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Post by robberbaron on Oct 13, 2016 7:37:35 GMT
Given that SS said not too long ago that they were lowering risk yet we still see 70% LTV I doubt we'll see better quality just lower rates. But that's just supply and demand. The Brexiters have made our bed now we must lie in it.
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Post by robberbaron on Jun 27, 2016 15:43:16 GMT
I expect the interest payments to be made into the Provision Fund at the end of each month. The PF is always showing as 2% no matter what. Therefore there is no link between missed interest payments and the PF.
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Post by robberbaron on Jun 27, 2016 13:31:18 GMT
We all know that when you put your loan parts on the SM you don't earn any interest. Well instead of this money going toward SS' Ibiza party fund... The SM would still be as simple as it is now and would be much more liquid. Everybody wins! Well except SS' Ibiza party fund The parenthesis of those comments on this P2P board are factually incorrect. I have taken the time to go back and review the previous posts made by Saving Stream; p2pindependentforum.com/user/143/recent?page=3I quote the following, as well as highlighting and underlining the relevant section; Interest will be earned whilst loan parts are for sale. The reason we don't currently offer this is to discourage gaming of the SM by people not paying for their parts and still earning interest. The interest currently goes into the Provision Fund but are happy to amend this.
Anything to add with regards the SM whilst we are focussing on this? The provision fund is still sitting at exactly 2% despite the volume sitting on the SM. Clearly the missed interest payments are not being used for that anymore. I think the missed interest payments should either be used to increase the provision fund beyond 2% or to help relieve the SM overhang. Note: I don't think SS is doing anything wrong
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Post by robberbaron on Jun 26, 2016 19:35:21 GMT
The secondary market has always had liquidity problems. It used to be on the buying side and recently it has been on the selling side. Some parts especially for defaulted loans have no chance to ever be sold at par. Being able to sell part at a discount would solve the liquidity issue. However some here seem to be opposed to this idea. Instead I proposed an alternative which would provide liquidity while keeping the SM simple.
We all know that when you put your loan parts on the SM you don't earn any interest. Well instead of this money going toward SS' Ibiza party fund, I propose that it be used to reduce the cost of buying your loan parts. For example if you put a £100 loan part on the secondary market after 1 month it will only cost £99 to buy (£100 - £1 unpaid interest). The seller will suffer no capital loss since he gets his full £100 yet the loan parts would become more and more attractive over time. SS would still be able to claim that no investor has suffered any capital loss. The SM would still be as simple as it is now and would be much more liquid. Everybody wins! Well except SS' Ibiza party fund
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Post by robberbaron on Jun 23, 2016 12:35:52 GMT
Exactly the point I was trying to make less eloquently on another thread. I'm of the opinion that the extraordinary liquidity on the sell side that we experienced before was mostly due to people gaming the free auto credit facility provided by SS. They were essentially one-sided market makers paid unknowingly by SS to provide liquidity. As soon as the 7-days rule was established this activity ceased to be profitable and the "one-sided market makers" vanished.
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Post by robberbaron on Jun 23, 2016 11:55:56 GMT
I don't think boundah is talking about creating multiple accounts to get free extra credit which would be fraudulent but rather that he was "overprefunding" in order to get closer to his desired allocation just like I assume 90% of lenders were doing. The only problem is that he probably didn't realise the impact the new rule would have on his effective allocation.
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Post by robberbaron on Jun 22, 2016 16:43:14 GMT
I believe SS mentioned that repeated offenders would be banned. Also before SS latest change there was a loophole whereby it was advantageous to overprefund massively in order to earn some interest before selling the negative balance. I guess some people have not adapted to the new rules.
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Post by robberbaron on Jun 22, 2016 7:51:36 GMT
The second I saw it had defaulted I threw my loan parts straight on the sm. I was astounded when they sold quite quickly. Even if you assume the cf is going to cover capital loss, you will still have to wait for your money. Likewise mine went within minutes. I have a theory that SS bought them to save on paying out the interest when it all (hopefully) gets resolved. By doing this SS would be taking a big risk with its own capital just to avoid paying some interest. It's more likely that some newbs bought your parts on the day of the default without realising what they were buying or someone forgot to stop their bot. As it stand PBL020 parts are not moving and they won't until people are allowed to sell at a discount at least for defaulted loans. (disclosure: I don't own any part in PBL020)
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Post by robberbaron on Jun 22, 2016 7:23:53 GMT
This is as much a liquidity issue as the current situation. I also doubt people will be able to offload their PBL020 parts at face value even without Brexit. Why would anyone expect to offload a loan which is in default? Surely only a retard would buy a defaulted loan, nothing to do with liquidity.... There are many funds that specialise in buying defaulted debt and they are definitely not run by retards. But of course they don't buy it at par which is the whole point here. There is a price at which even you will be willing to buy defaulted loans unless you believe the recovery rate will be 0.
