Some people think something will go up in price / is a good credit risk. Others that it will go down / is a bad credit risk. This difference of opinion means you can trade the asset and both sides are happy.
......unfortunately I don't think autobid has an opinion
This is true and is the point. Also Autobid has the role of providing liquidity for those selling anything at par, and so is structurally disadvantaged in buying when compared with a manual buyer. That is so unfair!
Your 'system' requires there to always be a buyer whether they like it or not .. basically 'pass the toxic parcel and hope someone else is holding it when it implodes'. It favours someone who actively manages their portfolio every week, day or ideally nanosecond, to comb out the toxic junk .. note the word 'favours', which implies 'unfair'. If you reckon you can beat the system by deciding what to sell when, then you are also implying the lucky recipients of what you sell are going to come out worse than if you didn't have that option.
Saying 'yeah well they can do the same to someone else' doesn't actually address the issue, just kicks it down the road.
Yes, you're right GSV. I had been expecting this change but had also expected to be able to sell manually to dispose of the loans I have bought manually. Mine is all property and very poorly diversified, and so holding on to the point of one repayment left is too much of a risk. So I have to sell loads before 18th Sept, to give myself a few months after 18th Sept before I sell the rest. I could think that the purchasers under the new scheme will be properly diversified, and that there is nothing dodgy about property parts with one month to go.
However, it has been noted that the risk profile of the property loans is very different from that of the SMEs, in that for property it is hugely end-loaded, and exploiting this is unfair and must be stopped, like flipping the risky SME loans, and selling loans which have been late but recovered. We must all, weak and strong, hold hands and cross the finishing line together in the new FC, fit for consumer lenders with ISAs. Understandable but sad.
I guess if you don't turn autobid on, and/or don't agree to all the new T&Cs, then money will just pile up in your holding account waiting for you withdraw it. Well that's how it SHOULD work, but you might want to check with FC in case they know.
This is right. Just do not choose either of the new Autos and you just receive the repayments - that's what it says.
A really useful quick improvement would be to allow the account holder to select which account opens when they log in - would make it much more friendly for those who want only an IFISA account.
If you log in using your ISA email address, it takes you to your ISA account.
Thanks for pointing that out. There was a complaint on another thread that a new lender (New features requests, Investorman, Aug16) who just wanted an IFISA account had to have a normal account as well and was directed to the normal account on login. If the (obvious) answer is to log in with the IFISA email address then that removes the inconvenience, other than needing two email addresses for one wanted account.
Harsh words, SXLR. Let's hope they are not justified and you have to retract the insults. Not long now.
My available funds in FC are now steadily increasing because I also do not trust said ex-team and I now always get out before the twilight zone, when one repayment is left. No new property loans over 8% seem to be coming, and so it is a long goodbye FC, after 5 years.
Approx 3% of whole loans default whereas its closer to 6% for partial loans.
Tho there are many reasons why that could be the case...
The analysis I referred to showed that the main reason was the 'whole loan rejects', which pushed a number of poor prospects back onto the partial board. It's on this forum somewhere. Also please remember that whole loans have not the long history of partial loans, and so there will be some lag on the defaults (but not much I think).
Just for info, advanced Autobid will also buy at a discount, but such parts are generally only available in loans to Hen's Teeth Ltd. Or possibly very dodgy stuff.
So let me get this right ( remember I am new to FC). Someone makes a loan to a business. One or two months later they decide it's Hens Tooth Ltd. and put it on SM. Er, how or why? Did they not do DD in the first instance? I thought autobid cannot pick up loans where payments have been missed? So how do you decide a borrower is a dog after a month or so with no new information ( I assume?). To a novice it doesn't make sense.
I agree with bg, and Steve.
When I was speaking about hen's teeth I was meaning that discounts are rare. It was not always so, especially in the days of cashback.
Concerning due diligence, I agree that time spent in assessing the business's prospects of repaying for five years, based on the FC information, is probably time wasted. However, making decisions about SM purchases based on the repayment history is not time wasted. It is true that you cannot sell a loan where the repayments are not up to date, but you can sell a loan where the repayments have been erratic, or where there has been a 'credit event' which has resulted in the risk band being temporarily removed and then reinstated. Many lenders sell loans which have been late with a payment and have recovered, or which have been stopped form trading for a while because of a CCJ or something. You can reduce losses by doing that, and by avoiding buying such loans on the SM. They are the ones which may well be at par.
In the past I had a rule which said that I had to sell any loan which came back from a late payment, on the basis that this was an indicator of stress. It served me and others very well. That rule did not apply to loans which had had credit events, and foolishly I kept one which had a large 'unexpected' CCJ when I could have sold it. It is now my largest loss.
They are not cherry picked by FC, it is random within the general split. But they can be rejected by the whole loan lenders (except for FCIF) and then they go to the partial board. There has been evidence that whole loan lenders have been good at rejecting poor loans, though It was long ago on this forum and I would not be able to find it.