bg
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FundingSecure (FS) in Administration
Renewals...
Aug 19, 2017 10:59:53 GMT
morris likes this
Post by bg on Aug 19, 2017 10:59:53 GMT
All I can say is the limits were wrong - again! In fact there wasn't any on the Porsche. How so? I didn't bother bidding for the RR (£100 for me isn't worth the effort) but looking at the investements there must have been around £2k available, so 20 people got £100 (give or take). How would you divvy that up then £5 each to make 25p interest? What a waste of time.
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bg
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Funding Circle (FC)
FC vs Zopa
Aug 19, 2017 8:47:33 GMT
Post by bg on Aug 19, 2017 8:47:33 GMT
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. They can't. It's very easy with hindight to say it was obvious a loan would go bad....but if someone is willing to post X loan id's of loans they have analysed and predicted will go into default in the next 6 months and then a lot of them do, I will conclude that they are a financial genius - not before. Until then I will stick with my belief that there is insufficient data to do proper DD on these companies (unless you get actually contact the companies involved for more info) and that FC credit checks are better than anything we can do. The best tactic is to run a diversified portfolio.
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bg
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Post by bg on Aug 16, 2017 18:19:02 GMT
But surely MT don't have any exposure to the underlying loan. I thought that was against the rules, hence the ending of INPL on the SM? MT's exposure is the money they've spent setting up (and monitoring) the loan (less any arrangement fees, which might be quite small, BPF taking the lion's share), plus the money they've paid out to the lenders as interest. They expected to get it back as their margin on the interest the borrower repaid at the end of the loan. As MT is pretty much at the end of the queue of secured lenders there's a fair chance that they won't get any of it back. I can imagine that MT might not pay monthly interest on future loans with an underlying bullet interest. Are we sure MT have paid the interest out of their own funds and didn't just retain it from the loan proceeds on drawdown?
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bg
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Post by bg on Aug 16, 2017 16:21:07 GMT
Afternoon, Re: Interest. Thanks very much for your comments on this one. On reflection some good points have been made as this is in fact a performing loan at the moment. Given that we have not placed the loan into default yet, we will continue to pay interest monthly as per the loan particulars. The loan particulars state the payment terms for a normal performing loan. Our T&C’s clearly state what happens in the event of default which is that interest is not paid monthly and will accrue. It is expected that this loan will be placed into default on the 20th September, when the loan reaches its term. I will update the loan particulars to reflect this.
Kind regards, Ed Thank you Ed. I know this inflicts more pain on you, but at least we can now be sure that MT honour the terms set out on the loan details page. But surely MT don't have any exposure to the underlying loan. I thought that was against the rules, hence the ending of INPL on the SM?
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bg
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Funding Circle (FC)
FC vs Zopa
Aug 16, 2017 13:25:40 GMT
Post by bg on Aug 16, 2017 13:25:40 GMT
Well none of the loans listed are late, all of them are fully up to date as they must be to be tradeable. If you think they are truely bad loans why have you chosen to keep them? At no point have I claimed that they are truly bad loans, in fact I have kept them because I think the opposite I have although sold some similar loans that have subsequently defaulted via the SM at par, which is exactly where autobid feeds from & why it has a lower rate of return than is achievable via manual selection. Many investors would prefer to avoid loans with late payment histories, CCJ's & other serious issues - this is possible with manual selection by reading the loan comments & not with autobid that blindly buys whatever fits the criteria. I support impaired SME loan's even though the risk of default maybe higher because I think it is the correct thing to do for the broader economy, I also rate FC's recovery procedures, mine is currently running at 44% & don't mind accepting a few losses as long as the impact on overall returns is not too great - but my approach will clearly not suit everyone. Fair enough - but when I said truely bad loans, I meant loans that are late, have a CCJ or have defaulted. I would say that a loan that had a CCJ that has been removed is not bad. Likewise a loan with a late payment in the past (this can happen for a variety of reasons) I would not classify as truely bad. But then again it's all a matter of opinion. The point I was trying to make (badly!) is that autobid can only buy fully up to date loans that are not in default and have no CCJ's. I think if you want an entirely hands off experience then it's fine if you are targetting a 7% return.
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bg
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Funding Circle (FC)
FC vs Zopa
Aug 16, 2017 13:03:06 GMT
Post by bg on Aug 16, 2017 13:03:06 GMT
Whilst I accept most of what is said above & am certainly not claiming any "inside info" MY BOLD is most definitely wrong; try 4272, 4871, 8120, 8404,10001, 14493, 14724, 16788, 18393, 18899, 27938, 30574, 36208 as just a selection which have had late payments & other serious issues that are still tradable on the SM & they are just some which I have chosen to keep, others have been sold. Well none of the loans listed are late, all of them are fully up to date as they must be to be tradeable. If you think they are truely bad loans why have you chosen to keep them?
