Rob
Posts: 138
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Post by Rob on Oct 5, 2017 7:59:34 GMT
As anticipated, Hipocredit bought back another loan from me today. Interest rate was 15.4%, perfect payment record. Very disappointed with their business practices. Will never buy another Hipocredit loan.
Correction, as I write the number is increasing!!! Now 4 loans bought back!!!
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Post by zeverare on Oct 5, 2017 9:21:10 GMT
Yesterday I saw a small 17% loan offered, checked the loan book and there was also a 15,5% one. Didn't see anything wrong with it, fair LTV and short term. Did I miss something or they just forgot to fill in the "mark to market" field? well, yesterday it was bought back...
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Post by gmaxkenny on Oct 5, 2017 15:28:38 GMT
I complained to Mintos about and got back an obviously prepared standard reply hiding behind T&Cs and washing their hands of this. You would think they were powerless to do anything. They are selling loans on their platform which they know will be bought back if they preform well. Hipocredit have bought back loans at 15% and resold them at 12% what to stop them rebuying this loan and reselling it again at 10%,absolutely nothing. Mintos should kick them off the platform to prevent further damage to their reputation or at least warn investors what is happening. I regard this as a complete ripoff and if Mintos allow it to continue it will show that they have no regard for those who invest with them and investors should act accordingly. I will not invest my money with ripoff merchants and those who engage in sharp practices who take me for some sort of fool and who think they can do what they like with MY money.
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kulerucket
Member of DD Central
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Post by kulerucket on Oct 5, 2017 20:56:31 GMT
To be honest I don't find any of this very surprising now. I used to think this practice on Twino would give them a bad rep and be detrimental to their credibility, but if they can buy back loans paying a high rate and there are investors willing to buy them at a lower rate then the practice is sensible from a company perspective. If I was a shareholder in Hipo I would want them to be doing this. If they can't find buyers they increase the rate until they can. Business as usual.
Personally I wouldn't touch the loans at the lower rate but while there are people that will, I think it's inevitable.
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Post by extremis on Oct 5, 2017 22:03:05 GMT
I think there is a huge difference between Loan Originators that offer buyback guarantee and those that don't. If a Loan Originator that offers buyback guarantee exercises his buyback rights to buy high interest rate loans and then re-issue them with lower interest rates, then investors would of course loose the interest rate difference, but they would not loose any capital (assuming the Loan Originator is not in bankruptcy). Moreover, the investor can make a decision whether to re-buy these loans at lower interest rate, buy loans from other Loan Originators, or withdraw his money and invest elsewhere. In a sense it is similar to a Bank lowering the interest rate on a savings account.
But with Hipocredit loans that (mostly) come without buyback guarantee there is a substantial risk to loose capital invested: if they constantly buyback well-performing high interest loans, in the end investors will be left with loans in default and very low interest rate loans that might not be able to compensate for any losses. It's a free market, but for me the risk of Hipocredit loans is too high compared with the reward offered. Unless they reconsider their policies, i will not invest in any Hipocredit loan again (except for loans sold at SM with discount).
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Post by kissmyjazz on Oct 5, 2017 22:18:55 GMT
I would like to add to Extremis' excellent post that Twino does not have a SM where you can buy loans at a premium, therefore the material impact of buybacks on investors is uniform. I also will never touch the Hipocredit loan on the primary market.
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shimself
Member of DD Central
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Post by shimself on Oct 6, 2017 15:02:32 GMT
I think there is a huge difference between Loan Originators that offer buyback guarantee and those that don't. If a Loan Originator that offers buyback guarantee exercises his buyback rights to buy high interest rate loans and then re-issue them with lower interest rates, then investors would of course loose the interest rate difference, but they would not loose any capital (assuming the Loan Originator is not in bankruptcy). Moreover, the investor can make a decision whether to re-buy these loans at lower interest rate, buy loans from other Loan Originators, or withdraw his money and invest elsewhere. In a sense it is similar to a Bank lowering the interest rate on a savings account. But with Hipocredit loans that (mostly) come without buyback guarantee there is a substantial risk to loose capital invested: if they constantly buyback well-performing high interest loans, in the end investors will be left with loans in default and very low interest rate loans that might not be able to compensate for any losses. It's a free market, but for me the risk of Hipocredit loans is too high compared with the reward offered. Unless they reconsider their policies, i will not invest in any Hipocredit loan again (except for loans sold at SM with discount). To me the issue is that buyers on the SM will suffer capital loss as a result of this practice, whoever the Originator is and irrespective of Buyback Guarantee. The very very least Minto could do is to put a clear warning on the SM that this is a possibility (same as FS do on their SM because of the tax calculation). And what they should do is put a stop to it. I was just getting back in but seeing now that they are happy to see lenders shafted I'm probably off
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shimself
Member of DD Central
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Post by shimself on Oct 6, 2017 15:04:27 GMT
Just to say I have emailed and PM'd Mintos about this issue asking them to give us their thoughts; silence speaks volumes, and what it says is sod the lender
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Post by rahafoorum on Oct 7, 2017 7:35:23 GMT
Mintos should kick them off the platform to prevent further damage to their reputation or at least warn investors what is happening. That will never happen. Hipocredit began as Mintos, which was then renamed to Hipocredit. It was Mintos' own company. Now that they sold it to and undisclosed counterpart, it is technically unrelated. However, we don't know whether it's still their own business partner and only technically unrelated in the eyes of the regulations or whether they actually have no ties to Mintos now.
