|
Post by bengilbert on Jan 20, 2014 16:18:58 GMT
I think there is no doubt that the inability to sell at a premium makes the market somewhat inefficient, for the reasons samford71 points out. I also see that there can be advantages to keeping things as they are, including preventing flipping.
If Assetz ever do think of allowing sales at a premium, I wonder if one way of doing it, following on from the suggestion above, is to make all secondary market sales in the first 3/6 months after drawdown at par (or discount), and from then on allow sales at a premium.
I think a minimum holding period might put some people off, even if they aren't intending to sell quickly (a sense of flexibility is one of the things I like about p2p - compare the ease and speed in administrative terms of selling a loan part to, eg, selling a holding of a unit trust).
|
|
|
Post by bengilbert on Jan 18, 2014 17:04:09 GMT
I wasn't in on the deal that seems to have gone wrong, but Funding Knight wrote yesterday in their general investor update email ('the good, the bad and the inevitable' - this was in the 'inevitable' section):
'It is with great sadness I report that this week, we have had to notify Investors of the first potential loan default. Our Chief Executive, Graeme Marshall, wrote in his Christmas email about its eventual inevitability, but that we were enjoying our default free record whilst it lasted!
We have notified all potentially affected Investors of the details and, whilst the payment is only 3 weeks late, we are sufficiently concerned by the lack of communication from the borrower that we have instigated our formal debt recovery process.
Unfortunately, defaults are always a possibility and I would remind you that the best way to minimise the risk to your return is to spread your investments across as many loans as possible. To read more about spreading your investment, please take a look at our page on understanding the risks.'
Credit to them for being so open about it - it bodes well for future transparency. I think openness about track record is going to be an important part of credibility for platforms as years of data start to build up. Availability to lenders of accurate information will be important in creating the right incentives for platforms to keep loan quality / recovery levels high.
|
|
|
Post by bengilbert on Jan 17, 2014 15:10:36 GMT
Well said, j.
|
|
|
Post by bengilbert on Jan 16, 2014 9:16:25 GMT
Guidance from the OFT (www.oft.gov.uk/shared_oft/business_leaflets/consumer_credit/oft140a.pdf) on the Consumer Credit Act 1974 says:
'3.21 The Act does not regulate: • a consumer credit agreement by which the creditor provides credit exceeding £25,000, or • a consumer hire agreement requiring the hirer to make payments exceeding £25,000 provided in each case that the agreement is entered into by the debtor or hirer wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by him. 3.22 An agreement is presumed to be wholly or predominantly for business purposes if it includes a declaration to that effect by the debtor or hirer, in a prescribed form, unless the creditor or owner knows or has reasonable cause to suspect that this is not the case. 'Business' is defined in section 189 of the Act, but a person is not to be treated as carrying on a particular type of business merely because occasionally he enters into relevant transactions.'
I wonder if this means that a company can lend to individuals so long as the total original loan amount is over £25,000? (And assuming that the platform has taken a declaration from the borrower that the loan is wholly or predominantly for business purposes)
|
|
|
Post by bengilbert on Jan 10, 2014 12:08:39 GMT
A couple of new deals have gone up on Funding Empire - a 3 year loan to a construction company who started trading recently, and a 1-year cash-flow type loan to a IT company who say they're waiting on a big payment owed by the EC.
I haven't had time to look carefully, but there's some info there for anyone who's interested.
|
|
|
Post by bengilbert on Jan 9, 2014 12:16:48 GMT
Thanks to both sides for the updates - the challenging questions and the responses from Wellesley.
Can I check I understand everything correctly. Let's say the loan with highest LTV is 60% LTV (I understand the average is lower). Also, let's say that Wellesley end up holding 25% of all loans, with 75% held by lenders. Then, if that loan were to default and you had to sell the property, then 1) if the property raises 60% of the loan value, everyone gets repaid. 2) if the property raises (0.60 * 0.75 = ) 45% of the loan value, Wellesley will lose their money and p2p lenders would be repaid in full 3) if the property raises less than 45%, if the shortfall is less than the provision fund, p2p lenders will be repaid in full. 4) any shortfall greater than the provision fund would be losses to p2p lenders.
A couple of things that would I think help make the actual level of security clearer would be: -guidance on what proportion of the loans Wellesley plan to hold (you write that you'll keep a portion of all loans but I don't think I've seen what % you expect that to fall to) -more details on the loan book, with the size, LTVs and portion held by Wellesley of each individual loan
(I know you may consider the latter too much detail to make open, but it would help those who want to dig into understanding the security position - perhaps some sort of spreadsheet download like the FC loan book?)
