mikes1531
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Post by mikes1531 on Feb 1, 2017 19:45:22 GMT
The problem is Google Recaptcha is not fit for purpose on SS. Its primary purpose is for single use, like downloads or registration etc. It automatically thinks that repetitive use (such as on the SM) makes you a bot. However, change may be just around the corner....Having read the Google info, ISTM that the 'new' system isn't going to be much different from what we're experiencing now. In fact, SS may be on the 'new' system already. Google say... ... and then they show a picture of what we're seeing now. The 'single click' experience is what we've referred to as a 'free pass', and I typically get one or two of those each day, generally when I haven't tried to buy anything on the SS SM for a double-digit number of hours. As soon as anyone makes multiple purchase attempts in a limited span of time, Google raises the red flag and starts serving up pictures to choose from, etc. So despite wanting to think that we're going to see an improvement, I really am not expecting anything. As C_D has suggested, Recaptcha is not fit for purpose for the activities of SS investors. But it's better than a return to BotGate and, until something better comes along, we're stuck with it.
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mikes1531
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Post by mikes1531 on Feb 1, 2017 19:20:16 GMT
SavingStream could provide updates of the form "<date of event>: borrower has prepaid interest up to <end date>" and "<date of event>: borrower has paid the interest due <due date>". If they did that we could be confident that loans are being serviced, rather than the LTV margin being eroded by accrued and unpaid interest. (Hi Paul64 .) Funding Circle have their own communications problems, but there at least participants in an SME loan know when repayments are late, and we all know the situation with overrunning property loans (interest payments haven't been made, and FC tell us - at least some of the time, and I think reliably - when partial capital repayments are made, but not distributed due to the defects of FC's IT systems.) AC do a brilliant job of this. Every loan has a Repayments tab showing exactly what is due from the borrower and what has been received and when. If a payment is overdue, it's very obvious from that info. Wouldn't it be nice if savingstream provided similar info?
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mikes1531
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Post by mikes1531 on Feb 1, 2017 18:15:18 GMT
Once the interest comes in today lots will be hoovered up. This doesn't seem to have happened as quickly today as it has on other occasions. Perhaps it will later this evening. (There's still more than £300k available as I write his.) Or perhaps investors are buying more selectively -- waiting patiently for parts of positive term loans to appear on the SM rather than hoovering up the 'usual suspects'.
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mikes1531
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Lendy (L) in Administration
SS emails
Feb 1, 2017 17:49:31 GMT
Post by mikes1531 on Feb 1, 2017 17:49:31 GMT
noun: whitelist 1. a list of people or things considered to be acceptable or trustworthy. "Trustworthy". Hmmm. Is that meant to pertain to the sending mailserver, or the contents of the email?
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mikes1531
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Post by mikes1531 on Feb 1, 2017 17:40:48 GMT
It is claimed that interest continues to be received on the overdue loans and they continue on a rolling basis having not been formally extended. I thought I read somewhere recently that SS had 'clarified' the position of overdue terms loans to say that where the borrower actually was paying interest monthly SS would adjust the term accordingly, and where the term was negative it meant that SS themselves were paying the interest to their investors and expecting that they would be reimbursed for this out of the proceeds of the loan settlement. Did I imagine that? Is it a new policy that hasn't been implemented fully yet?
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mikes1531
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Lendy (L) in Administration
PBL 040
Feb 1, 2017 17:29:33 GMT
Post by mikes1531 on Feb 1, 2017 17:29:33 GMT
There's still only 0.3% on the SM (why?) so if you're quick you could still join the women, children and OAPs in the first lifeboat which could still be sailing very soon. Unfortunately -- if that's the right word -- it doesn't look like there are many buyers coming forward. The most recent purchase (£300 by k***********4) seems to have sat at the top of the Investor Activity table for a few hours now.
