markr
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Post by markr on Mar 5, 2018 15:45:33 GMT
I don't invest anymore in FC...but left with a legacy which stands at 145 defaults/late payments/on life support/or RIP Of those 101 are still classed as RBR ..which is supposed to mean that something is being syphoned out of them each month...albeit pennies in some cases. However as more than a few have final distribution notes attached and are clearly write offs, its difficult to believe any connected information at all. I think once a loan has been defaulted, the risk band or RBR status doesn't mean anything, it's just how the loan was at the point it was defaulted. Most loans that are defaulted have previously been RBR'ed, but some are taken straight to default and these hang on to their risk band, presumably because there's no point "retrospectively" RBR'ing them. Loans that are RBR but not defaulted are usually making reasonable repayments, but have had a "credit event", to borrow Assetz's terminology, or in some cases the loan has been taken into another company. It is extremely unlikely that these loans will have their risk band reinstated, but there's a reasonable chance that they will keep up repayments roughly in line with the payment schedule. It would be very rare indeed for a loan to have a final distribution without being defaulted, mainly because FC's system can't distribute arbitrary payments for a loan that isn't defaulted.
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markr
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Post by markr on Mar 5, 2018 11:08:26 GMT
I have a property loan due to make a payment tomorrow, so out of interest I tested Blender's method. It doesn't work for me. If I ask to sell £100.00 or more, it chooses a set of small loans to make a value of £109.95 (until I request £109.96, then it chooses loans that add up to £119.75, and so on). If I ask for £99.99 or less, it always tries to sell a £100 part in a D loan that is due it's first repayment on the 15th (until I get gown to about £88, when it goes back to smaller parts).
There does seem to be something payment related in the choice, because today it will choose that D loan every time, but tomorrow it will choose something else, but I'm yet to see a pattern a clear as Blender's in my account.
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markr
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Post by markr on Mar 2, 2018 20:02:36 GMT
Indeed, I think emailing FC to ask them a very specific question, then posting on a forum saying "I emailed FC to ask them this very specific question", has already blown your cover I'm afraid.
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markr
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Post by markr on Mar 2, 2018 17:15:28 GMT
Except that they have told me it is mandatory, yet have failed to follow their own mandatory policy. How can an investor have any certainty over how a loan will be handled if a mandatory policy isn't in fact mandatory? As far as I am aware, that has never been the case, and I can't find anything in their current FAQs or Ts&Cs that suggest it is (just an indication that they *may* default a loan after 90 days). FC regularly grant struggling borrowers payment holidays of 3 months or more; it would seem pointless to do this if they were then forced by their own rules to default the loan. Would you prefer that they did default the loan? This would call in the debt (i.e. the entire loan becomes due there and then), the company will likely then be insolvent and the directors would legally have to wind it up. You'd then join the queue with any other unsecured creditors, or chase the guarantors who you've probably just made unemployed, for any recoveries. Oh, and I'll see your 93 days and raise you: Expansion And Growth Loan (36663) — 205 days late, exposure £19.53 C
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markr
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Post by markr on Mar 2, 2018 15:28:29 GMT
Defaulting a loan is always discretionary. I'm not in this loan, so can't see the circumstances, but generally FC would prefer to allow a company that is trading and making some payments to continue rather than defaulting the loan.
When FC used external collection agencies (to whom they would have paid significant fees) to manage defaults, there was a definite reluctance to default loans, leading to many downgraded "zombies" that were neither defaulted nor clearing their arrears, but since bringing recoveries in-house, my experience is that they make a considered judgement about what is likely to produce the best outcome for lenders and the borrower.
In this case, if the loan has been late for a year but now is 90-odd days late, it seems the company is able to mostly meet it's repayments, but not able to clear the arrears. It seems right that FC has decided not to pursue the arrears or default the loan if this risks the future of the business, as long as the borrower is open and co-operative. It's the "direct debit cancelled, no further contact" outfits that they tend to lean hardest on.
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markr
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Post by markr on Mar 1, 2018 21:46:34 GMT
Yes I'm sure that, in the preparation for their £1bn flotation, they are desperate to hold on to your 200 quid. IT cock up I could believe. Conspiracy, nahh.
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markr
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Post by markr on Mar 1, 2018 16:31:35 GMT
To start a new account, yes, dribble in over time to improve your initial diversification. However, even with a lump sum initial deposit, amortisation and random smaller SM purchases will mean an account will settle down with something like 400 loans.
FC's loan book does have a tendency towards early failures, so your losses are likely to come in ~0.5% lumps, which can be unsettling. But conversely, those that survive infant mortality will mostly go on to perform well and cover future losses. FC investment is definitely for the long term.
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markr
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Post by markr on Mar 1, 2018 15:58:37 GMT
I wasn't happy with lending 0.5% of my portfolio per loan. I can understand that, and pre-September I was a super-diversifier too (with over 2000 loans). But, if you look at FC's statistics, it actually doesn't make much difference. The mean rate and 90% confidence interval is pretty flat after about 300 loans, so although the day-to-day returns will be lumpier (steady upward periods with sudden, large, drops), the trend will be similar to a highly diversified account.
