Rob
Posts: 138 
Likes: 36
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Post by Rob on Oct 20, 2016 15:34:17 GMT
New e-mail from Mintos: "To obtain exposure to Hipocredit loans, investors will be able to invest in loans issued by Mintos Finance to Hipocredit where repayments depend on the borrower’s payments. Each loan issued by Mintos Finance to Hipocredit will be pegged to a respective loan issued by Hipocredit to the final borrower.
Investors making investments according to the new structure will henceforth gain exposure to Hipocredit-issued loans. Previously investors had direct claim against the final borrower; now investors will have a direct claim against the loan originator - in this case, against Hipocredit.
Taking into account that these changes affect the investment risk profile, Hipocredit loans will be removed from all current Auto Invest settings. To continue using the Auto Invest function to invest in Hipocredit loans, please renew your corresponding Auto Invest portfolio settings."martins You say that the investment risk profile is affected; please can you explain if the risk to the investor is increased or decreased, and why? Is the return to the investor decreased as now both Hipocredit and Mintos Finance receive a share of the payments from the borrower? |
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Post by gmaxkenny on Oct 20, 2016 16:34:03 GMT
This does not sound good. Instead of having a claim against the borrowers property we will now only have a claim against the company Hippocredit. So if Hippocredit goes bankrupt investors will be left high and dry. The loan book could be sold off to another company and as we no longer have a claim against the borrower we get nothing. Am I missing something? Does this only apply to new loans or will they do a Bondora and make it retrospective ?
I am getting uneasy about all the chopping and changing at Mintos. Maybe all is not well and investors need to know what is going on.
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Post by extremis on Oct 20, 2016 19:24:12 GMT
Does this only apply to new loans or will they do a Bondora and make it retrospective ? This applies only to new loans issued. However, i am also worried about the new structure affecting both Hipocredit and Banknote. What is the reason for the recent change? Is Mintos responsible for the change or the Loan originators demanded it? Or perhaps a recent change in consumer credit regulation in Latvia has somehow made this change necessary (or desirable)? The real problem here is that we are totally in the dark. And not knowing what is happening behind the curtain does not really help to invest with confidence.
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Post by thep2pinvestor on Oct 20, 2016 21:43:17 GMT
The real problem here is that we are totally in the dark. And not knowing what is happening behind the curtain does not really help to invest with confidence. Fully agree, we have no clue about Mintos Finance. Is is a securitisation vehicle ? Is it regulated ? Where is it domiciled ? Are there several compartments ? Is it audited ? How is the Governance organised ? Communication around this is a disaster.
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Post by mvaltersmintos on Oct 21, 2016 7:50:44 GMT
Hi,
First, this applies only to the new loans - all your previous investments are unaffected. In case of Hipocredit this applies only to the loans issued to consumers, not to companies or loans issued for business purposes.
Second, as mentioned in the blog and newsletter the new structure has been implemented as the new licence from Consumer protection centre for these loan originators included limitations, i.e. that claims from consumer loan agreements cannot be assigned directly in the future.
As a result in the new structure Mintos Finance (Latvia based SPV, 100% owned by Mintos group) is issuing loan to respective loan originator which is pegged to certain loan already issued by Banknote or Hipocredit. This is done loan-on-loan basis. The repayments are linked from the respective loan issued by the loan originator. Given that this indeed changes the risk profile we have excluded from all the AI portfolios marks to invest through the new structure automatically. Thus investors can make their own decision either they are fine or not with the new structure.
Martins
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Post by jackp2p on Oct 21, 2016 8:18:35 GMT
1) Each loan issued by Mintos Finance to Hipocredit will be pegged to a respective loan issued by Hipocredit to the final borrower. 2)"now investors will have a direct claim against the loan originator - in this case, against Hipocredit. " So, what will happen if the borrower will stop paying? We stop receiving interest? And what happens if debt collection will not cover whole investment? If we have claims for the company (Hipocredit in this case), and as i know, if company is not paying on time, we should start its insolvency  . Its only humor, but you know, we invest there our own money, please describe the process more detailed.
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Post by mvaltersmintos on Oct 21, 2016 8:50:48 GMT
1) Each loan issued by Mintos Finance to Hipocredit will be pegged to a respective loan issued by Hipocredit to the final borrower. 2)"now investors will have a direct claim against the loan originator - in this case, against Hipocredit. " So, what will happen if the borrower will stop paying? We stop receiving interest? And what happens if debt collection will not cover whole investment? If we have claims for the company (Hipocredit in this case), and as i know, if company is not paying on time, we should start its insolvency . Its only humor, but you know, we invest there our own money, please describe the process more detailed. The loan agreement between Mintos Finance and respective loan originator is made such that loan originator needs to make payment only once they have received the payment from the ultimate borrower (exactly as it is now with direct assignment to ultimate borrower). In case of Banknote which comes with buy-back guarantee if the borrower stop paying after 60 days Banknote will repay the loan including accrued income. In case of Hipocredit if the borrower stop paying, investor will get payment only when the payment from borrower is received or recovery is done and up to the amount of the recovery sum (exactly as it is now with direct assignment to ultimate borrower). The loan agreement was also included in the blog post, so that you can review that. If the loan originator does not pay because the ultimate borrower does not pay, there is no reason to sue for insolvency due to reasons mentioned above and how the deal is structured. In unlikely case when Banknote would not pay for loans which are 60 days past due, there would be a situation that you could ask for insolvency, but this is exactly the same situation if loan originator would not honor its buy-back guarantee as of now. Hope this is more clear. Let us know if you have any other questions. Martins
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fric
Member of DD Central
Posts: 199
Likes: 79
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Post by fric on Oct 21, 2016 8:53:24 GMT
Is it due to lacking regulation regarding p2p lending? It would seem that having a claim against Hippo/Banknote rather than the actual borrower - meaning that technically we would be lending money to Hippo/Banknote - would suggest this.