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bg
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Post by bg on Aug 16, 2017 12:26:24 GMT
Thanks, I'm not interested in spending hours on DD, so if autobid can't deliver 6.9%ish I'll stick with z or maybe look at AssetzCapital. Ta for your time. I wouldn't listen to all you read on here necessarily. Some people think they can tell if a company is 'rubbish' or not by looking at a one line business profile and a few basic lines from a couple of years P&L and balance sheet - but you can't. I have seen plenty of companies with what appear stronger summary financial statements default and plenty of those with apparent weaker balance sheets repay just fine. Any loan that is late or missed a payment can not be bought or sold so you are shielded from truely bad loans. There is no 'inside' knowledge. Unless you actually speak to the particular SME you won't know if they have a strong order book, if they have lost a big contract or if they need a new significant item of machinery, if a key staff meneber has left/died etc etc - these are some of the major factors that can cause a company to default and nobody is doing that. FC have their own credit assessment team who have a lot more information than we can see and as with any platform (Zopa included) you have to place some trust in them. As long as you diversify then autobid should return 6.5-7.5% over a reasonable period of time (by that I mean minimum a couple of years). How it gets there is irrelevent as long as you get that return (ie if some loans default as they will). The ironic thing is if FC made their autobid complately black box (as Zopa now have done) so you couldn't see much information for each loan or manage any individual loans then you wouldn't get some of these comments. The funding circle investment trust (which also invests in randomly selected loans) also yields just over 7% which is an indication of what a random investment strategy will give you. I have also had a Zopa account since it started which has been in wind down mode for a number of years. I think you will earn a higher rate with FC autobid (7%) than Zopa's riskier offering (6% last time I checked). You shouldn't disgard FC just because they give more information than Zopa. If I were you I would diversify between the two platforms. In my experience speed of lending is also much faster at FC. FC also has the added bonus of being able to liquidate much quicker and cheaper than Zopa. 99% of the time you can sell out for a 0.25% fee in a matter of minutes. When I have tried to sell out of Zopa they charge a fortune.
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bg
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Post by bg on Aug 15, 2017 14:36:26 GMT
I have noticed in the Administrators report that BF holds an unlimited personal guarantee from the Director. I may be wrong, but this is not mentioned in the MT loan details. My questions for someone more experienced than me: do MT investors benefit from this guarantee? is there likely to be any value in it? (I understand this is difficult to say, but does it work that BF could go after any single personal item held by the director? i.e. house, cars, etc...?) just trying to understand if the PG is something to factor in the recovery value discussions... thanks! As I understand it yes MT investors would benefit as the loan is from BF just partially funded by MT. As for the value, yes there may well be some value. The company in question have a number of developments on the go, they're not a one development builder. I would expect the directors to be reasonably wealthy (although I have no knowledge of this) so would expect them to have to make the loan good (or declare themselves bankrupt).
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bg
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Post by bg on Aug 14, 2017 22:18:32 GMT
Maybe you are legally correct. It's very difficult to tell the law from googling. It's even more difficult to tell how this pans out in practice with P2P. But this is definitely more legally complex than "I have lent you money, now you owe me back" It's the same as any secured loan. If you have a mortgage on your house and stop making payments, the bank can reposess your house and sell it to recover their money. Any excess after fees and interest gets returned to you. Things have to be reasonable though. If your house is worth £1m and there is a £100k mortgage, they can't just sell it the next day for £150k (as that covers capital, fees and interest) and wipe their hands of it. They have to try and get the best price for it which is fair on everyone (ie they market it for a reasonable period, accept a reasonable offer and take appropriate legal advice). The receiver must act in good faith. Generally before this happens the bank will work with you to see if there is a way forward that does not involve such drastic action. The problem with such high risk bridging loans is that the assets can often be highly illiquid. You may say a commercial property or country house is worth £1m but if noone wants to buy it it's irrelevent. Market value is always an estimate. The receiver has to try and get the best outcome for all parties involved. If it becomes apparent that the best outcome is to sell the asset for £500k then that is what will happen. There isn't much the borrower can do about this. They can't say the estate agent said it was worth £1m so the receiver has to achieve that price, if however he can prove that the receiver was negligent in conducting their duties then he can sue them.
