bg
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Post by bg on Aug 28, 2017 9:27:58 GMT
I think that every platform that allows discounts and premiums will have a small group of lenders that will prey upon and profit from, essentially, the ignorance of the hoard. This is point at which I generally leave. Typical or median returns will fall and the Platform or the FCA will change the platform to go automatic to ensure fair treatment for all. This is the point at which I consider returning. This is a pattern we have all seen elsewhere and if and when MT get big enough, they will surely follow. (With apologies to mrclondon ) I don't agree with this. I can't see how allowing discounting would allow a small group to prey on the ignorant hoards. AC allow discounting and I can't say that anyone is being preyed upon. Same with ABL etc etc. All it means is that it is always possible to sell and always possible to buy (if premiums are allowed) which reinforces confidence in the market. Historically an investment type/venue that has remained illiquid has typically died. I really don't buy into the 'fair treatment for all' or everyone should get the same returns idea. It is the opposite of capitalism (I guess this is fairly popular in this country at the moment). Those that deploy their capital well should be rewarded and those that do it badly should lose their money (and the same applies to the businesses themselves). That is how society progresses, leads to capital being allocated effectively and efficiently and prosperiety for the society as a whole. If all capital was allocated automatically then bad business ideas will always get their 'fair share' and resources (and money) will be wasted en masse. By this token a loan which looks dubious should be allowed to go unfilled on a platform instead of being by some sort of autobid. I don't have much sympathy for the ignorant when it comes to P2P lending. If they don't understand the basics/don't know what they are doing or the risks they are taking then they should stick to savings accounts. By the same token I am glad that we are allowed to buy shares in individual companies in the stock market instead of being forced to buy a FTSE-all share index tracker if we want to invest even if it means the igniorant may lose their money on a start up tech company.
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bg
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Post by bg on Aug 26, 2017 7:16:06 GMT
Borrowers should pay interest monthly (and lenders receive this), not at the end of term as per FS.
But it's not the borrower paying anything. It's just the platform borrowing more money from lenders to pay back to lenders during the term of the loan (and calling this 'interest'). Developments don't produce any income until they are sold. Personally if a development is going to cost £100k I would rather the developer borrowed £100k rather than £120k so they could pay me back my own money every month under the guise of 'interest'.
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bg
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Post by bg on Aug 25, 2017 11:36:28 GMT
For me, allowing discounts helps avoid liquidity runs on the platform.
For instance look at Lendy. Everything was great, anyone could liquidate anything in a few seconds which meant that all their loans were over subscribed. Now we have passed a knife edge situation where suddenly the SM flipped the other way and people start panicking and listing a lot of loans. This means confidence collapses in the platform and people stop bidding on the PM (as I have done myself). Lendy have pulled this back a bit (mainly by not listing many new loans) but its going to be a nightmare for them to balance liquidity.
Contrast that with FS....there is loads listed on the SM at premiums and discounts but noone cares. Thats just the operation of a perfectly healthy market...every loan finds its level. In fact its good as it allows people to diversify into pretty much any loan they want. People aren't worried about liquidity as hey know they can get out of everything at the right price (I would feel more comfortable if discounts of more than 1% were still allowed but for now its fine).
MT is still in a bit of a honeymoon period (although this is wearing off a bit) where people still have confidence and given there are so few new loans they are all filling fairly easily. I think MT are aware that to grow to any real size and to have long term profitibility they can't allow a flooded SM to happen or that will kill PM sales. For me the only way to do this is to allow selling at a discount.
Let the market find its own level.
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bg
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Post by bg on Aug 24, 2017 19:24:00 GMT
Would that be in a car park in public view ? Seriously, why would anyone want to lend to this borrower after today ? Regardless of the platform. Unfortunately most platforms do not take into account the history of the borrower, some have even said its does not matter about the borrowers only the asset, pretty short sighted that when it is obvious that a borrower has taken other lenders for a ride what is going to happen when the loan term expires. Lendy and FS are two prime examples with a few borrowers like this and both have previously said it is only the asset that matters. When the loan expires, if the borrower does not stump up interest or repay then FS will sell the painting. When you walk into a pawn shop for a loan they do not check your credit history and nor should they. They value your asset and give you a loan against it with a high rate of interest. You are kidding yourself if you think you are going to get borrowers with unblemished credit histories taking out secured loans paying 20%+ interest.
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bg
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Post by bg on Aug 24, 2017 14:04:30 GMT
At this stage I would say that it looks more likely that the borrower told UB he had the painting in his posession wheras in fact it was in FS' vault. Unless he is completely stupid and expected to be given a loan without even having to show the painting or it taken as security, he must have had something to show unbolted so either he was planning on raiding FS safe or he was planning on showing unbolted a fake, so it could be possible that FS already has a fake to. If I was in the loan I would rather take the hit now then risk dealing with a dodgy borrower. He showed them a valuation he had from Christies. Unbolted never had the painting.
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bg
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Post by bg on Aug 24, 2017 13:37:16 GMT
Don't care. As long as FS have the painting the only thing that concerns me is the valuation. That's the nature of pawn loans. The nature of pawn loans yes, but it looks like the borrower may have another copy of the art. If he was trying to pawn it to unbolted too, so it may just be that the one FS is also a fake. At this stage I would say that it looks more likely that the borrower told UB he had the painting in his posession wheras in fact it was in FS' vault.