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Post by mvaltersmintos on Oct 21, 2016 9:10:17 GMT
Is it due to lacking regulation regarding p2p lending? It would seem that having a claim against Hippo/Banknote rather than the actual borrower - meaning that technically we would be lending money to Hippo/Banknote - would suggest this. According to civil law under which we operate it is allowed to assign claims and there is no limitations. The new structure was implemented due to the limitation imposed by Consumer protection center on these loan originators to assign claims from consumer loans in Latvia, which according to their view cannot be done. Bespoke p2p lending regulation is currently being developed.
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Post by gmaxkenny on Oct 21, 2016 11:51:26 GMT
Is it due to lacking regulation regarding p2p lending? It would seem that having a claim against Hippo/Banknote rather than the actual borrower - meaning that technically we would be lending money to Hippo/Banknote - would suggest this. According to civil law under which we operate it is allowed to assign claims and there is no limitations. The new structure was implemented due to the limitation imposed by Consumer protection center on these loan originators to assign claims from consumer loans in Latvia, which according to their view cannot be done. Bespoke p2p lending regulation is currently being developed. With reference to Hippocredit I am not so much worried about some borrowers defaulting as the company going bankrupt. We are investing in long term mortgage loans at low rates because they are secured on property. It now seems that in fact we in future will be giving Hippocredit long term UNSECURED loans and if if Hippocredit goes bust either by bad luck or by design we would join the queue of their creditors. As the loan book would be a company asset and would more than likely sold off at a knock down price I would not have much hope of getting back any investment. I for one will not be investing in any new Hippocredit loans.
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Post by kissmyjazz on Oct 21, 2016 13:00:27 GMT
As a grammar nazi I do not understand why so many people write Hipocredit with two p -s. Do you assume that it is a company that gives loans to hippopotamuses or what?
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fric
Member of DD Central
Posts: 199
Likes: 79
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Post by fric on Oct 21, 2016 13:14:47 GMT
According to civil law under which we operate it is allowed to assign claims and there is no limitations. The new structure was implemented due to the limitation imposed by Consumer protection center on these loan originators to assign claims from consumer loans in Latvia, which according to their view cannot be done. Bespoke p2p lending regulation is currently being developed. With reference to Hippocredit I am not so much worried about some borrowers defaulting as the company going bankrupt. We are investing in long term mortgage loans at low rates because they are secured on property. It now seems that in fact we in future will be giving Hippocredit long term UNSECURED loans and if if Hippocredit goes bust either by bad luck or by design we would join the queue of their creditors. As the loan book would be a company asset and would more than likely sold off at a knock down price I would not have much hope of getting back any investment. I for one will not be investing in any new Hippocredit loans. Yup, same thoughts here as well... Even if on Mintos platform its linked to a specific mortgage, in reality it might not be and you are just one of Hipocredit's creditor, so in case of bankruptcy you are in a queue with all the other creditors including any other loans given to Hipocredit, the government for any unpaid taxes, your office space leaser, any other unpaid goods/service provider etc. Because lets be real - an enterprise such as Hipocredit in 99% of cases only have 2 assets: 1) money in their bank accounts; 2) their loan portfolio. So in case of insolvency (and bankruptcy afterwards) the portfolio will be sold off and the earnings together with any leftovers from bank accounts divided to the creditors and the rest that lefts unpaid written off. So yeah, even if all your Hipocredit loans are paying and none defaults, you still might lose some money - even if the borrowers are still paying their loans afterwards.
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Post by guggaburggi on Oct 21, 2016 13:41:40 GMT
So,
Before: Borrower goes bust + Originator goes bust = You become a creditor in liquidation.
Now: Originator goes bust = You become a creditor in liquidation.
In case of buy-back guaranteed loans.
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Post by gmaxkenny on Oct 21, 2016 15:44:42 GMT
So, Before: Borrower goes bust + Originator goes bust = You become a creditor in liquidation. Now: Originator goes bust = You become a creditor in liquidation. In case of buy-back guaranteed loans. Incorrect. Before if borrower or HiPocredit goes bust you have a claim against the property when the loan book is sold on. Now if HiPocredit goes bust you are just a creditor of the company.
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Post by extremis on Oct 21, 2016 16:19:44 GMT
And what if Mintos Finance goes bust?
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