copacetic
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Post by copacetic on May 25, 2017 10:15:06 GMT
I count £390k of 200+ day 12% loans on the secondary market at the moment. While I suspect it won't last too long, it should be a bit of a wakeup call to those whose investing strategy is solely based on the term and rate of the loan without doing due diligence and being happy to stay in until it finishes. My concern with this strategy is that it encourages Lendy to make risky loans available because people are investing indiscriminately with the belief the can pass it off to someone else on the SM. At some point in the future when enough loans turn sour there reaches a tipping point and everyone tries to get out at once and the SM isn't just slow but rather grinds to a halt as little new money comes onto the platform.
Personally I have invested in only 1 of the last 6 of the 12% rate loans available on Lendy. I tend not to invest in the lower rate loans on here because I have so far been able to reach my p2p limit by investing at higher rates spread across platforms.
I for one would be happier for Lendy to produce a smaller loan flow if only good quality loans (low LTV with realistic valuations) were available to avoid a potential run on the platform. Unfortunately they have little incentive to do this in the short term since they make a profit on any loan that they can fill and it's the investors that take the potential losses. I think they have realised that an illiquid secondary market dents investor confidence because they've recently started sending out repayment emails to everyone even if you aren't in the loan. Hopefully they can improve the quality of the their pipeline and keep an eye on the long term future of the business.
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copacetic
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Post by copacetic on May 23, 2017 20:28:02 GMT
Hi all, there's seems to be a misunderstanding about how DFLs work here. For land/development loans our policy is that we will lend a max of 70% of the 'residual' land value of the site and up to 100% of the build costs, but not more than 70% of the GDV in any event. Our loan at initial drawdown in this case is 56% of GDV. This is quite a hefty valuation report and I admit to only skimming it, not going through with a fine tooth comb. However on page 6 it lists the market value (non-time restricted) as £3,685,000. With a loan of £2,947,357 this is a LTV of 80%. When calculating the maximum that can be lent are Lendy now subtracting the upfront interest retained for the loan term from the loan? Or adding up the residual values for the time when the development was started with another lender at 70% and then adding 100% of build costs at the time the loan is taken over perhaps? Further to my last post I should add that because the valuer has underestimated the finance costs for phase 1 and the phase 1 valuation is a residual value this means the value would be lower by the amount underestimated. I've made an approximation this would be about £140k lower which bumps up the LTV a little bit more to 83%.
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copacetic
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Post by copacetic on May 23, 2017 0:19:38 GMT
Lendy will need to update their welcome video which says they only lend up to 70% LTV ratios! I do wonder how the FCA looks on Lendy's way of advertising their investments with low headline loan to GDV values like 56%, then in the overview page mentioning 70% for some mixture of valuations I can't quite get my head round, then in the valuation report it being current LTV of 80%.
Anyway in the actual valuation report when the valuer is working out the development profit (page 68) the total assumed finance cost is £131k but at 12% for six months that would be £180k. This is a guess but if Lendy were charging out 1.5% per month or 18% that'd be £270k, not to mention interest on further tranches. A couple months delay on this one could really see the developer's motivation for completing the project disappear.
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copacetic
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MoneyThing (MT) in Administration
MTAU712
May 17, 2017 15:41:08 GMT
elliotn and will like this
Post by copacetic on May 17, 2017 15:41:08 GMT
I think it shows there is a lot of faith in MT's due diligence when almost half a million pounds has been invested before investors have even see the valuation report!
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copacetic
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Post by copacetic on May 15, 2017 14:04:33 GMT
Another thing to consider is how likely a platform is to go into administration, not just what happens if it does. If the platform is profitable this becomes a lot less likely. Part of my due diligence when investing in a new platform is to try to find out if the business is working. Lendy have accounts filed up until end of 2015 and show a good profit (you can look them up on Companies House beta.companieshouse.gov.uk/company/08244913/filing-history ). I suspect one of the many on-the-ball forumites will post here when their next set of accounts is up! I guess that the downside here is that it takes 9 months before they have to file a year's accounts so the information is old. Lendy's profits might have taken a hit from PBL20 but with the lower rates and increased loan volume they are offering to investors on many of the new loans (while not necessarily reducing their borrower rates by the same amount) they might have boosted their bottom line considerably. A risk to small companies is if something happens to one of the key people or the owners fall out, etc but I suspect as long as the company is making a profit and growing fast it would be snapped up by an investment fund. In fact there may even be a few big hitters on here that would buy the company to just to access some good loans off market without having to worry about prefund allocations
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copacetic
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Post by copacetic on May 9, 2017 21:17:15 GMT
I wonder how tranche 8 for £250k will go given that there's £225k already on the SM which, from experience, I can say isn't exactly flying off the shelf. ...unless they release another tranche to pay the interest. I hope not! Using new investor money to pay the returns for existing invetors ... there's a name for that type of scheme isn't there?
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copacetic
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Post by copacetic on Apr 25, 2017 15:23:02 GMT
Regardless of whether the SM is moving or not at the moment I have a deeper concern that Lendy have a vested interest in keeping the SM illiquid. Investors don't earn interest on loan parts up for sale despite still owning the loan part and being liable for any losses. Presumably the interest Lendy saves in paying out goes straight onto their bottom line, so if there is £2m average for sale on the secondary market they earn up to an extra £20k a month.