Also, I can't yet find the part in the statistics section about the split between lender and Wellesley money - is it up yet?
Finally - how have you managed to raise so much p2p investment so quickly?
Thanks.
|
|
|
Post by bengilbert on Jan 2, 2014 15:00:57 GMT
Lots more of the Anglesey bridging loan have gone on.
|
|
|
Post by bengilbert on Dec 12, 2013 15:02:55 GMT
2 issues here, I think:
1> Trustworthiness of savingstream. Obviously, some questionable choices made in how they've presented themselves.
2> (More interesting for me) Savingstream may or may not be one of them, but there are platforms allowing investments in loans which pay c. 12% pa and which are secured on assets worth 150% or more of the loan value (eg some Assetz deals, Lendinvest). Yet lots of investments are going into Zopa or Ratesetter loans paying 4 - 5.5%. How to make sense of this?
-The risk of the assets not being sellable to cover the loan value on the 12% loans is a lot higher than the risk of the a big increase in borrowers not repaying their unsecured personal loans (and so the provision funds running out of money)? -Platform risk? -It's mainly lack of awareness and people overestimate the risks on secured deals / underestimate them on provision fund-protected loans?
It seems to me personally that there is a lot of inefficiency in the market and rates often don't have much to do with risk, but perhaps I'm missing something. Could it be that, on some platforms at least, 12% with strong security actually isn't too good to be true? I doubt that can last for long but, for now, it seems to be the case.
|
|
|
Post by bengilbert on Dec 6, 2013 11:54:13 GMT
Apparently, they're trying to get some extra security on the deal: there was a mailing list email a few days back including this -
'Imp*ll*co S**vic*s Ltd has agreed to include a second charge on a residential property to support this loan request. It is now almost a third of the way there and we’re optimistic this new level of security will encourage further bidding. When we’ve got the value and equity confirmed we’ll amend the listing accordingly.'
I believe it's a property in France - details still to come. (If it is in France, I've no idea how this affects the enforceability of the security)
|
|
|
Post by bengilbert on Nov 25, 2013 17:00:16 GMT
I can see why there might be a bit of bad feeling about the loans today but it may work out for the best, if it helps to secure a stream of further deals from the same source. I also take it at face value when Assetz say they're trying to get the balance right for the sake of lenders as a whole, and anyone following this forum and the old one knows that Andrew engages with what people are saying. They may have miscalculated but that's only because the amount of interest they're now getting from lenders seems to have gone up a lot.
Interesting to see how quickly the £77,000 baby tomorrow gets filled.
|
|
|
Post by bengilbert on Nov 25, 2013 16:47:55 GMT
I'm not sure where it's written. It isn't made clear - I remember someone complaining about that on the old forum. It should really be made more obvious.
|
|
|
Post by bengilbert on Nov 25, 2013 16:43:03 GMT
I think it's an interesting question whether they should allow people to sell at a premium. In a way, not allowing it interferes with the working of the market - there might be people wanting to sell at a premium, others willing to buy at a premium, but they aren't allowed to. But I think I like it as it works now. It's very clear and simple, and there won't be people bidding just because they think they'll be able to sell at a premium later.
I also think earning interest up to the day you sell / from the day you buy is sensible, better than some other platforms where the holder gets all the interest even if they only bought it a few days before.
|
|
|
Post by bengilbert on Nov 25, 2013 16:36:47 GMT
At the moment, the aftermarket only allows you to sell at par (ie the buyer pays however much is left to be repaid on the loan). The seller gets interest up to the day they sell, the buyer starts earning interest from the day they buy it. There's a fee of 0.35% for the seller.
The system automatically splits any bids over £100 into parts of £100 each.
|
|
|
LendInvest
Feedback
Nov 16, 2013 17:45:34 GMT
Post by bengilbert on Nov 16, 2013 17:45:34 GMT
I've invested on a couple of their deals. I can't say much about their track record since the loans aren't due for repayment for several months yet, so I've yet to be repaid. All I can say is -the interest has been paid monthly on time (the loans are interest only, which is usual for bridging loans) -I went to their office in London to drop off copies of my documents (easier for me to cycle over than do copies and send them!) and had a chat when there. They seemed professional, it's a proper office, and I felt they knew what they were talking about. -If you don't know, they are part of Montello who have been doing bridging loans since 2008. You are basically buying parts of loans Montello have already made. They told me they haven't had a loss since they started out. (Though property hasn't been doing badly more or less throughout the time they've been making loans).
Hope that helps - let me know if you've got any questions about my experience with them.
|
|