petrichory
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Post by petrichory on Jun 27, 2019 15:34:46 GMT
Arguing about returns on this thread in particular is spectacularly ironic in the extreme, given that every creditor who has ever touched this project has been ripped off by the developers - over successive generations of developers.
The first developer that bought this piece of land at auction managed to squeeze £1.7 million out of Dunbar Bank in 2007 as a development loan.
An application for planning permission was made and in 2010 planning would have been granted, however the developer suddenly had nomore cash - despite the £1.7mil loan - and went into administration without paying the planning application fee.
In 2011, the administrators sold the land, the same piece of land that FS advanced £1,980,000.00 in loans on, for a mere £650,000 because technically, planning permission was not in place.
Guess who bought it? You guessed right, the same developer who had previously defaulted on the £1.7mil loan. Fast forward to 2013, the same developer under a different company name pays the £14k planning application fee which is instantly granted.
Tally: Lenders -£1.2mil
Developer +£1mil
Administrators +40k
FS advances £1,980,000.00 and only repays £1,181,250.43 back to lenders. In total, this project has cost various lenders around two million pounds without a single brick being laid in over a decade.
The kicker is, of course, that FS sold the land for significantly more than the money that was returned to lenders because that is how a criminal enterprise operates, lenders get the scrap after the whole cabal of thieves have had their bellies filled.
godanubis - It is possible to make a profit in a casino but that is going against the grain - sure, you can count cards but as soon as you bet a little too much, you will be left with nothing. The odds are never in your favour at FS.
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Mousey
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Post by Mousey on Jun 27, 2019 17:55:01 GMT
Not true though, they don't get their cut, or their expenses, or liquidity, or working capital until the loan is repaid. Quote: FundingSecure earns revenue from the monthly administration fee it applies to borrowers' loans. We do not take commission from the investors' interest.That's wrong. As shown by the court records for the Art loans fundingsecure took a cut paid for by lenders.
For example: On Loan Ref 5073631341 they took a Fee of £13,500.
If by some miracle the loan is repaid FS will receive:
Admin Fee 0.72% per month Default Fee: 0.5% per month
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adrian77
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Post by adrian77 on Jun 27, 2019 18:24:05 GMT
quelle surprise - NOT. And people like me in this game dared to suggest FS did not know what they were doing - any experienced property funding company would simply have not got into this almighty mess as they would have pro-actively sussed out the borrower and looked for this sort of thing. Will go over the figures again when I get time but this looks very much to me as if FS (or rather their lenders) have been well and truly shafted and this much quoted director is killing himself laughing and not for the first time
Gordon Bennett.
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arby
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Post by arby on Jun 27, 2019 19:40:58 GMT
Not true though, they don't get their cut, or their expenses, or liquidity, or working capital until the loan is repaid. Quote: FundingSecure earns revenue from the monthly administration fee it applies to borrowers' loans. We do not take commission from the investors' interest.You gave half of a complete point there. Now just tell us when and how that monthly fee is actually received in cash by FS to complete the picture.
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locutus
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Post by locutus on Jun 27, 2019 20:37:04 GMT
You gave half of a complete point there. Now just tell us when and how that monthly fee is actually received in cash by FS to complete the picture. As these are bullet loans, it is paid when interest is paid at renewal or at loan redemption. i.e. the exact same time as lenders receive their money. Do I win a prize?
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arby
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Post by arby on Jun 27, 2019 21:54:11 GMT
You gave half of a complete point there. Now just tell us when and how that monthly fee is actually received in cash by FS to complete the picture. As these are bullet loans, it is paid when interest is paid at renewal or at loan redemption. i.e. the exact same time as lenders receive their money. Do I win a prize? Yes, you win an extra 0.5% (if you invest over £10k on a single loan)
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petrichory
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Post by petrichory on Jun 28, 2019 2:14:06 GMT
That's wrong. As shown by the court records for the Art loans fundingsecure took a cut paid for by lenders.
For example: On Loan Ref 5073631341 they took a Fee of £13,500.
If by some miracle the loan is repaid FS will receive:
Admin Fee 0.72% per month Default Fee: 0.5% per month
This is news to me, does this not contradict their own terms and conditions? 8. Fees and Charges
8.1 FundingSecure charges Borrowers an administration fee on every Loan depending on the Loan amount. The rates charged are per month on a daily basis for the duration of the Loan.
