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Post by bracknellboy on May 23, 2014 16:07:19 GMT
The news on this loan brings an interesting test for AC and raises some interesting questions.
Firstly the question: The report that has been issued states that the borrowers estate is bound by the personal guarantee. That is not how I understood PGs worked in the normal course of events. There was discussion on this somewhere else sometime back, and I think may have been the TC forum. The pertient point being that the loan was to a Ltd company not an individual. My understanding was that the estate was bound IF the personal guarantee had been called in/called upon PRIOR to the death, but it did not pass onto the estate as an ongoing guarantee otherwise i.e. it voided if not called in prior to death. Intersting to know whether the above is just plain wrong, or whether special conditions were added in this case.
Secondly the interesting test: One element of the security (residential property) was included into the security @ a value of £275k open market value. However it is being recommended to accept offer @ £220k (net ~£215k after fees). While not necessarily material in this case due to the remaining security, nonetheless a difference of about 20% in realised versus assumed is interesting (albeit known that probate sales tend to be lower for purposes of speed).
Finally: should congratulate AC on actions taken to remove all AI mandates on the loan and make the status clear on the loan information should anyone be tempted to go and buy the already significant number of loan parts listed on the market.
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Post by mrclondon on May 23, 2014 16:29:38 GMT
bracknellboy had you considered the fact that the majority of TC (and virtually all FC) PG's are unsupported, whereas this one is backed by a legal charge ? For those attempting to dash towards the exit - don't forget it is possible to list at a discount on the AC aftermarket 
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Post by andrewholgate on May 23, 2014 16:36:24 GMT
The news on this loan brings an interesting test for AC and raises some interesting questions. Firstly the question: The report that has been issued states that the borrowers estate is bound by the personal guarantee. That is not how I understood PGs worked in the normal course of events. There was discussion on this somewhere else sometime back, and I think may have been the TC forum. The pertient point being that the loan was to a Ltd company not an individual. My understanding was that the estate was bound IF the personal guarantee had been called in/called upon PRIOR to the death, but it did not pass onto the estate as an ongoing guarantee otherwise i.e. it voided if not called in prior to death. Intersting to know whether the above is just plain wrong, or whether special conditions were added in this case. Secondly the interesting test: One element of the security (residential property) was included into the security @ a value of £275k open market value. However it is being recommended to accept offer @ £220k (net ~£215k after fees). While not necessarily material in this case due to the remaining security, nonetheless a difference of about 20% in realised versus assumed is interesting (albeit known that probate sales tend to be lower for purposes of speed). Finally: should congratulate AC on actions taken to remove all AI mandates on the loan and make the status clear on the loan information should anyone be tempted to go and buy the already significant number of loan parts listed on the market. BB - My understanding is the debt will be recognised by the estate as long as it is declared to them and the lenders have a legal charge on the property. There is a myth that your debts go to your grave, but this is not the case, they only go to your grave if you have no assets left over to pay them off. The process will be to inform the firm handling the Probate that we have a charge and the PG and ask what the Estate is planning to do with the asset. If we do not get a satisfactory response, we will be able to call in the debt (the death is an event of default) and repossess the property. Once we have a clearer understanding of how the probate is going, we will let you know. First default, an one that we couldn't even predict!
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j
Member of DD Central
Penguins are very misunderstood!
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Post by j on May 23, 2014 16:41:31 GMT
The news on this loan brings an interesting test for AC and raises some interesting questions. Firstly the question: The report that has been issued states that the borrowers estate is bound by the personal guarantee. That is not how I understood PGs worked in the normal course of events. There was discussion on this somewhere else sometime back, and I think may have been the TC forum. The pertient point being that the loan was to a Ltd company not an individual. My understanding was that the estate was bound IF the personal guarantee had been called in/called upon PRIOR to the death, but it did not pass onto the estate as an ongoing guarantee otherwise i.e. it voided if not called in prior to death. Intersting to know whether the above is just plain wrong, or whether special conditions were added in this case. Secondly the interesting test: One element of the security (residential property) was included into the security @ a value of £275k open market value. However it is being recommended to accept offer @ £220k (net ~£215k after fees). While not necessarily material in this case due to the remaining security, nonetheless a difference of about 20% in realised versus assumed is interesting (albeit known that probate sales tend to be lower for purposes of speed). Finally: should congratulate AC on actions taken to remove all AI mandates on the loan and make the status clear on the loan information should anyone be tempted to go and buy the already significant number of loan parts listed on the market. BB - My understanding is the debt will be recognised by the estate as long as it is declared to them and the lenders have a legal charge on the property. There is a myth that your debts go to your grave, but this is not the case, they only go to your grave if you have no assets left over to pay them off. The process will be to inform the firm handling the Probate that we have a charge and the PG and ask what the Estate is planning to do with the asset. If we do not get a satisfactory response, we will be able to call in the debt (the death is an event of default) and repossess the property. Once we have a clearer understanding of how the probate is going, we will let you know. First default, an one that we couldn't even predict! Condolences go to the family of the deceased, first & foremost!!