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bg
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Post by bg on Aug 24, 2017 12:05:05 GMT
Well it appears that either FS are lying about having the painting in their possession or that the borrower lied to UB when he said he had it in his possession. I know which of the two possibilities I would wager on. I just hope UB would have waited until they had the painting in their hands before they delivered the funds to the borrower. Unbolted had not raised the money so they could not have handed it over. Although if I was in this loan I would be selling quickly, as the borrower is obviously pretty dodgy by the sounds of it. Don't care. As long as FS have the painting the only thing that concerns me is the valuation. That's the nature of pawn loans.
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bg
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Post by bg on Aug 24, 2017 9:07:34 GMT
Well it appears that either FS are lying about having the painting in their possession or that the borrower lied to UB when he said he had it in his possession.
I know which of the two possibilities I would wager on. I just hope UB would have waited until they had the painting in their hands before they delivered the funds to the borrower.
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bg
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Post by bg on Aug 24, 2017 8:05:59 GMT
Well let's just hope FS have securely stored this one as they are supposed to. If so it shouldn't really matter. With the tight process that unbolted use I would expect them, or their valuer on their behalf, to have the painting in their hands. As an aside, in further reading of the quoted loan on FS, the valuation figure is for 2 seperate loans afaiks. Good luck getting an answer from FS on this issue. I will follow the thread with academic interest. I have just spoken to FS and they confirm that the paintings are in their secure vault. They are aware of the painting being put up for security on another platform.
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bg
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Post by bg on Aug 24, 2017 7:47:52 GMT
What I find is amusing is people using the lack of monthly interest as a stick to beat the likes of FS with - saying that L is safer because it has it. What they don't actually understand is that all they are doing is paying money to themselves. The same loan 70% ltv on FS is higher risk as borrower has to rustle that up AND the interest 6 months down the line; the same borrower on Ly *just* the combined loan/interest at 70% ltv. They're not the same though. The loans on L these days are all mass developments with huge GDV's.
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bg
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Post by bg on Aug 24, 2017 7:25:10 GMT
What I find is amusing is people using the lack of monthly interest as a stick to beat the likes of FS with - saying that L is safer because it has it. What they don't actually understand is that all they are doing is paying money to themselves. But doesn't it affect the quoted LTV? Lendy include the interest in the "L", whereas FS don't. (As I understand it.) In that sense, the Lendy approach seems more transparent. Strictly speaking yes but the LTV's for DFLs on L are based on GDV's which really are highly risky finger in the air estimations. I think most FS loans are based on current market valuation which gives me far more confidence (even if some of these valuations can be called into question!)
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bg
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Post by bg on Aug 24, 2017 7:14:46 GMT
If the interest is held back as you say it is and I am sure you are right on that, then is that not effectively the same thing as having the interest in the bag for the investors? I'm not sure I understand the difference between the borrower paying the interest up front and LY withholding the interest from the loan. In terms of the investors In the loan why does it not amount to the same thing? You noted that "a year's interest is paid upfront by the borrower" which is incorrect, as the borrower does no such thing; whether you think it is the same thing or not is irrelevant as it is simply an untrue statement The fact that investors see cash flow is simply (IMO) a marketing ploy (admittedly very effective) to provide reassurance that there is cash flow, but it is always important to note that cash flow is only generated by investors own money, not the borrowers. If you sit down and think about it, it would make no difference if that amount accrues and is paid at term and would actually remove a big chunk of unnecessary admin; the only nominal benefits (to investors) is there is compounded interest and slightly reduced max LTV, but both could be tweaked anyway (say 12.5% & max 65%). I'm digressing a bit but retained interest did come from the pre-P2P world of bridging loans, but rather than a Marketing Ploy, it was used as a crafty additional revenue as they often charged interest on the interest; I'm fairly sure this was frowned on by FCA What I find is amusing is people using the lack of monthly interest as a stick to beat the likes of FS with - saying that L is safer because it has it. What they don't actually understand is that all they are doing is paying money to themselves.
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bg
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Post by bg on Aug 24, 2017 6:40:26 GMT
If you are in the loan that is backed by the Munnings plus other paintings you may be interested in the following thread. Starting at post 472 on unbolted board, update new loans. Fs I do hope you are respinding to e mails to protect your lenders. Well let's just hope FS have securely stored this one as they are supposed to. If so it shouldn't really matter.
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bg
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Post by bg on Aug 23, 2017 16:10:43 GMT
As it is for £1.3m hopefully we will have a chance to read the particulars before it fills! I =thought= ablrate were going to look at some bid restrictions, at least for the first couple of hours (after the way the generators flew off the shelves). Admittedly this is a bit bigger, but even so .... Fairly tepid response all told..
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bg
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Post by bg on Aug 23, 2017 14:02:24 GMT
I am still learning about P2P, much more at home with the stock market and reading company annual reports, but will have a look through when the details are released. Only loaning up to 65% of the assets value, plus PGs, means the 15% looks suspiciouly high? Would the rate not be higher to make the loan viable given the short duration? It's the kind of loan that would be on AC @ 8% which really makes me question why it is on ABL @ 15%
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