This "administration fee" falls clearly within the second tier of recipients in the pecking order: 6.2.5 Net proceeds of sale of Assets shall be used to settle amounts due in the following order: 1 - Principal amount of Loan which was funded by, and is repayable to, the Investors (allocated pro rata in accordance with the proportion of the Loan amount which each Investor invested);
2 - Direct costs incurred by FundingSecure through the setting up and the administration of the Loan including, but not limited to, storage costs, referral fees and valuation fees up to the date of sale;
3 - Interest due to the Investors up to the date of sale (allocated pro rata in accordance with the proportion of the Loan amount which each Investor invested);
4 - Administration fees due to FundingSecure not recovered through clause 6.2.5(ii) above
There is no mention of a 3% up-front/setting-up fee and no mention of a special default fee either, one that isn't passed onto lenders! It already is a perverse incentive that FS profits from keeping loans "active" for as long as possible - especially to the detriment of second-charge holders - but taking up-front fees out of lender funds works as a direct disincentive to conduct proper due diligence. Incredible, absolutely incredible. I wonder how many hidden fees FS has surreptitiously charged on defaulted loans.
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adrian77
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Post by adrian77 on Jul 4, 2019 6:03:59 GMT
To return to the D*ll
There is some excellent research by Mr C in the FS DD
This is well worth a read as it shows many interesting facts as to what seems to be going on here.
I note this one is linked to many others not least the flats in N*w *righton and I also recognise the valuers - oh no, not the ones with a famous pencil - oh yes, them!
Sooner or later we will know exactly what actually happened with this and the other related loans but I would say this applicant company knew exactly what they were doing and must have praised the day they met FS. I also think FS could have and should have taken additional security over this loan
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r1200gs
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Post by r1200gs on Jul 4, 2019 8:53:27 GMT
According to their news letter FS got 89 new lenders last month, 89. I don't find that particularly impressive.
I wonder how many less they have because of The D*ll, Whitehaven, wind turbines, tower blocks and oh so much more!
Apparently they are going to take more care about who they hand money to in future.
Won't be any of my money.
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jcb208
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Post by jcb208 on Jul 4, 2019 9:14:18 GMT
Will be one less when I get all money I can back ,none of my money will be going near them either
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adrian77
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Post by adrian77 on Jul 4, 2019 9:59:42 GMT
above is from petrichory who is one step ahead of me and I guess has specialist expertise which I don't. If my research including the excellent MrC contribution is correct then the current situation is even worse than I had thought and basically I get the same figures as petrichory - it looks to me that this outfit has completely shafted FS and made money in the process. Whilst myself and others have invested £1.9m and got back £800K of the phase 1 and phase 2 tranches. (60%)
BUT there is also the phase 1/2 additional tranches which have paid back nothing and if my maths and deductions as to what has happened here are correct then there is damn all more money to come...somebody please tell me I am wrong!
This loan is linked to several others e.g. *ew *righton - if we have a repeat of this farce I am sure I will not be the only person to be a tad annoyed!
Do I think FS could have been clearer and more transparent about this one (and that is being generous) - answers on a digital postcard...I thank you
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copacetic
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Post by copacetic on Jul 4, 2019 11:18:15 GMT
I sent an email requesting a breakdown of costs and to advise if the borrower had any connection to the purchaser back on 6th June. The reply was that they couldn't divulge any information regarding the purchaser and that they were still waiting on the breakdown and this would be posted when they have it. I followed up 3 weeks later and got the same reply.
I find it very hard to believe that the receiver would send >£1m to FS without some sort of remittance or even telling FS what they sold it for. Perhaps FS should stop "waiting for a breakdown of the costs" as they say in they update and send a sharply worded letter to the receiver about their lack of professionalism and to get it sent this afternoon. As almost a month has gone by though, I suspect FS already have the information and are taking legal advice before telling us because something dubious was done.
Perhaps we should get the FCA involved to see if they'll investigate this loan but that unfortunately might end up with yet another platform in administration...
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adrian77
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Post by adrian77 on Jul 4, 2019 12:20:45 GMT
There is no way on this planet they would have done this - I am not convinced FS got over £1m as there seems to have been a quick offer from one company who quickly sold it to another one (any guesses if the original company and the 2 others are linked) .
We had all this confidentiality GARBAGE with the art loans. There was nothing sophisticated about the art loans; it was a glorified IOU and he sold them. However this lender clearly knew exactly what he was doing and if nothing else is not stupid - believe me he (unlike a disposable company) will not be going bust!