If Lendy's and your own desire for a liquid SM are oppositely aligned then there could be trouble ahead!
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copacetic
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Post by copacetic on Apr 13, 2017 13:03:46 GMT
Sorry if it's already been suggested, but as I grow my portfolio on the MT platform, the 'My Live Loans' page is becoming a nightmare vs something like SS. The reason is the tranches and purchased loan parts from the SM. It's not easy unless you export elsewhere to see exactly what you have in each loan. Might I suggest the following? Each primary loan has a unique ID Each subsequent tranche has a link to that ID as well as it's own ID number, so it has a link to it's 'parent' That the my live loans page group and total by loan ID with an option to expand to list to loan parts I think for most people that would provide a much quicker and better summary for them than the current page. Thanks. I second this suggestion. It would make the "My Loans" tab a bit tidier with multiple small loan parts gathered into one for a particular security. I appreciate that some loan tranches are also split into different term lengths/interest rates/legal charge ranks but having one main entry per security that can be expanded into sub-entries would make keeping track of the amount you have invested in each loan easier to see at a glance. Typically I'll set a maximum amount to be invested after due diligence on the security. Perhaps a checkbox somewhere on the page to introduce this function so that investors can still sort their whole loan list with ease.
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copacetic
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Post by copacetic on Apr 6, 2017 11:31:18 GMT
Further, FS's second charge position,... Unfortunately if you're in loan part 3867743062 it's acually effectively a 3rd charge as it ranks behind FS's main facility. I'm not sure what the legal position is as FS have said in the description for that loan part then further down In any case I expect there could be total loss of capital in 3867743062.
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copacetic
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Post by copacetic on Apr 4, 2017 12:41:03 GMT
I had an email today that this has been formally defaulted so at least we will be able to offset against this year's tax.
I think Funding Secure really need to update their website so loan updates are automatically posted on each loan tranche. It's daft the way you have to manually go to the first loan part to see if there have been any updates since you last checked...
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copacetic
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Post by copacetic on Mar 31, 2017 16:55:22 GMT
Haven't managed to get through all 248 pages of the valuation yet but looking at the borrower D***** G**** they have been in administration a few times. That said, the purchase price of £9m compared to the loan of £4.7m seems to indicate the borrower has come confidence in the project.
The planning laws do seem overly restrictive against residential use given the scale of the housing shortage in Southern England and the long time much of the site has been derelict.
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copacetic
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Post by copacetic on Mar 17, 2017 16:08:50 GMT
As others have said you should understand the risks very clearly before attempting to leverage your investments. Consider the worst case scenario of your investments going up in smoke but still being left with the liability of the £20k bank loan - could your salary still cover the repayments and other obligations like rent/mortgage repayments? Also, think about your personal situation and what, if any, financial commitments you have towards family.
A person I know through work took a mortgage out on his house and invested the proceeds (not in p2p). Unfortunately when the financial crash came along it pretty much wiped out his investment. He had to go bankrupt because he couldn't pay the debts and he ended up losing his house. To add to the financial pressure he and his wife had twins shortly after. Eventually after a numer of years he did get back on his feet but it was definitely tough starting over from nothing at 40.
I'm not saying you should or shouldn't leverage your investments. Some people like leopardcat definitely make money from it but you should keep in mind what assets you currently have and what you can afford to lose while you have your eye on potential profits.
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copacetic
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Post by copacetic on Mar 2, 2017 0:09:05 GMT
Having worked in the receiving end of a customer complaints department I can understand Tim's frustration. You give a polite answer but if things don't go just as the customer expects it and on their schedule and they follow it up with an angry or threatening response then you really have to work at not responding in kind. In this case I'd recommend a polite non-answer after having already given the polite answer and hanging a punching bag in the office to prevent you developing a twitch! Also if the Tim in the email is Tim Gordon the founder then spare a thought for poor Paul who has to find a diplomatic way to tell his boss not to agitate customers!
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copacetic
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Post by copacetic on Feb 11, 2017 18:15:39 GMT
Debit card is fixed small cost, no matter the transaction. ~20 pence maybe. Unfortunately not any more - this changed recently. www.cardswitcher.co.uk/2016/05/uk-card-processing-fees-change-2016-2/This could end up being a major overhead for SS unless they pass the charge on to investors. For transferring in £5000 it would cost more than £10 (0.2% interchange fee) + whatever margin SS's merchant service charges on top.
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copacetic
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Post by copacetic on Feb 11, 2017 3:52:59 GMT
The removal of INPL feature from the secondary market is very sensible from SS's point of view as it is open to at least one glaring exploit in the case of exiting a defaulted loan. At present with only one defaulted loan at 80k on the SM it isn't platform threatening but that could change with someone unscrupulous enough. I wonder if this was done now intentionally at the same time as the new defaults policy? It might be an indication that SS are planning to formally default a few loans.
INPL is a pretty useful and unique feature to SS and it would work exploit free if SS delayed credits to account from secondary market sales until the buyer payment window has expired and crediting only if payment has been made. If the buyer doesn't pay just relist the loan part on the SM and advise the seller it didn't sell due to non-payment.
For the new investor the scrapping of INPL is a bit of a blow for diversifying into loans that were missed on the primary market.
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