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Post by GSV3MIaC on Aug 24, 2017 20:36:10 GMT
We haven't actually had an instance yet (although Birkenhead came close), but it looks like we will in future .. a loan part is accruing interest to be paid if/when recovery takes place (asset disposal). The question arises if one sells the part (assuming that sale of defaulted parts goes ahead .. or even sale of non-defaulted-but-accruing parts, like B'head nearly was) what happens to the accrued interest (yes, I looked in the T&Cs and failed to find it). Does ALL the accrues interest go to the purchaser, or does the part 'up until the point of sale' hang around with the original owner (even though they no longer have any loan part in their 'my parts' list for it to hang off)?? MoneyThing . explanation/clarification welcome. (If we are never going to be able to sell such parts, then it isn't any issue I guess). |
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Post by MoneyThing on Aug 24, 2017 20:50:46 GMT
We haven't actually had an instance yet (although Birkenhead came close), but it looks like we will in future .. a loan part is accruing interest to be paid if/when recovery takes place (asset disposal). The question arises if one sells the part (assuming that sale of defaulted parts goes ahead .. or even sale of non-defaulted-but-accruing parts, like B'head nearly was) what happens to the accrued interest (yes, I looked in the T&Cs and failed to find it). Does ALL the accrues interest go to the purchaser, or does the part 'up until the point of sale' hang around with the original owner (even though they no longer have any loan part in their 'my parts' list for it to hang off)?? MoneyThing . explanation/clarification welcome. (If we are never going to be able to sell such parts, then it isn't any issue I guess). Evening. Similarly to normal trading during the month between interest payments for a particular loan, the system will record the number of days the lender holds the loan part for. Then upon the next payment run, the platform allocates the interest accordingly. In a default situation, the platform will continue to record the number of days the lender holds the loan parts, however this will only be credited upon recovery. So say Lender A sells their defaulted loan part having held it for 10 days after default (since they would have been paid interest up to the day of default). Lender B buys this part and holds it for another 90 days at which point the loan is fully recovered (capital + interest). The system would only credit Lender A & B's interest upon recovery. Hope this answers your question. Regards, Ed
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Post by GSV3MIaC on Aug 25, 2017 9:03:36 GMT
Thanks, I think that covers it, assuming that (given sufficient recovery) A gets 10% of the recovered interest and B gets 90% (pro-rata share out of what is recovered). The other scenario, if only a bit more than capital was recovered, might be A gets all their 10 days (that being the earliest interest owned) and the rest goes to B .. but I hope not!
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Post by MoneyThing on Aug 25, 2017 9:33:40 GMT
Thanks, I think that covers it, assuming that (given sufficient recovery) A gets 10% of the recovered interest and B gets 90% (pro-rata share out of what is recovered). The other scenario, if only a bit more than capital was recovered, might be A gets all their 10 days (that being the earliest interest owned) and the rest goes to B .. but I hope not! The former. Regards, Ed.
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