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Post by jackp2p on Feb 3, 2017 10:53:38 GMT
Hi, guys Just noticed recent negative changes in Hipocredit loan quality. There is only 79% of portfolio with current status for this moment. It used to be 85-87% in December. 79% is actually pretty close to personal loan statistics. What are you re thoughts about that? Are you holding any of those loans? Is 15% rate worth the risk on such loans, with out buyback? www.mintos.com/en/589129-01There is a collateral though, with nice LTV and every defaulted loan was recovered fully, so maybe the only risk, is the time it takes to recover the loan.
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Post by southseacompany on Feb 3, 2017 13:02:58 GMT
A loan like your example with 30% LTV has a pretty good margin of safety, so it could be argued that 15% is a good return. It is not liquid though: First, in case of default, mortgages take a long time to recover due to heavy regulations (after all someone is potentially being made homeless). Second, any property not in downtown Riga can take a long time to sell if there is a downturn. Obviously the interest rate reflects those risks.
One risk that I haven't seen mentioned is what happens if Hipocredit itself implodes. After all it is a loss-making company and it has an investment in a "loan to related company" that is over 90% of its equity, meaning that if that unnamed related company goes kaput, it will likely take Hipocredit down with it. (To be fair, Hipocredit has also received a "loan from related company", presumably involving a different company.)
The fact that Hipocredit's skin in the game was pushed to the ridiculous 2% level suggests the company is undergoing financial stress. In case Hipocredit goes under, how well will Mintos (or whoever they transfer claim management to) handle recoveries and at what cost? That is something we will only know if it happens.
Personally, I don't have any Hipocredit loans as I don't like anything with durations that long.
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