am
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Post by am on Mar 8, 2018 19:03:10 GMT
I'm late to the party, but a few points that don't seem to have been made.
1) I don't understand the late change to the T&Cs. A cynical view would be that it provides more money to pay a dividend to bond holders, and on directors' loans. But, while not a lawyer (I am not a lawyer ) I have difficulty believing that it would stand up in court. My last activity on my account was last autumn, or earlier, and I can't see that they would be allowed to make such as change on me, especially when unadvertised. Perhaps they received (hopefully bad) legal advice that once they lacked FCA approval they were no longer allowed to maintain ring-fenced client accounts. The administrator at least seems to think differently.
2) I don't see why the loss of FCA permissions would change FSCS status (with the possible exception of people who invested in February). We still have FSCS insurance for cash in client accounts, not that we expect to need it. There is also FSCS insurance on investments, based on bad advice (such as advising an inappropriate risk profile for investments, or an overconcentrated portfolio) or fraud. It would be silly for your FSCS insurance to evaporate if the regulator discovers a problem and strikes the company off the register. But I don't know whether Collateral falls within the scope of this. Bottom line - I don't think FSCS is relevant.
3) The best option for lenders and borrowers is for another company to take over the loan book, analogous to the nil premium acquisitions of troubled building societies. The problem, other than the administrator trying get a price that no-one wants to pay (perhaps a deferred payment conditional on earnings would be the way to go), is the loans with overhanging future tranches. Some platforms are already struggling to fund loans; a failure to achieve a corresponding increase in lender base to compensate might result in negative outcomes. On the other hand acquiring the loan book increases their income with I suspect a relatively low operating capital requirement - I expect that the upfront loan origination costs are reduced. (On the other hand the IT costs of migrating the loan book might be a problem - the Coop Bank came a cropper on their acquisition of Britannia, and, IIRC, that was partly due to IT expenditures.)
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am
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Post by am on Oct 23, 2017 18:30:05 GMT
The 3rd option is awkward. "Everyone deserves 2nd chance" (yes) "so I'm in" (non-sequitur).
On the plus side this seems to the sort of project (urban regeneration) that one would like to see funded (provided it's viable); on the other side we had less that 24 hours notice which is not really enough time to analyse the proposal, which made it easy for me to lean towards ducking the planning risk (which I don't have a good handle on) and waiting for subsequent tranches.
It doesn't help that after a long run of loss-free development loans at FC and (except for one, on which I hope for a full recovery) at AC, I've recently been hit by 4 failures across Lendy and MT, so I'm a little spooked.
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am
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Post by am on Oct 23, 2017 15:58:47 GMT
My name is Ivor Freedman and I am a director of F & P Sponsors Ltd. My company has sponsored over £100m of P2P loans. We sponsored this loan on MoneyThing and we would not sponsor a loan and nor would Moneything accept the listing, unless we were entirely satisfied in our due diligence both with the people concerned and with the security offered. We have sponsored a number of loans for companies controlled by Mr N***** P****** on other platforms which have always been fully supported by lenders and conducted properly within terms. Mr Priestley has provided a detailed background to his family history, which can be viewed on the documentation tab of the listing. As always , lenders must make their own judgement on whether to lend or not, but I hope that the issue of his father's misdemeanours and Mr N***** P******'s support of his father at that time, as a naive and loyal 17 year old son, should now effect lender's decisions in this case. He has more than proved his integrity in the successful creation of a dynamic property development business. I think it would be harsh to penalise him for the actions of his late father. I think you've had an attack of missing negative syndrome (or "should now" should read "would not"). The impression I have is that only a small fraction (I'm not among them) of potential lenders have held his history against him; I suspect more people were spooked by the inaccurate statement of the purchase price. An explanation of how the money spent on the property post-purchase was deployed would have been likely to have eased concerns. Update: I see from the related poll that more people held the borrower's history against him that I expected (I was expecting about 5%).