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bg
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Post by bg on Aug 14, 2017 18:08:17 GMT
One of FS's significantly overdue property loans just repaid in full (2234007285 - was due to finish 20/10/2016). Good work given the 70% stated LTV. In other news, the TVR has just been defaulted, anyone wanna buy a TVR for circa £6,500? Also on Friday 6696063822 repaid in full. A £560k loan. This loan had receivers appointed in February and was paused from the SM since then.
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bg
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Post by bg on Aug 14, 2017 16:49:10 GMT
It's not though. You are being paid 13% interest to take this risk and the borrower is paying you for it. You have to judge if that is a good risk/reward balance. This is not a business model specific to FS. It's how bridging loans work - thats both with P2P companies and banks. Oh, I agree that it's up to me to judge risk/reward. And I failed to understand the risk, which is my mistake. But which risks.... I'm prepared to take 13% interest for the following major risks that I had understood: 1) The LTV being insufficient to pay for the transaction costs of selling 2) The valuation estimate being sufficiently wrong that the actual value of the item is less than the sales value But I *thought* that: 3) The borrower had a strong incentive *not* to default I now think the borrower has a strong incentive to default, because actually *we* are guaranteeing the *borrower* a market-price that we can't predict. To the extent that the value-at-risk exceeds the amount invested. That's *really* bad. 4) If the borrower *did* default - which is under their control, not mine - there seemed a potential upside for me I assumed that FS would take any profit, and this was reducing the *platform risk* It seems I was wrong. I may have missed it but im not aware of the specific loan you have this issue with. I was talking in general terms. If the valuation of a loan is correct then the borrower does have a strong incentive not to default. If they do default it will cost them serious cash. We are not guaranteeing the borrower anything. The receivers duty is to get the best price they can....that is irrespective of any valuation. If they can only get 30% of the valuation then so be it..as long as they have followed procedure and realised the best possible outcome there is nothing the borrower can do. If you want the potential upside you thought you would be getting you are better off investing in equity instead of debt.
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bg
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Post by bg on Aug 14, 2017 15:18:53 GMT
It's not though. You are being paid 13% interest to take this risk and the borrower is paying you for it. You have to judge if that is a good risk/reward balance. This is not a business model specific to FS. It's how bridging loans work - thats both with P2P companies and banks. The borrower only pays you for this risk if he is prepared to meet his obligations and cough up on time, invariably this is not happening, and every time it does not happen, it means we the borrowers are taking all the risk's and receiving nothing in return, while fundingsecure have little if anything to lose as their cost's are covered in the fees they charge the borrower up front. I'm not sure if this is a model only specific to FS , Are their others that only pay the interest when the loan is concluded? Well if you like you can go with the other model (like with Lendy etc) where a little bit more is borrowed from the lenders and held back to pay the interest back to the borrowers over the loan period (so effectively you are paying yourself). All amounts to the same thing in the end.
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bg
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Post by bg on Aug 14, 2017 14:49:56 GMT
Ok...it seems that I haven't done my DD about this business model. Oops. Then I'm OUT. ASAP. I thought this was a two-sided risk if LTV estimate was wrong. But it seems like heads-they-win-tails-I-don't-win. It's not though. You are being paid 13% interest to take this risk and the borrower is paying you for it. You have to judge if that is a good risk/reward balance. This is not a business model specific to FS. It's how bridging loans work - thats both with P2P companies and banks.
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bg
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Post by bg on Aug 14, 2017 12:17:02 GMT
Or just maybe the Valuation and LTV are correct for once and FS know Capital & Interest will be returned? So what? And this is a genuine question I have about FS. The pawnshop model is NOT to only take the outstanding debt. If the borrower fails to redeem, the pawnshop gets to keep the whole value of the security, right? How/why is FS different? Sure, there is a cost to defaulting the loan, because there is a cost-to-sell, and also you are crystallising a risk on the LTV. But if RS has got the LTV correct, surely if the loan defaults, then minus selling costs, the residual is profit? Who gets that profit? Given the fixed-interest model, my assumption is that it is FS itself. But that doesn't seem to square with their reluctance to actively default loans. So, what gives? No, the pawnshop only gets to keep the profit if the value is less than £75. Any more and they have to pay the excess back to the borrower. Besides for the most part FS is doing bridging loans not pawn.
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bg
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Post by bg on Aug 13, 2017 14:02:27 GMT
well i'm not, only been on here 2mths and already lost £33.67 on a bad loan, i have 4 loans now downgraded so probs going to lose more money there, £16.78 in charges to sell me the bad loans on autobid in the first place, i'm begining to regret investing in fc ! You don't pay charges when using autobid.
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