upland
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Post by upland on Jul 26, 2015 20:11:15 GMT
mrclondon what do you think of the AC Green fund, at 7% with a provision fund? Do you worry that these funds will be severely tested over a normal economic cycle? A provision fund built up from a well-diversified and large enough book of loans should be capable of withstanding the impact of normal economic cycle, including random external influences to the UK economy. Not least the funding requirements for such a provision fund are capable of being adjusted if the coverage ratio starts to look iffy. The W&Co fund suffers from lumpy underlying loan sizes and a strong bias towards property security - it could well be be the first to be stressed. Transparency varies widely between the provision funds, and I far prefer the RS model of the fund continuing to grow ad-infinitum than say the SS or AC model where the provision fund is capped at 2% or 5% respectively of current loan values. The AC GEIA provision fund suffers from a couple of flaws if stress tested - relatively few but large loans (similiar to SS) meaning one total failure could wipe out the fund, and secondly the systemic risk that all the loans are to one basic asset class. The level of transparancy of the AC GEIA provision fund is arguably the worst of all the major players, but mitigated by the fact that all the loans are available for non-provision fund investmants so we will have oversight of the fact the fund is being drawn down. I think that if you want something that has a reliable and resilient outcome then one should engineer that thing and not another. I feel that it is using the green card to be seen as a good place to be when it really needs proper diversification.
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upland
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Post by upland on Jul 26, 2015 20:02:09 GMT
I think much better to call in the receivers right away. Say I invest £100. Now there is issue with planning permission and property looses 30 percent of value. I would still be covered as loan to value ratio is 70%. Let us say I still lost a further 10 percent of the capital for receivership fees etc. Had a receiver been appointed 7 months ago (after the initial one month of 'discussion') a total of 7 months would have been saved. Meaning that though now though I have only £90 pounds of my initial investment I would have been able to reinvest at 0.0083% per month and hence back up to £95. First loss is the best loss.. no need to drag it out. I find this 'approach' concerning to me as an investor as it drags out the financial uncertainty. Where can I find the current default rates on Assetz Capital site? In terms of loans in default, a fair few. In terms of lost capital, I think I'm right in saying that any losses predicted have yet to be crystallised (can anyone correct me?), so nothing as yet, but there are some forecast to represent a loss of varying degrees. #146, #57, #41, #35 initially spring to mind. There is no on-site stats on defaults other than in individual loan details. I think that there is just not enough consistent history to make any sensible statistics as yet with AC. Even FC are changing a lot and their defaults must be changing all the time. There was mention on the AC website of some default stats a while ago. I asked about it but I think that the mention has gone away.
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upland
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Post by upland on Jul 4, 2015 7:07:03 GMT
Its OK until the value of the p2p assets drop. I'm not sure what you mean by P2P assets. Do you mean the loans, the security for the loans, whatever might be worked on by the customer or something else? There are assorted potential asset-related issues, including: 1. A business customer borrowing to expand by buying equipment who then loses their main customer, leaving the firm in severe difficulties rapidly if they can't replace the customer. But this is one loan and borrowers can be selected that have no undue customer concentration, so it's not a major risk when diversified across loans. 2. A business customer borrowing to redevelop property who finds unexpectedly large extra work is required that they can't get funding for and who has to abandon the project, leaving partially completed property as the loan security, potentially below the assumed value. Again a single company risk preventable with loan diversification. 3. A business customer borrowing to buy stock based on an existing order -effectively invoice finance - who finds their customer breaching contract by cancelling the order, leaving the borrower with stock to sell and a need to find a new buyer. Loan diversification protects again. 4.A business borrower for property redevelopment after a major economic shock that causes demand for the property being produced to fall and properties in general to become hard to sell. On an individual loan level security valued conservatively can help but more broadly this can affect many borrowers and a whole platform, so diversification of platforms and lending types is the way to protect against it. I was loosely likening it to the way that some investment trusts use leverage / borrowing to enhance their returns or as house owners most of us have done well on borrowed money. Sometimes it goes wrong ... I do feel that the p2p market is pretty young and we have not seen it all yet. It was not a particularly serious observation though.
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upland
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Post by upland on Jul 3, 2015 7:19:02 GMT
Its OK until the value of the p2p assets drop.
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upland
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Post by upland on Jul 3, 2015 7:16:20 GMT
I suppose that it reflects that there is more money currently chasing too few borrowers.
Uninvested cash can certainly reduce those good returns to something more pedestrian. I used to have that with Zopa years ago.
I like the way with AC that you can set targets for several loans but do not need all the cash to be there. I top up my FC account regularly with enough to do what I want , it is now of a size that this is only a small problem.
