r00lish67
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Post by r00lish67 on Jul 13, 2017 9:28:42 GMT
There's a basic point about underwritten loans that I just haven't quite grasped, which I'm hoping someone can advise on.
If a platform offers a loan to us and advises that it's fully underwritten, I understand that the loan is effectively funded already and that any funds we bid towards it will just reduce the platform's underwriting costs.
The bit I'm not sure about is - in the scenario where an underwritten loan doesn't fill on a platform and the remainder is therefore taken by the underwriter, does this make a tangible difference to our security on the loan? Does the underwriter taking a portion reduce our risk in any way, or is it just the equivalent of a Big Hitter dropping in a large amount to the loan?
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Post by dan1 on Jul 13, 2017 10:06:35 GMT
There's a basic point about underwritten loans that I just haven't quite grasped, which I'm hoping someone can advise on. If a platform offers a loan to us and advises that it's fully underwritten, I understand that the loan is effectively funded already and that any funds we bid towards it will just reduce the platform's underwriting costs. The bit I'm not sure about is - in the scenario where an underwritten loan doesn't fill on a platform and the remainder is therefore taken by the underwriter, does this make a tangible difference to our security on the loan? Does the underwriter taking a portion reduce our risk in any way, or is it just the equivalent of a Big Hitter dropping in a large amount to the loan? There is a different meaning for some of the pawn loans on FS, and perhaps elsewhere. Take for example 1081233053 which has just filled, it offers a relatively low rate of 9% but the info states "The watch has been fully underwritten for the full six month loan agreement." I take this to mean that in the event of default an underwriter will purchase the asset for the full loan amount plus accrued interest. This sounds like a good rate for relatively low risk, or am I missing something?
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r00lish67
Member of DD Central
Posts: 2,691
Likes: 4,048
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Post by r00lish67 on Jul 13, 2017 11:05:31 GMT
There's a basic point about underwritten loans that I just haven't quite grasped, which I'm hoping someone can advise on. If a platform offers a loan to us and advises that it's fully underwritten, I understand that the loan is effectively funded already and that any funds we bid towards it will just reduce the platform's underwriting costs. The bit I'm not sure about is - in the scenario where an underwritten loan doesn't fill on a platform and the remainder is therefore taken by the underwriter, does this make a tangible difference to our security on the loan? Does the underwriter taking a portion reduce our risk in any way, or is it just the equivalent of a Big Hitter dropping in a large amount to the loan? There is a different meaning for some of the pawn loans on FS, and perhaps elsewhere. Take for example 1081233053 which has just filled, it offers a relatively low rate of 9% but the info states "The watch has been fully underwritten for the full six month loan agreement." I take this to mean that in the event of default an underwriter will purchase the asset for the full loan amount plus accrued interest. This sounds like a good rate for relatively low risk, or am I missing something? I was more thinking about those occasional large property loans where they state that underwriters have been used, although no mention of underwriters purchasing the asset in the case of default (unfortunately, wouldn't that be good!) Edit: As an FS example - Property in Poole (5355230753) - "This loan is fully underwritten and will be drawn down shortly. The loan will stay open for funding to allow additional bids from new or repeat investors, with the underwritten amount being reduced as additional bids are made"
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bg
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Post by bg on Jul 13, 2017 11:55:21 GMT
There is a different meaning for some of the pawn loans on FS, and perhaps elsewhere. Take for example 1081233053 which has just filled, it offers a relatively low rate of 9% but the info states "The watch has been fully underwritten for the full six month loan agreement." I take this to mean that in the event of default an underwriter will purchase the asset for the full loan amount plus accrued interest. This sounds like a good rate for relatively low risk, or am I missing something? I was more thinking about those occasional large property loans where they state that underwriters have been used, although no mention of underwriters purchasing the asset in the case of default (unfortunately, wouldn't that be good!) Edit: As an FS example - Property in Poole (5355230753) - "This loan is fully underwritten and will be drawn down shortly. The loan will stay open for funding to allow additional bids from new or repeat investors, with the underwritten amount being reduced as additional bids are made" It makes no difference to the security (ie you both rank the same) but different platforms give different prioroty to underwriter sales...ie some get to jump the queue ahead of retail investors while others put the underwriters at the back of the queue.
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nick
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Post by nick on Jul 26, 2017 8:38:33 GMT
Underwriters have no impact on security, but may impact the SM as they will not be long term holders of the loan and will seek to sell down their positions to reduce risk and recycle cash quickly.
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