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Post by robberbaron on Jun 21, 2016 20:09:22 GMT
This is not some kind of abstract theory. The whole bond market has worked this way for hundreds of years.
Yes and it's the exact opposite situation where demand outstrips supply and it's impossible to get any parts unless you are running a bot. The point is the SM is always illiquid one way or the other.
If this was the case the entire bond market would be in a constant state of crisis. Panics and crises are the exception not the rule. The beauty of a free market is that no one is forcing you to do anything ;-)
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Post by robberbaron on Jun 21, 2016 16:37:11 GMT
Could people be just waiting for Brexit result before committing any more cash I was thinking the same. I don't think there's anything wrong with the way the SM works as we know you will get times of feast and times of famine, everyone will be complaining about fast fingers in a couple of weeks. This is as much a liquidity issue as the current situation. I also doubt people will be able to offload their PBL020 parts at face value even without Brexit.
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Post by robberbaron on Jun 21, 2016 15:54:55 GMT
I use Adblocker and I have never seen an ad from any of these. I can't see it in Task Manager - how can I see how much memory it is using? Google, Microsoft, and Amazon are paying Adblock Plus huge fees to get their ads unblocked
I'm only speaking from experience on the memory issue. To see exactly how much it is using, you'd need 3rd party tools to go down to a process level which is beyond the scope of this discussion. If you have no issues with it, feel free to keep using it. If you notice your browser is getting slow after being open for a while, then it could be the culprit.
Use pi-hole instead: no memory footprint and impossible to circumvent.
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Post by robberbaron on Jun 21, 2016 14:21:01 GMT
The SM can never be balanced because it is not really a market. A market with a fixed price will always have either excess supply or excess demand. SS should allow lenders to sell at a discount (or premium) as this would provide much needed liquidity to satisfy both supply and demand.
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Post by robberbaron on Oct 12, 2015 18:48:26 GMT
Thanks for that. All a bit complicated! The code at the moment, using cell formula for each loan (slightly different for the four 2nd charges), is =IF(RAND()<$H$3,A3,IF(RAND()<$D$1,A3*MAX(0,1-(1-$E$1)/B3),0)) where $H$3 is the prob of Total Loss (0.10% being tested currently) A3 is loan value (repeated down for each loan) $D$1 is prob of default (the D%, 50% being tested currently) $E$1 is %loss given a default (the L%, 50% being tested currently) B3 is LTV% for the loan (repeated down for each loan) These outputs are then summed for all loans and the Provision Fund deducted from the total (if total > PF, else 0 overall loss). A bit of VB (under a button) copies this value to another column 10000 times, which automatically fires a repeat of the RAND()s for the next iteration of the Monte Carlo. At the end, the resultant values are then averaged and divided by the loanbook total to calculate the average loss, and histogram also created. Not sure whether your correlation formula is appropriate in these circs. Not sure you could retrofit correlation into this model. I would instead generate n normally distributed random variables (using Box-Muller) for the n properties. This study of the UK housing market suggest the historical mean is 0.025 and the standard deviation 0.028 (also suggests the returns are not really normally distributed but it's still better than a uniform distribution). For the correlation coefficient I would assume that all the property prices have a very high correlation (e.g. somewhere between 0.80 and 0.90, higher for properties from the same borrower). Then compute the matrix R using Cholesky decomposition and use it to compute the returns ε i for all the property prices. Once you have that you can multiply the return by the property price in the previous period to get the current price and use some rule to determine if this causes the loan to be in default (e.g. if the price is lower than when the loan was contracted). You can then use the price you have computed to get the final loss. Note that you no longer need as input the loss given a default or the probability of default.
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Post by robberbaron on Oct 12, 2015 18:08:49 GMT
I probably should have explained that the list of loan was static and therefore had to be updated manually. There is a way to remove duplicates in Excel via functions but not in OpenOffice to my knowledge where I have to use filters instead. That's why it is static.
Thanks dawn for updating the spreadsheet.
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