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mikes1531
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Post by mikes1531 on Feb 1, 2017 3:18:11 GMT
There is a fundamental difference on FS, the interest is only paid at the end of a loan. The sm prices have to reflect that. I prefer the sm on the other platforms too but I can see why it is this way. sikas the SM is the way it is primarily because the loans are interest rollup - i.e. the borrower pays interest at the end of the loan period. Changing the way the SM operates would mean completely changing the business model to interest upfront / monthly interest, and turning away borrowers who want an interest rollup loan, a niche FS have pretty much to themselves within p2p. It would be a real shame if such borrowers were denied a p2p loan. I'll be the first to admit that I'm taking advantage of the FS SM in its current form, so I wouldn't propose changing it. However, having said that, I don't agree that it has to work this way simply because of the way FS structure their loans. All that would need to be changed is to keep track of who owns loan parts over time and then distribute the interest -- when received -- in line with that. If that were done, secondary market sales could be done at par. Investors selling parts would be entitled to their accrued interest when -- and if -- the borrower paid it or the security was sold for enough to repay all capital and there was money left to pay the accrued interest. It's not a trivial bookkeeping operation to keep track of all the bits of accrued interest, and investors selling parts might not like the idea that if the loan defaulted after they sold their part they might not receive any of their accrued interest, so it might not be a popular change. But all I'm saying is that there is a possible alternative that still would work with FS loans structured as they are now.
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mikes1531
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Post by mikes1531 on Feb 1, 2017 2:59:32 GMT
There's also the reality that second charge loans typically incur higher interest rates than first charge loans. It obviously will depend on the actual interest rates and the relative size of the first and second charge loans, but it might be that paying off the cheaper first charge loan could make financial sense.
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mikes1531
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Post by mikes1531 on Jan 31, 2017 23:22:09 GMT
lobster did you see the interest rate included in that calculation? Yes I saw the rate of 4.5-5.0 % . I'm not sure what this means. Obviously there will be a very high interest of about 18% on the 1 million that they borrow from FS. If the total development costs are 15.4 million , and they only borrow 1 million from FS, then where is the rest of the cash (ie 14.4 million) coming from ? Do they have that much cash themselves ? Or are they borrowing it cheap from elsewhere ? Or what ? Getting a bit out of my depth here - any thoughts ?? Are you saying that they just want 1 million to get the planning permission (hopefully !?) and then sell out ? The interest rate affects the development cost. The value attributed to the land is the difference between the GDV and the development cost. If a development loan can't be obtained at 5%, then the development cost would rise by some amount and the 'value' of the land would decrease by a similar amount. So the question is whether the 5% is a reasonable assumption. I would have thought that's rather optimistic, but that's JMHO and based on no research at all. The other critical question is what would the value be if PP is refused? The figures on page 8 of the valuation report suggest that the value of the developed site will be approx 21m. Also on page 8 it says the total cost of the development is approx 15.4m , so there is a profit there of 21 - 15.4 = 5.6m approx , and this is basically the quoted valuation. That is the valuation, not the 'profit'. It will cost something to buy the land in the first place and, with a big project like this, the cost of all the work needed to obtain the PP will be significant.
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mikes1531
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Post by mikes1531 on Jan 31, 2017 23:04:38 GMT
I really don't understand, and anyone who can explain why "microsculptures", boats and property loans are allowed to extend their loans but jewellery isn't would be welcome. Yes I know it's expensive to foreclose on property but does the same apply to boats. Perhaps I'm just a little inexperienced and don't fully understand the market. 09dolphin: I don't think it's a case of some loans being 'allowed' to extend and others not. If any borrower pays the accrued interest when their loan reaches its maturity date, it would be extended. I expect fundingsecure make an attempt to contact every borrower as a loan's 'maturity' approaches to ask them whether they're intending to redeem, extend, or give up their security. I wouldn't be surprised if no response at all is more common for small (jewellery, watch, etc.) loans than for loans with substantial security where the borrower has more 'equity' to lose. If FS receive no response on a small loan, they probably don't invest a lot more time, and simply send the default letter promptly and start making plans to sell the security. They're probably more willing on larger loans to work a bit harder to ensure that they don't just 'dump' the security, especially as there'd be a greater chance of an unhappy buyer willing to take them to court.