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am
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Post by am on Oct 23, 2017 15:47:31 GMT
1) The borrower doesn't have to give a second charge for development finance elsewhere; there was always the option of refinancing this bridging loan at the same time. (But it's more hassle for the borrower so if he can get the whole project financed elsewhere he might find that preferable.)
2) There's a difference between a bridging loan on a property without planning permission, and a development finance loan for a property with planning permission; it's conceivable that there would more demand for the latter. (My decision - before and after all the discussion - was to wait for planning permission to be granted and consider participating in a later tranche.) OTOH, a number of people expressed a lack of conviction in the project's viability, and £4.5m is stretching the platform's capacity, so perhaps it was the right decision.
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am
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Post by am on Oct 23, 2017 14:42:14 GMT
I had a look at this site while I was in Crewe today.
Five properties (2 semis and 3 town houses) appear to be structurally complete and roofed, with half the windows installed. There's still some insulation to be added to the cavity walls, and to my uneducated eye looking through open windows little interior work has been done. Signage says that these should be complete by the end of November.
Two other blocks have been started; one has the foundations, and the other has the walls nearly up to first floor level. Signage says that these are scheduled for completion in January 2018.
There were people on the site, but they didn't look very busy. There were reasonable amounts of building materials present, and scaffolding up the side of the adjoining site.
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am
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Post by am on Oct 18, 2017 14:11:38 GMT
Out of interest, regarding the £1.2M spent on the property, how does this work from an accounting perspective? As the borrowing company has put £1.2M worth of revenue onto it's sister companies books does this just sit as debt on the borrowing companies books? I would have guessed that the asbestos removal was done by an outside specialist contractor. Beyond that you could study the planning application to see if there's any evidence whether the architects and planning consultants involved are in-house or external contractors. On the other hand work done to make the building safe sounds like something that could be done by the captive construction company, as could removing buddleias and birches and any other plants which have colonised the building. The building is newer that I'd assumed; it's reported on the web that construction was completed in 1902.
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am
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Post by am on Oct 17, 2017 16:45:25 GMT
Platforms don't seem to be held in very high esteem round here. One badly worded reply to one question, which was then clarified. NP and TW seem to have a good track record in Bradford. They've brought equity to the project. The comments on skyscrapercity are positive. This seems to be a genuine attempt to develop a grand old building. MoneyThing is in fact held in quite high esteem here. In the case of this loan (and in general) lenders want to make their own personal judgements about the viability of the project and the valuation of the security. Valuation reports are an art, not a science; even good valuation reports can be badly wrong when it comes to exercising the security. So, it's a natural step to look at the price history of the property; it gives you some idea of the wisdom of the market. We were told that the borrower paid £2m for the property, which gives us a comfortable 37.5% LTV. But someone checked (I'm guessing) the price paid data at the Land Registry, and found that the price paid was £1m, giving us a risky 75% LTV. Now, this was a distressed sale, and we're told that the borrower has spent an additional £1.2m on the property, so hopefully the first figure is a closer estimate to the real value. It is likely that the incorrect figure is just a mistake; somewhere along the chain of transmission someone misunderstood what the number represented. (If only because a deliberate misrepresentation would be found out.) As lenders what we expect is information that is accurate, and complete as far as is compatible with commercial confidentiality, borrower privacy, and reasonable efforts on the part of platforms (there's a tension with keeping costs down). P2P is a relatively new business, and platforms are learning on the job, and developing their processes in response to experience, customer feedback and FCA oversight. But checking the price paid data is a simple action which should already be part of the introducer's due diligence process, and the platform's due diligence process. (The check could have been omitted due to an oversight, or maybe performed early on and the discrepancy with the report provided later not noticed.)
