jayjay
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Post by jayjay on Dec 28, 2016 8:34:41 GMT
Latest Trip Advisor review from 25 Dec. "The most horrible hotel" - so its still open and taking cash. This Japanese visitor wrote three days ago
This hotel is the most horrible hotel where we have stayed.......
<remainder of quote redacted as it lead directly to identification of the hotel>
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kt
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Post by kt on Jan 6, 2017 12:46:50 GMT
Property loans on the FC platform are looking more and more dangerous an investment.
Today another loan is being rolled over with a change in name: "We are refinancing the original 3 tranches into a new loan, given the increase in loan and LTV. The previous tranches are being repaid, as such it needs a new name and starts from the sequence 1."
Is it not worrying that property loans are not repaying or being rolled over? It would seem in the current climate an unwise investment.
I would like to hear from anyone who disagrees. Perhaps I am being to pessimistic.
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kt
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Post by kt on Jan 6, 2017 13:52:27 GMT
My two concerns with property loans are, can they sell and can they sell at the required price.
I'm not old enough to remember previous property busts but I wonder were there cases were property couldn't sell even if "discounted" 20%?
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metoo
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Post by metoo on Jan 6, 2017 14:01:00 GMT
LTV is the important thing. The valuations are professionally done. If the LTV is low enough, it should give the possibility for FC to sell the properties at a big discount if necessary, or make it possible to refinance one day without the LTV becoming too high then. It might be necessary to wait quite a long time for the sale of properties to happen, so I wouldn't rely on the maturity date if the money is needed at a particular time. Of course, if it's a development loan, the properties may not have been built / finished but if the LTV is low enough, it should be possible to finance the building work using a different contractor if necessary and then eventually sell.
Others look to sell during the loan term, but that does require the secondary market to still be there with enough buyers when they want to sell. If the LTV is low enough the loan ought to be safe in its own right. There's also diversification across multiple loans to spread the risk in case something unanticipated happens on one. Those are just my observations, not advice.
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blender
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Post by blender on Jan 6, 2017 14:58:50 GMT
I buy property at 10%, A+ or A, and look to sell before the penultimate payment. With that plan, the interest pre-funded and the security, I do not care what the project looks like nor much about diversity. If prepared to sell at par, then the parts do sell and with Autobid I think they will in future, especially at A+. The only worry would be if FC started adding cash back and flipping re-started. But that would probably call for a change of strategy anyway. The holding is less that it used to be. This is my safe p2p at just less than 9% before tax.
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metoo
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Post by metoo on Jan 6, 2017 18:34:02 GMT
My strategy is very similar to yours blender , but I do bear in mind that if the world situation turns unexpectedly very bad, Former Conqueror could enter wind-down arrangements without a secondary market. Also, if normal business continued but Joe Public didn't want to buy property parts any more, I'd still have to be prepared to hold to redemption. There are different ways of managing risk that suit each person's appetite and situation.
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blender
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Post by blender on Jan 6, 2017 20:37:13 GMT
Yes of course, what I consider safe could be unacceptably risky for others. If Finally Crushed did cease trading, then the property loans are short, secured, and my cash flow from them would not change much without a secondary market - apart from the late ones.
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jamesc
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Post by jamesc on Jan 27, 2017 14:09:25 GMT
Another day another uninspiring update on this long running saga. However something had occurred to me which is maybe one of the reasons FC are so loath to default this loan of course in addition to the more obvious ones. Is that the costs that arise in the collection which as we know can be quite large are borne by FC ( I knew there was a reason they take a cut from my hard earned interest) which of cause is unlike a default in the majority of the other P2P sites or at least the ones I use (SS,MT & FS ) where they come out of any proceeds from the sale of any security. This at least puts us in a better position than maybe elsewhere although it may well count again us as they are probably loath to spend any more money than they need collecting on these loans.
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bramhall17
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Post by bramhall17 on Jan 27, 2017 16:13:27 GMT
This chronic over-run seems absurd to me. In my opinion, all this option development they outline in their latest update is all well & good but should have been undertaken months ago . TBF they are clearly now putting a lot of store by this specialist 'third party advisor' they have hired but surely logic dictates if by this stage (circa >280 days out) refinancing has not been achieved it is much less likely to happen. Therefore they need to 'bite the bullet' and force the sale of the security or activate guarantees etc. IMO they should never have let it drag out like this and should bring it to a close as a priority. They need to accelerate resolution primarily because they have a duty of care to retail investors but also as a damage limitation exercise for themselves.