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upland
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Post by upland on Jul 3, 2015 7:04:43 GMT
I am new on this platform and am still 'playing' so this is going to be interesting for me but I am still really waiting for Invoice Financing to start.
I too regard the RS 5 year as a sort of benchmark and currently my FC holdings tell me they are ahead of that. I expect that eventually my AC returns will be better than my FC returns.
I would imagine that AC is aware of this situation and take the view that it was better not to bother the lenders with "details". At the end of the day , after a sensible time with a reasonable number of holdings if my experiences are not that good then I (and I am sure many others) will drift away. So I must believe that this situation is being managed the best that it can be unless nobody is making any money ?
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upland
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Post by upland on Jun 25, 2015 5:36:56 GMT
I was surprised with FC how long the process takes , although I have no real experience on any other p2p site. One year my recoveries exceeded my losses and it was then that I started to appreciate that the timescales are long.
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upland
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Post by upland on Jun 24, 2015 6:08:56 GMT
I find it a nuisance when property loans have the same name. Unlike ordinary loans most are multi tranche and it just takes me a bit more work to figure out where I am with the holdings.
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upland
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Post by upland on Jun 23, 2015 7:36:05 GMT
Interesting , I think that 13695 is the same , as the term is still 18 months I guess that its a marginally worse offer ?
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upland
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Post by upland on Jun 23, 2015 7:18:26 GMT
Would I be right in thinking that 13686 is being offered with less CB than a previous tranche offering ?
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upland
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Post by upland on Jun 22, 2015 6:21:58 GMT
Many thanks all , these reasons seem quite feasible to me and I guess a bit of them all will make FCs Monday morning a little less calm. A lot of this is new to me and I am learning a lot , the thing that made me think twice was I looked at the LTV and the cursory figures and wondered if that had a bit more risk attached to it. I agree that two 5 bed houses could have more to go wrong than some other arrangement and it could swing from good to bad easily. It will make me look a bit more into what is proposed. What does anyone suppose will happen if this tranche is not filled ?
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upland
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Post by upland on Jun 21, 2015 20:19:50 GMT
13475 is shaping up to be a challenge for FC : still £180K short and only 22 hours to go. That's going to be a lot of Monday morning clicking for FCPF, even at £100 a time. Would anyone speculate why this is as short as it is ?
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upland
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Post by upland on Jun 21, 2015 14:34:05 GMT
13475 is shaping up to be a challenge for FC : still £180K short and only 22 hours to go. Looking at the proposition it makes you think.
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upland
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Post by upland on Jun 21, 2015 7:03:38 GMT
Just curious if you don't mind sharing. What happened with the default on the 40% LTV loan? I also would've assumed that was a safe bet! It was 14 paintings by the same artist. The loan was £13k and valuation was £32k. It defaulted and the paintings failed to meet a reserve at auction. Three of them were sold privately, but the others haven't been sold. The platform have given lenders 70% of their capital and one day hope to sell the paintings, so it is possible that a buyer will be found. Speak to FundingSecure and get yourself a bargain. Its possible that you will do well in 50 years when the artist turns out to be the next flavour of the month that nobody wanted when he was alive but everyone wants when he is dead. It does bring it home to you that the value of assets sometimes has an error attached that is considerable. I believe that residential property can have its complications if it becomes delapidated and the unpaid interest blooms or there is some more complicated legal charge structure. I dont know a great deal about the pitfalls being new to the game but I am keen to learn.
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upland
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Post by upland on Jun 21, 2015 6:37:28 GMT
Having noticed that most investors, on all of the platforms which I invest in, seem to be pretty flush with money, I am wondering if I am stark raving mad! I am 81, single, own my bungalow valued at around 180k, have an income of around 9.5k and savings of around 18k in other words I am as poor as a church mouse.
I have all of my savings, apart from a 1 year monthly saver in which I save £200/month at 4%, invested in four P2P platforms and have a total of 23 loan parts. So far I have had no losses but have earned worthwhile interest from SS which is the platform I have been using for a couple of years.
I guess the answer to the original question is - "depends on your age, family, dependents, how cautious you are, whether you are prepared to loose everything and whether you are prone to worry" Even after getting professional advice and doing your own DD (I have done neither) only you can make the final decisions regarding your financial affairs. 23 loans is not really a lot numerically , I roughly estimate if 'life' were to conspire against you that about 4 of them may become compromised. You can do the sums to estimate what the outcome would be. You probably will not get much notice that an individual loan is going sour. And then you will have to watch as the sorting out process rolls along , it takes a long time to achieve some recovery of funds , I got about 50% from FC over some years and I think that I have been lucky. I quite like p2p lending and I am increasing mine but there is a lot of change going on and its very hard to quantify the risk , whatever we mean by that.
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