To me the main charge is a 40% loss and the 2 additional charges are a 100% loss and that is what I am updating my mega list with (along with a note saying these figures are provisional).
There is no excuse for FS not being open here - NONE!
Lunch over = now back to lugging rolls of insulation between houses - I am clearly stupid as I should be shuffling paper and shafting people...
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petrichory
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Post by petrichory on Jul 4, 2019 15:59:37 GMT
adrian77 - I do not have any specialist expertise or any industry knowledge whatsoever, all I have is access to the internet. I believe that puts me in the same position as the majority of people working at FS. ‾\_(ツ)_/‾ Concerning this firesale omnishambles: The receivers had anticipated completion for the week commencing on the 3rd of June and the Land Registry states the sale as the 5th of June. How is there any ambiguity about the sale, if the property was sold on how could this possibly have happened within two days? There are reasons why someone may wish to hide the true sale price if the land registry entry is meant to serve as a guide to future buyers. This was probably the case when Flat Nr. 35 was sold to a company connected to the borrower in the Tower Block loan, this is commonly done to establish a reference price for valuations of the property - it's a sham tactic but not uncommon. Two connected companies could have sold The D*ll to one another to artificially increase the price on the registry. The reason why I don't believe this to be the case here is because the current owner of the land appears to be a charitable social housing outfit, someone we could call an "end-used" (ie. someone who will actually build something on it). I don't believe they would have orchestrated this elaborate scheme to inflate the sales price as they do not appear to be in the business of flipping or whatever the young kids call it today. Based on what has been returned to lenders and a half-year of receivership fees, the land would have sold for ~£1.25mil at most. I believe MRC has come to a similar conclusion. Edit: It has been pointed out to me that there may be legitimate bookkeeping reasons why the entry submitted to the land registry diverges so significantly from the proceeds of receivership. This may or may not be true; I am frankly unimpressed with the way this was communicated to people who contacted FS about it. I am still waiting on the receiver statement but more than anything else, I am waiting for verifiable evidence to show that the 39 houses at The D*ll had in fact been sold off-plan, as was stated in the updated valuation, reiterated in the update from the 12th of April 2017, re-confirmed in the update from the 20th of October and triple-confirmed when the loan was renewed on the 20th of December 2017. You know, the thing that most lenders had based their investment on. If FS can argue, as they have in the Barnoldswackadoodle loan, that an "update" constitutes a valid change to the loan contract then I sure as 💩 am going to take them at their word. You cannot have your cake and eat it too, FS. What is clear NOW is that the "developer" never planned to develop anything, all structures currently in place have been there since at least 2009 according to satellite imagery. When FS stated on the 12th of April 2017 that " development work has commenced, further increasing the value" it is very clear from the pictures that no such work was carried out. Attachments:
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adrian77
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Post by adrian77 on Jul 4, 2019 17:05:22 GMT
looks very much to me as if one company bought it and sold it to another. I often see it but a stalking horse will offer to buy a property and then pull out at the last minute in the hope the seller needs the money and will take the next but lower offer which by happy coincidence is related to the stalking horse company - are you paying attention FS as this is how the real world works - it stinks but not my fault!
I am out of my expertise here but I wonder if this could be done to shuffle the assets and liabilities within the group? I guess D Trump does this sort of thing all of the time. I don't like Trump but one thing he is good at is building a good team around him - not least tax avoidance lawyers which he is proud about! I agree the highly profitable holding company at the top claims to be a "social enterprise" but companies lower down have been forced to de-register this claim and any company that make just under £7m does not strike me as a charity! Being in this business I am often offered partial finished projects and am naturally very wary of them so all this is fascinating to me - whatever the situation is here.
As I said FS have lent a lot more than they got back - not smarty!
Looks to me that this company have defaulted on the FS loan (and the prior loan) and then bought it back for vastly less than they borrowed - I think FS should tell us exactly what they sold the land for etc. I wonder how much ,if any, control FS had on the cash once handed out - I think it is inside the realms of possibility this cash was moved around the group and this whole sorry state was planned from day one
I don't think FS researched this company and have been taken for a ride with OUR money - if they had they could easily have insisted on additional assets being used as collateral - just like my bank did before I decided to do everything in cash. I just wonder what is going to happen with *ew *righton...
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