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mikes1531
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Post by mikes1531 on Jan 31, 2017 22:27:31 GMT
To get a net 7% from 11% loans you need a default rate of no more than 3.6% if there is no recovery. Proof; you put in 100 and get return of capital of 96.4 plus interest of 11% of 96.4 = 10.6, so a total of 107. If the recovery rate is r then you can just scale 3.6% accordingly, so a 50% recovery needs a default rate < 7.2% But I stand to be corrected by anyone cleverer than me. This is more of a clarification than a correction... (and I'm not claiming to be cleverer than LOL! ) The important thing to note is that the above calculation is fine for 12-month loans. For 6-month loans, it's important to realise that the 3.6% default rate has to be an annual rate. Otherwise, the calculation becomes... ...you put in 100 and get return of capital of 96.4 plus interest of 11% of 96.4 for half a year = 5.3, so a total of 101.7, which is a 3.4% p.a. return.
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mikes1531
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Post by mikes1531 on Jan 29, 2017 14:58:25 GMT
Exactly why they need to act way before it goes 1 year overdue in most cases. Yes and no. If the end result in both the 'sell at 6-months case' and the 'sell at 12-months' case is calling in the receivers, then forcing the issue sooner should produce a better result for investors. If, however, the difference is between receivers conducting a fire sale after six months and the borrower managing to sell or refinance but taking a further six months to do so, ISTM that not calling in the receivers would produce a better result for investors. And that's without bringing in additional complications of FS needing to treat borrowers fairly, etc. The hard part, of course, is deciding whether the borrower has a realistic chance of being able to sell or refinance.
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mikes1531
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Post by mikes1531 on Jan 29, 2017 14:44:44 GMT
Personally, looking at the way FS lend and the assets they lend on, I expect and would be happy with a return of about 7% to 8%. In other words I expect 30% defaults and zero recovery. ashtondav: I think there's something wrong with your calculation. If I invest in 100 similar-sized loans and 30 go bad with no recovery, there's no way the interest earned on the 70 remaining loans will be enough to cover the capital lost on the defaults, much less to provide a return. ISTM that to achieve 7-8% return, you could stand only 5% defaults with no recovery, or 30% defaults with 83% recovery, or something similar. And that only works for 12-month loans. With 6-month loans you could stand only half as many defaults to achieve that return. Have I got this wrong? If I'm misunderstanding what you wrote, please try to explain.
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mikes1531
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FundingSecure (FS) in Administration
Defaulted loans
Jan 29, 2017 14:31:34 GMT
Post by mikes1531 on Jan 29, 2017 14:31:34 GMT
A 6 month 13% loan that starts at 70% LTV reaches about 84% LTV including capital and accumulated interest by the time the loan is a year overdue as some FS loans are. Steerpike: I don't know exactly how you arrived at your 84% LTV, but I suspect you were considering only what the investors would be owed. If you add in something for FS's interest/fees I think you'll find the LTV is more like 90% for a loan that's a year overdue.
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mikes1531
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Post by mikes1531 on Jan 29, 2017 14:21:17 GMT
I did wonder if FS use specialist auctions for items such as these model trains? They have in the past for a bassoon, a grand piano, and artwork. And they probably do for cars and boats. They should be able to recover any defaulted loans if they do. Unfortunately, this doesn't follow. Based on the price the bassoon was listed for sale at, I suspect FS topped up the sale result from their own pocket so that lenders could be repaid in full. On a pair of art collection loans, buyers were few and far between, and FS returned 70% of lenders' capital without waiting for all the paintings to be sold. They said that if they actually managed to obtain more than that, lenders would receive more. AFAIK, nothing further has happened, so either the rest of the sales also were disappointing, or FS still are trying to sell the paintings. (For more info, search past loans for 'Lubin'.) My concern about the trains/railwayana is that there are a lot of loans to one borrower, and if one defaults they probably all would. So the question is whether half a million pounds worth of these things would be snapped up by enthusiasts, or cause a glut on the market and depress prices. Knowing nothing about this market, I haven't a clue what the likely outcome might be.
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