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am
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Post by am on Oct 17, 2017 14:17:08 GMT
I'm sorry but I'm not convinced. The borrower has spent a total of £2.2m including the £1M purchase cost on the building. What exactly has the rest of the £1.2 million been spent on? This is a £750,000 loan yet £1.2 million of his own funds has already been spent but there is not any discernible change in the appearance of the building according to local reports. Time and time again valuations are questioned and discussions have gone on throughout the year regarding other platforms on this and recently on MT, but yet here we are again questioning the valuations. As someone said earlier in this thread, are there not enough red flags already. The borrowers "interesting" past is based on facts that happened, Valuations however, continue to just be plucked out of thin air. Good luck to those investing. According to MT money has been spent on making the building safe and asbestos removal, and romy points out that money will have been spent on architects and making the planning application.
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am
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Post by am on Oct 17, 2017 14:11:13 GMT
To bring up another point that hasn't yet been covered.
If I haven't missed something the valuation is based on the residual value of the project, with comparables used to estimate the GDV. Additionally, if I haven't missed anything, there's no planning permission, not even outline planning permission. In my opinion this means that a planning risk discount needs to be applied to the valuation.
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am
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Post by am on Oct 14, 2017 0:49:26 GMT
This was posted in the DD-C, but I can't see any reason that it can't be posted here (I did raise this point; I thought it might be moved ). Lendy Auditors has Resigned beta.companieshouse.gov.uk/company/08244913/filing-historyI don't believe there are any issues here and was addressed in the recent update, so more for reference than anything As an aid to anyone wanting to refer to the abovementioned recent update, it was the update of 29th September, which included the announcement of the appointment of a new auditor. "We have recently appointed (a) top 10 accountancy firm ... as our auditor ..."
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am
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Post by am on Oct 13, 2017 20:11:49 GMT
There is mention of a press report relating to these properties on the The House Crowd board. Googling finds a press release on the same topic from The Insolvency Service on gov.uk. It doesn't make happy reading.
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am
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Post by am on Oct 13, 2017 11:53:50 GMT
Perhaps there's scope for some boilerplate on the lines that the customer support team is unable to promptly answer the question, and will consult with colleagues elsewhere in the organisation. (Perhaps there already is, but it hasn't always been used when it should have been.)
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am
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Post by am on Oct 13, 2017 10:37:05 GMT
This is an awkward situation. I am not comfortable with this loan, but I am equally uncomfortable with having many thousands in idle funds waiting in my MT account for a 'good' one to come along. I am beginning to think these days 'acceptable' is the new 'good'. So I will have to decide soon whether this is 'acceptable' because sitting on the fence is rather uncomfortable too At an interest rate of 13% you can't expect perfect borrowers. You have to decide on your risk tolerance, and evaluate the risk on the loan. (If you diversify your portfolio you can in theory increase your tolerance for idiosyncratic risks because effective diversification reduces variance in returns.)
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am
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Post by am on Oct 12, 2017 15:45:48 GMT
Refinance (3 month extension) of a development in Dublin, available midday tomorrow. MT quote the original LTV, but the ratio of loan against advertised price in euros is under 25%. Exchange rate movements make it even better, except that MT took on the currency risk. (At current exchange rates MT can expect a nice little £10k bonus from exchange rate movements when this loan repays.)
However the limit on bids is £50, so there isn't a bootfilling opportunity, and probably most lenders will renew, so you can't be certain of even getting that £50. As it's only a 3 month loan you might prefer to direct your fast fingers at DFW tranche 2, and leave this to those of us who are sticking to our diversification rules.
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am
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Post by am on Oct 12, 2017 15:27:57 GMT
You obviously were not around here when Bolly was launched ! It took around a month This one is simply flying off the shelf ... even more so given the size
I must then defer to the greater knowledge and experience in this and the previous post. I just got the impression from the loan 'purpose', speed may be relevant. I don't have details to hand, but if you search for underwriter or underwriting on this board I think that you'll find an explanation of what happens if the loan doesn't fill promptly. (MT used to use their own float, but the FCA didn't approve.)
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