT
Well, please can we have another ratesetter rep if Kev has gone walkabout?
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jonah
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Post by jonah on Oct 21, 2016 20:23:44 GMT
But if you want confirmation you'll need to ask RateSetter directly. I'm no longer in the office for the foreseeable future. Whatever that means, good luck. And I hope that we will continue to 'see' you around in these parts...
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jlend
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Post by jlend on Oct 24, 2016 16:50:29 GMT
I think the £500k loan has been paid back by the Provision Fund to RMM Ltd. A very good outcome because come a rainy day, this money probably wouldn't have been available to protect lenders. It was good for the brand image of the PF, not much else. But if you want confirmation you'll need to ask RateSetter directly. I'm no longer in the office for the foreseeable future. Kevin. From ratesetter. we originally made a loan of £150,000 into the Provision Fund when RateSetter launched, so that there would be money in the Fund to cover bad debts from day one. In 2014, we began to take fee income and Provision Fund contributions over the lifetime of loans, rather than 100% up front. By early 2015, we were in a position where we had over a million pounds worth of contractual income due to the Fund over the following five years. This was not shown in the value of the Provision Fund, so we increased the size of the loan to £500,000 to reflect this contractual future income due to the Fund. However, in July this year, we updated the Provision Fund Coverage Ratio so that it takes into account both the current value of the Provision Fund, and the (discounted) value of contractual future contributions. This gives a much clearer picture of the Provision Fund's ability to cover expected losses. As a result, the additional loan was no longer required, and it was repaid in September.
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Post by propman on Oct 25, 2016 8:16:29 GMT
We are still none the wiser as to how the excess of the funds from the sale of some older defaulted loans has been allocated. We were told that this was expected to raise about £1.4m and b£500k was used to repay the loan from RS (which IIRC we were earlier told would stay in the PF and only be withdrawn over 10 years). The balance doesn't appear to have gone into the PF as cash, and has not been included as contracted income (which might have been appropriate if the sale price was repayable in installments). This suggests that the proceeds have not been treated as realised. However, the monthly bad debt analysis has been amended to show a full repayment of the earlier defaulted loans and partial recovery of the defaults in later months, so RS is confident enough on the proceeds to report the recovery as made.
Leading aside the likelihood of a third party purchasing 6 year old loans of no more than 3 year duration that have not repaid anything significant for multiple years, as the beneficiaries of the Trust, I am very surprised that we have not been told officially about this transaction.
In addition, the expected bad debts have been significantly reduced despite the late loans being close to their highest level. We have previously been told that this is based on the performance of earlier loans. It seems likely that the reduction in bad debts from the sale has been used to justify this reduction. This is concerning if it will not give rise to increased cash or contracted income.
Am I missing something or does the above give significant cause for concern in the integrity of the statistics provided or even the ability of the fund to deliver protection?
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jimc99
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Post by jimc99 on Oct 25, 2016 9:11:08 GMT
I think RS are losing the plot if they haven't lost it already.
The business is hardly growing, with the amount on loan nearly stagnant for the past few months. Doubts about the PF. Cockup around removing the 3 year market. Lots of concerned investors on this forum.
In my opinion it started around the same time as the "invest at market rates" ploy was introduced.
Oh well 18 months to go and hopefully my loans will have been repaid and I can jump the sinking ship.
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wapping35
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Post by wapping35 on Oct 25, 2016 9:30:23 GMT
Been looking at the default data as well and yes 100% agree a lot more communication / transparency around what is happening is needed.
The only factor I can see that may be lowering the expected bad debts is that it is notable that the portion of shorter loans may be higher than previously as a % of total lending. Volumes in 5 yr lending are certainly a smaller proportion of total RS lending since April/May.
So I guess if that shorter maturity lending is lower risk it would drive the expected default rate down.
The above is the only explanation I can think of as to why the expected default rate has fallen to 2.6% and yet 2014/2015 defaults are so high and at the time of the fall to 2.6% actually rose, rather than fell.
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jlend
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Post by jlend on Oct 25, 2016 17:22:08 GMT
There certainly seems to be a lot of changes going on related to the provision fund that Ratesetter are choosing to keep internal to themselves unless lenders ask questions.
Of course they are free to do what they like - but it would be good if changes were more visible to those that are interested.
It may be a sign of things to come as Ratesetter aims to be more of a mainstream product.
I assume this changed some time ago - some of the sellout fee (if rates have fallen since the original loan) use to go to the provision fund. Does anyone remember this changing?
"There is another potential cost as well. If rates rise, the contract must be refinanced at a higher rate. In this situation, the Lender will also incur an “Assignment Fee”. The assignment fee is used to compensate the new Lender (“the assignee”) for being matched with contracts with an interest rate that is less than his request. This ensures contracts can always be sold, though at potentially a higher cost if rates have moved against you – it also ensures there is no benefit to Sellout only to re-lend at better rates. If rates have fallen, the excess interest – rather than going to you or the new lender – goes to the Provision Fund."
I see the money now goes to Ratesetter
"Also, there is another potential cost: at the time of withdrawing your money, the rates available on RateSetter may have risen since you started to invest which would mean a gap needs to be filled between your rate and the rate needed for the new money matched to your loans. Our system instantly works out what that gap is and lets you know the amount to pay to fill that gap. It’s only fair and is usually a small price to pay to get early access your money. However, if rates have gone down you won’t get the benefit – that accrues to RateSetter in return for running and managing the early withdrawal service."
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wapping35
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Post by wapping35 on Oct 31, 2016 17:39:38 GMT
Still waiting for a reply on which default rate is correct but may be I have my answer (implied) from todays update to the Provision Fund page: Coverage ration now shows 121% (now 120%) down from 129% this morning. Expected Bad Debt Rate has gone up to 2.8% from 2.6%. Seems a v big jump in one day... p2pindependentforum.com/thread/6409/statistics?page=2EDIT: to add the Statistics thread which has my question to RS & I see the Provision Fund Page has just been updated again to reduce the ration to 120%.
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jlend
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Post by jlend on Nov 1, 2016 10:09:49 GMT
Still waiting for a reply on which default rate is correct but may be I have my answer (implied) from todays update to the Provision Fund page: Coverage ration now shows 121% (now 120%) down from 129% this morning. Expected Bad Debt Rate has gone up to 2.8% from 2.6%. Seems a v big jump in one day... p2pindependentforum.com/thread/6409/statistics?page=2EDIT: to add the Statistics thread which has my question to RS & I see the Provision Fund Page has just been updated again to reduce the ration to 120%. It is the first time the coverage ratio has dropped below the ratesetter published target range of 1.25 to 1.5 ?
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