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Post by markp2p on Jul 5, 2017 17:21:18 GMT
Are the standard terms and conditions on which Moneything makes loans to its borrowers available anywhere?
The reason I asked is that I was recently shocked to discover that another P2P site is lending money against assets on a non-recourse basis so that if the security proves insufficient it cannot pursue the borrower for the outstanding balance. I would like to be certain that MT is not engaging in the same practice.
Edit: Obviously I understand that it some cases the borrower will be a company with no other assets whatsoever but in that case I'd expect MT to take a guarantee from some related company with more substance.
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Post by sannytwist on Jul 5, 2017 17:55:54 GMT
Are the standard terms and conditions on which Moneything makes loans to its borrowers available anywhere? The reason I asked is that I was recently shocked to discover that another P2P site is lending money against assets on a non-recourse basis so that if the security proves insufficient it cannot pursue the borrower for the outstanding balance. I would like to be certain that MT is not engaging in the same practice. Edit: Obviously I understand that it some cases the borrower will be a company with no other assets whatsoever but in that case I'd expect MT to take a guarantee from some related company with more substance. I'm not sure exactly what 'non-recourse basis' means but l think if a loan defaults MT attempts to sell the underlying asset but there is no guarantee that the amount sold will be sufficient to cover the original loan or with interest. It states this in every of its loan at the bottom of the page at 'Worst case scenario' and there is a 'risk statement' .
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Jul 5, 2017 18:36:29 GMT
markp2p you need not worry about mt doing the same as the platform you refer to. Mt are not pawn based loans. Mt is a far better run organisation. Pawn loans are typically valued and the loan to value used in the decision of how much to lend are smaller than we normally see on p2p. The security is then normally held by the pawnbroker until it is redeemed or extended. If the borrower does not buy the item back then the broker will sell the item for what they can get. If this is more than the loan plus interest then the surplus is returned. Usually, if the yield is less then the pb has no access to the borrower for recovery. Some platforms, not the one to which you refer, have different varieties of pawn loan contracts with some having recourse. All afaik of course.
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Post by markp2p on Jul 5, 2017 18:45:08 GMT
Are the standard terms and conditions on which Moneything makes loans to its borrowers available anywhere? The reason I asked is that I was recently shocked to discover that another P2P site is lending money against assets on a non-recourse basis so that if the security proves insufficient it cannot pursue the borrower for the outstanding balance. I would like to be certain that MT is not engaging in the same practice. Edit: Obviously I understand that it some cases the borrower will be a company with no other assets whatsoever but in that case I'd expect MT to take a guarantee from some related company with more substance. I'm not sure exactly what 'non-recourse basis' means but l think if a loan defaults MT attempts to sell the underlying asset but there is no guarantee that the amount sold will be sufficient to cover the original loan or with interest. It states this in every of its loan at the bottom of the page at 'Worst case scenario' and there is a 'risk statement' . Yes, obviously there is no certainty that the amount sold would be sufficient. A loan is made against an asset on a non-recourse basis if the lender's right to be repaid the money can only be enforced against that asset, and not against any other asset of the borrower, even if the borrower has plenty of other assets with which to repay the loan. That is in contrast to an ordinary secured loan where the lender's right is to be repaid the money full stop. If the security is insufficient the borrower will have to repay from other assets (or go bankrupt / insolvent). e.g. a mortgage - if my holiday home has negative equity and I stop repaying my mortgage, the mortgagee can obtain a judgment debt against me for the outstanding balance after selling my holiday home.
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Post by settersam on Jul 5, 2017 21:15:13 GMT
The loan details for MTAR701 states: "The borrower is taking the loan in his personal name, giving recourse to his other assets in the event of a shortfall". Since this is specifically mentioned I assume it is not the norm.