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markr
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Post by markr on Mar 1, 2018 14:32:50 GMT
Well, I never left which means I can't really comment on returns as my account is still heavily influenced by pre-September earnings. I'll be opening a new IFISA account in April, though, so I will have a new account to compare.
The box isn't black, it's nearly as transparent as it was before, but no longer has the rubber gloves in the side so you can't reach in and tinker with the contents. You can no longer see what is on the primary or secondary markets, but you can see everything about the loans you hold, including the updates that never come, if you choose. You can see the credit score and accounts, and even the Q&A page (always empty as no one can ask questions!) although of course you can't use this information to guide your investment choices. Or, you can also choose not to log in at all, and just let FC get on with it.
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markr
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Post by markr on Feb 27, 2018 18:24:29 GMT
...until investors en masse vote with their feet there is no chance of things changing. Why should we (and why should they)? 7-ish percent target rate, excellent diversification, fee-free sellout in a highly liquid secondary market, no effort on my part, from a well established successful platform. You might not like it but, as your figures show, plenty of people do. The target return may be a tad optimistic, but it has to fall a fair way to reach, IMO, its nearest rival, Assetz GBBA2 (and if FC fail to reach their target there's a good chance Assetz will too).
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markr
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Post by markr on Feb 26, 2018 15:26:38 GMT
I don't think borrowing from P2P sites would be the best way to do this because P2P isn't competitive at the low-cost, prime borrower end of the scale, not many lenders would be happy with the 2.9% before fees that Sainsburys offered above for example. You'd likely be breaking the Ts&Cs on most loans by using the funds to invest, although this is easily worked around or simply ignored.
I think, as others have said, outside of an IFISA the tax payable will seriously dent any profit, so the only reason I could see to do this is to prevent losing any of your year's ISA allowance if you don't have liquid funds to top it up yourself. Even then, you'd really want another source of income to pay the loan to avoid having to take money back out of your ISA.
Bear in mind that the base rate is expected to tick slowly upwards, while P2P lender rates have been steadily falling, and also remember that increased rate generally means increased risk, so don't be tempted to use a platform's "headline" rate in your calculations, but make a reasonable or even pessimistic estimate of losses. Finally, don't forget the cash drag associated with having a lump sum to invest.
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markr
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Post by markr on Feb 14, 2018 13:54:56 GMT
In my case my sellable loans represent 92.14% of my total. I'm not sure how this compares but I can't say I'm overly happy about it. It depends on your portfolio but for a mature portfolio you might expect 3-5% (depending on your mix of 12-60 month loans) of your capital to be in loans in their final month. If you have property loans in their final month then all your initial investment in that loan is unsaleable. Nearly every loan spends a day or two in "Processing" when a payment is due, and there's no reason to suppose that they won't return to "Live" (maybe a few will turn Late, but equally a few late ones will bring their payment up to date). Maybe 0.5-1% of your loans will be in this state. So the upshot is that at maybe around half of your non-sellable loans will be sellable within a month, but you'd need to do the sums on your own portfolio, by subtracting the value of loans in "Processing" and those with 1 month remaining from your unsellable total. This will give you a better estimate of what is long-term unsellable. Bear in mind that property loans routinely run late, though! Clearly, if you want to sell out all you can, you'd need to sell what you can now, then wait a month and sell out again.
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markr
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Post by markr on Feb 6, 2018 15:27:55 GMT
I work part time, and spend the rest of my time doing pleasurable things or being lazy.
I used to spend a lot of time on P2P sites chasing returns, mainly Funding Circle and the "12% sites", but these days either the opportunities to tinker are being taken away by the platforms, or I'm deciding its not worth the effort, and so I'm moving towards the more automated approach.
I still log in to FC most days to see what autobid has bought me, I go in to RS to re-invest repayments (don't trust Market Rate), I invest in MLIA loans on AC when they email me, and I check my smaller investments when the mood takes me. I will probably pull out of some smaller platforms to simplify things even more. Stocks and Shares are mostly in tracker funds with a few actively managed funds which I keep an eye on occasionally. My BtL properties are with an agent who emails me every so often to authorise a repair or suchlike.
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markr
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Post by markr on Feb 3, 2018 18:51:17 GMT
If there's no comments then the information isn't anywhere else, except perhaps on a Post It note on FC's office wall. I think it would be unusual for a loan to go so late with no comment, but updates are hit-and-miss and there doesn't seem to be any policy.
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markr
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Post by markr on Feb 2, 2018 19:28:19 GMT
Just had 5 defaults from my previous life which totals £90. If those defaults were of the modern variety then that would be £650. To invest the same amount of money in your previous life would take 7.2 times as many loans as it takes in the modern variety, and therefore you'd see only 1/7.2th of the number of defaults. So, if all your loans were modern ones, you'd expect to have seen 0.7 defaults; in other words you might have losses of £130 so far, but there's a chance you'd have lost nothing.
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