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ptr120
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Post by ptr120 on Jan 28, 2017 13:19:42 GMT
Another day another uninspiring update on this long running saga. However something had occurred to me which is maybe one of the reasons FC are so loath to default this loan of course in addition to the more obvious ones. Is that the costs that arise in the collection which as we know can be quite large are borne by FC ( I knew there was a reason they take a cut from my hard earned interest) which of cause is unlike a default in the majority of the other P2P sites or at least the ones I use (SS,MT & FS ) where they come out of any proceeds from the sale of any security. This at least puts us in a better position than maybe elsewhere although it may well count again us as they are probably loath to spend any more money than they need collecting on these loans.
My understanding is that if they default the loan they can keep up to 40% of any recoveries towards their costs. If they don't default - they can't, so at present they are having to pay for this third party agent from their own pocket
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jamesc
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Post by jamesc on Jan 28, 2017 13:38:45 GMT
Another day another uninspiring update on this long running saga. However something had occurred to me which is maybe one of the reasons FC are so loath to default this loan of course in addition to the more obvious ones. Is that the costs that arise in the collection which as we know can be quite large are borne by FC ( I knew there was a reason they take a cut from my hard earned interest) which of cause is unlike a default in the majority of the other P2P sites or at least the ones I use (SS,MT & FS ) where they come out of any proceeds from the sale of any security. This at least puts us in a better position than maybe elsewhere although it may well count again us as they are probably loath to spend any more money than they need collecting on these loans.
My understanding is that if they default the loan they can keep up to 40% of any recoveries towards their costs. If they don't default - they can't, so at present they are having to pay for this third party agent from their own pocket Can I ask where you got that 40% figure from ?
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ptr120
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Post by ptr120 on Jan 28, 2017 14:00:51 GMT
jamescFrom the FC terms and conditions: 12.3 If the borrower misses, fails to pay or only partially pays any monthly instalments, or if the borrower is otherwise in breach of any of the Loan Conditions, the loan may be placed into default and we may engage field agents to attempt to collect the total loan amount outstanding. We may deduct up to 40% of the amount recovered from the borrower to cover the costs of third parties (such as field agents) as well as any collections charges that we may apply to cover the costs of the in-house Collections & Recoveries team (see clause 8.3) and the remaining proceeds will be distributed to investors. Where reasonably possible any deductions for third party costs or collections charges will be added on to the loan amount outstanding so as not to reduce the amount investors receive. As and when they do default this loan I'll be seeking confirmation that they will cover all third party agents costs incurred prior to that date themselves
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blender
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Post by blender on Jan 28, 2017 15:19:34 GMT
I believe that FC do have a very strong incentive not to default this loan, but that is not to do with their costs from the loan itself. It is more to do with the effect on the business which follow the first property default. It could be a game-changer, for lenders, in a lesser way for borrowers, but mainly for the property team themselves and for how they and their loans are regarded in FC and its backers. The longer it takes to get to the first default, the harder it will be to accept it. We have already seen loans moving to A & B to protect the A+ loan book from a potential downturn, imo. A loss of about £1.6M?, which would happen before recoveries, would make the eyes water a bit. And tactically, they would rather have the loss at the start of the new fiscal year, with a hope of getting the recoveries in the same year. I don't expect any defaulting in March, which is when I think the third party agent will report, and for a cynic is why it takes that long. BTW, for loans more than 90 days late FC can raise substantial late fees, in addition to the other debt. This would be their mechanism for the costs of the third party agent. On default this would be added to the debt.
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ptr120
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Post by ptr120 on Jan 28, 2017 16:58:28 GMT
I agree with all of your points blender but the more I think about it, the more I think that FC are not putting the interests of lenders first - and not even balancing the interests of lenders and borrowers. They are instead managing the reputational risk to their platform.
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bramhall17
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Post by bramhall17 on Jan 28, 2017 18:43:51 GMT
It is clearly a very difficult situation now. In fairness to FC they seem to have now moved to tighten up their process by implementing an extra interest levy (2% ?) on delayed repayments --or at least that is what I understand to be the case. Most of my FC loan participation anyway is in SME and the bulk of my property loans are elsewhere. However, I thought the general attraction of property type loans was that they are secured against assets on a first charge basis rather than just personal guarantees . In essence, albeit simplistic, the lower the LTV the better the security. So I guess the real question is how much realisable value is there now in this asset ( Hotel ? ) and the supplementary personal guarantee (s) ? I defer to those who have more specific knowledge of the details of this loan but my basic assumption is that this loan was structured so that the asset ( and guarantees ) comfortably covered the loan ? Once again in fairness to FC exercising default , legal recovery and asset sale plus pursuing guarantees would be time consuming and costs more money, so if there is still a viable refinancing option I can understand why they would still prefer that. Yet after some 289 days late surely optimisation has to give way to damage limitation and in my opinion they really need to make a business decision and close this out .
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