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elliotn
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Post by elliotn on Jul 6, 2017 3:17:40 GMT
I'm not sure exactly what 'non-recourse basis' means but l think if a loan defaults MT attempts to sell the underlying asset but there is no guarantee that the amount sold will be sufficient to cover the original loan or with interest. It states this in every of its loan at the bottom of the page at 'Worst case scenario' and there is a 'risk statement' . Yes, obviously there is no certainty that the amount sold would be sufficient. A loan is made against an asset on a non-recourse basis if the lender's right to be repaid the money can only be enforced against that asset, and not against any other asset of the borrower, even if the borrower has plenty of other assets with which to repay the loan. That is in contrast to an ordinary secured loan where the lender's right is to be repaid the money full stop. If the security is insufficient the borrower will have to repay from other assets (or go bankrupt / insolvent). e.g. a mortgage - if my holiday home has negative equity and I stop repaying my mortgage, the mortgagee can obtain a judgment debt against me for the outstanding balance after selling my holiday home. The assets secured are specified in each loan. Typically this will be SPV for the purpose of the transaction ie only the property we are funding. This may be augmented by a cross-corporate or personal guarantee (which lenders on here tend to discount to be conservative). Occasionally loans are taken out in the borrower's name which would give the kind of recourse you refer to. Some introducers also take on additional credit risk beyond the secured asset. Edit - no T&C available on the Borrower page although presumably you could register and have a look.
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Post by markp2p on Jul 6, 2017 8:17:01 GMT
Yes, obviously there is no certainty that the amount sold would be sufficient. A loan is made against an asset on a non-recourse basis if the lender's right to be repaid the money can only be enforced against that asset, and not against any other asset of the borrower, even if the borrower has plenty of other assets with which to repay the loan. That is in contrast to an ordinary secured loan where the lender's right is to be repaid the money full stop. If the security is insufficient the borrower will have to repay from other assets (or go bankrupt / insolvent). e.g. a mortgage - if my holiday home has negative equity and I stop repaying my mortgage, the mortgagee can obtain a judgment debt against me for the outstanding balance after selling my holiday home. The assets secured are specified in each loan. Typically this will be SPV for the purpose of the transaction ie only the property we are funding. This may be augmented by a cross-corporate or personal guarantee (which lenders on here tend to discount to be conservative). Occasionally loans are taken out in the borrower's name which would give the kind of recourse you refer to. Some introducers also take on additional credit risk beyond the secured asset. Edit - no T&C available on the Borrower page although presumably you could register and have a look. I think we are at cross-purposes. My question has nothing to do with what assets are secured, but only with whether those are the only assets to which MT is entitled to look to in the event of default. I understand that the majority of loans are made to an SPV. Maybe if I give an example it will make what I am asking clearer: £1 million loan made to an SPV which, immediately before the loan, has only one asset, a plot of land. The loan is made only against the plot of land, either on a non-recourse basis or not. The SPV uses, say, £100,000 to obtain bags of cement, timber, cables, and it leaves these in storage until it is ready to use them. The SPV leaves £400,000 in the bank. The SPV spends £490,000 to dig some foundations on the plot of land. The SPV spends £10,000 on an insurance policy. The site is then damaged by flooding, so that its market value is now £50,000 and the SPV's parent company decides not to bother developing the plot of land or repaying the loan. Non-recourse loan: the lender is only entitled to look to the plot of land. The lender will be entitled to sell the land, recovering ~£50,000, but has no personal right against the SPV so that it cannot sue the SPV and recover any additional sum. Ordinary secured loan: the lender can look to the plot of land in priority to the other creditors of the SPV. The lender can sue the SPV for the outstanding debt, and is an ordinary unsecured creditor in relation to the borrower's other assets (i.e. the money in the bank, the bags of cement, timber and cables left lying around, the proceeds of the insurance policy, any contractual rights that the SPV has acquired against third parties, etc etc).
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Post by SophieThing on Jul 6, 2017 19:37:25 GMT
Evening, We have ordinary secured loans. There may be a couple of very old loans on more 'pawn' style agreements, dating back to our very early days when we had a very different business. With our transition project to move over to new terms they will be on our standard terms very soon if they are not already. I'd rather not make our borrower terms public since we spent considerable time and went to considerable expense getting them right. They have been reviewed by 3 legal firms from a regulatory, commercial law and recovery perspective, so if they are not robust I'm not sure who to blame  However, I am very happy to answer any questions about them, or refer to our legal advisors if necessary. Kind regards Sophie |
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registerme
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Post by registerme on Jul 7, 2017 17:06:36 GMT
so if they are not robust I'm not sure who to blame Well duh, the lawyers  . With the honourable exception of forumites of a legal persuasion, I find that in general siccing the blame on lawyers is at least good fun if not, in fact, actually worthy. At least you'll get some sympathy from the man on the Clapham Omnibus.
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. With the honourable exception of forumites of a legal persuasion, I find that in general siccing the blame on lawyers is at least good fun if not, in fact, actually worthy. At least you'll get some sympathy from the man on the Clapham Omnibus.