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shimself
Member of DD Central
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Post by shimself on Oct 7, 2017 10:13:20 GMT
Mintos should kick them off the platform to prevent further damage to their reputation or at least warn investors what is happening. That will never happen. Hipocredit began as Mintos, which was then renamed to Hipocredit. It was Mintos' own company. Now that they sold it to and undisclosed counterpart, it is technically unrelated. However, we don't know whether it's still their own business partner and only technically unrelated in the eyes of the regulations or whether they actually have no ties to Mintos now. Either way, they have a choice, diddling the lender or building the business. It's foolish, as it betrays the mindset, which is greed first and customer second
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Post by red_panda on Oct 10, 2017 0:02:39 GMT
I have dropped Hipocredit from my Autoinvest.
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Post by martins on Oct 12, 2017 8:04:36 GMT
Thank you for the activity and feedback.
Hipocredit is working on reducing their cost of funding. They have received a bank financing and is also buying back loans from investors by exercising their call option and placing them at lower rate on the marketplace. We have notified them to be more consistent with buybacks and buy back also loans that are late. Certainly, when placing loans at a lower rate on the marketplace Hipocredit faces the risk that the loans will not be funded.
Investors who buy loans on the secondary market at a premium take on the risk that the part of the premium that is not amortized would be lost in case a loan originator exercises its call option. This is the same risk investors face if a borrower makes an early prepayment of a loan.
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shimself
Member of DD Central
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Post by shimself on Oct 12, 2017 11:32:52 GMT
Thank you for the activity and feedback. Hipocredit is working on reducing their cost of funding. They have received a bank financing and is also buying back loans from investors by exercising their call option and placing them at lower rate on the marketplace. We have notified them to be more consistent with buybacks and buy back also loans that are late. Certainly, when placing loans at a lower rate on the marketplace Hipocredit faces the risk that the loans will not be funded. Investors who buy loans on the secondary market at a premium take on the risk that the part of the premium that is not amortized would be lost in case a loan originator exercises its call option. This is the same risk investors face if a borrower makes an early prepayment of a loan. The very very least Mintos could do is to put a clear warning on the SM, at the moment of purchase, that this is a possibility (same as FS do on their SM because of the tax calculation). And don't you think that to protect lenders you should change the terms to prevent loan introducers from cheating lenders in this way. A deal is a deal. I understand that Hipocredit are making an extra buck at lenders expense. I want you to understand that this is not fair on lenders and to stop it happening in future.
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Post by martins on Oct 12, 2017 11:43:51 GMT
Thanks for the feedback. Putting a warning is a good suggestion and we will consider it. As a two-sided marketplace we have to balance the interests of investors and loan originators. We have learned that having a call option is important for loan originators as that allows them to get a cheaper funding if that becomes available. The other question is how the call option is exercised so that loan originators do not cherry pick the performing loans and leave investors with non-performing loans. Thank you for the activity and feedback. Hipocredit is working on reducing their cost of funding. They have received a bank financing and is also buying back loans from investors by exercising their call option and placing them at lower rate on the marketplace. We have notified them to be more consistent with buybacks and buy back also loans that are late. Certainly, when placing loans at a lower rate on the marketplace Hipocredit faces the risk that the loans will not be funded. Investors who buy loans on the secondary market at a premium take on the risk that the part of the premium that is not amortized would be lost in case a loan originator exercises its call option. This is the same risk investors face if a borrower makes an early prepayment of a loan. The very very least Mintos could do is to put a clear warning on the SM, at the moment of purchase, that this is a possibility (same as FS do on their SM because of the tax calculation). And don't you think that to protect lenders you should change the terms to prevent loan introducers from cheating lenders in this way. A deal is a deal. I understand that Hipocredit are making an extra buck at lenders expense. I want you to understand that this is not fair on lenders and to stop it happening in future.
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Post by kissmyjazz on Oct 12, 2017 12:01:14 GMT
By only buying back performing loans Hipocredit trades against its own investors. That is real issue here, not some foolish investors who have not accounted properly for buyback risk. Mintos' legal team has to make sure the investors are not put at the disadvantage. At the very least you should prohibit Hipocredit to relist its loans on SM after they are bought back and make sure that any future contracts with originators will penalise for such cherry-picking.
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