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Post by andrewholgate on May 23, 2014 16:43:22 GMT
Naturally. I'm not cold hearted.
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Post by Ton ⓉⓞⓃ on May 23, 2014 16:52:23 GMT
Aren't there the three D's?
One is death, another Debt the other being.... oh I forget what the other is, but when these two (or three) get together it's thought that a 'Killing' can be made (no pun intended) So yes the agent is recommending that the Executors take the deal on the table which is 50k short of the valuation made several months ago. They may feel pressured to accept to over extra charges.
I'm debating is it worthwhile to pick up some of these units on the AM in the chance that there may now be default interest. The whole thing feels slightly ghoulish and on that ground I may not go for it. I do hold a very small amount of Bolton already tho.
Anyone know how old the borrower was? Did they have a family?
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Post by bracknellboy on May 23, 2014 16:55:44 GMT
Condolences go to the family of the deceased, first & foremost!! Indeed. I had thought to put that in my first post. However I took the view that while I have deep sympathy for the family (and friends) of the deceased, since I do not know them and since they are rather unlikely to read this forum it was a rather empty thing for me to state. Just in case anyone thinks that I am ignoring the regrettable circumstances.
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Post by bracknellboy on May 23, 2014 16:58:43 GMT
bracknellboy had you considered the fact that the majority of TC (and virtually all FC) PG's are unsupported, whereas this one is backed by a legal charge ? For those attempting to dash towards the exit - don't forget it is possible to list at a discount on the AC aftermarket Thank you: you have pointed out the material difference. So if I take your comment correctly, where there is a legal charge which is itself backed up by a PG then the estate is bound by the PG. Obviously I didn't have any doubt that the legal charge on the property held, it was a question of whether the backstop of the PG in regard to any assets over which there was not a legal charge would apply.
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Post by bracknellboy on May 23, 2014 17:03:08 GMT
....There is a myth that your debts go to your grave, but this is not the case, they only go to your grave if you have no assets left over to pay them off. .... well I'm not sure who would believe in that myth, otherwise we'd all go on a mammoth debt splurge if there was sufficient warning. It would be a bit like thinking that if a bank goes bust you are freed of your mortgage...
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Post by Ton ⓉⓞⓃ on May 23, 2014 17:22:58 GMT
I'm debating is it worthwhile to pick up some of these units on the AM in the chance that there may now be default interest. The whole thing feels slightly ghoulish and on that ground I may not go for it. I do hold a very small amount of Bolton already tho. This does raise the issue of what exactly is the default interest. In the case of the S Manc loan I think it went from 1.25%/month to 1.75%/month, so another 50bp/month. However, I don't remember seeing it for this loan. Is it also an additional 50bp/month and is this a general AC approach or is each loan different? From my viewpoint, I think I will be just an interested spectator. I unwound the last of my Bo***n position a week ago. I'm not sure I see a clear reward-to-risk proposition in buying back in just to get additional default interest. While the LTV is going to be <50%, things can go wrong. Perhaps I should buy just 1 unit to see how it all goes. In the Q&A of Bolton it does state 1.5%, I'm getting more tempted as my morals get worn down discussing this...
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duck
Member of DD Central
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Post by duck on May 23, 2014 17:41:57 GMT
I have small investments in this loan both as a personal investor and also through my Ltd Co - my accountants are going to enjoy this with the different debt treatment ....... but only after they have gone through my Bondora Euro investments 
'Lucky' I have a long term fixed charge in place with them!
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j
Member of DD Central
Penguins are very misunderstood!
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Post by j on May 23, 2014 19:20:41 GMT
Naturally. I'm not cold hearted. PS andrewholgate, apologies if tagging your conversation made my comment come across as if it was specifically directed to you or anyone else, it was made in general
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j
Member of DD Central
Penguins are very misunderstood!
Posts: 2,188
Likes: 540
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Post by j on May 23, 2014 20:34:29 GMT
Well, the news hasn't put everybody off, despite the clear warning on AC's page. A number of units already picked up by someone!
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Post by bracknellboy on May 23, 2014 21:04:49 GMT
For those attempting to dash towards the exit - don't forget it is possible to list at a discount on the AC aftermarket : it would appear, as far as I can tell, that no seller has yet taken advantage of that......
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Post by mrclondon on May 23, 2014 21:15:26 GMT
For those attempting to dash towards the exit - don't forget it is possible to list at a discount on the AC aftermarket : it would appear, as far as I can tell, that no seller has yet taken advantage of that...... It may take a day or two before the realisation dawns that that size of stock pile is going nowhere fast. It might only need one to make the move, and the lemmings might start a rush to the bottom. I can be patient ... AI (after I reset the mandadte) has picked up a £20 part for me this evening mopping up the spare cash on my account, but beyond that I'll wait to see what happens.
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