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Post by johncrosley on Oct 2, 2017 14:35:20 GMT
i am a cautious guy but am intrigued by the high return that SS/lendy are offering.
i saw an article in the press that said that lendy have a lot of loans in default something like 25%?
how can they continue to pay me a monthly interest if loans are in default? where do they get that money from? if they are using advance interest from new loans to pay interest on old loans isn't that a Ponzi scheme?
Whilst i like the thought of regular high interest payments i dont want to invest my cash if there is a chance this will implode.
can anyone explain to me how they fund all the defaults while protecting investors money.
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fp
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Post by fp on Oct 2, 2017 14:39:29 GMT
If the loan is in default you do not receive interest monthly, it accrues and is paid if\when sufficient funds are raised from sale of the asset.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 2, 2017 14:42:42 GMT
i am a cautious guy but am intrigued by the high return that SS/lendy are offering. i saw an article in the press that said that lendy have a lot of loans in default something like 25%? how can they continue to pay me a monthly interest if loans are in default? where do they get that money from? if they are using advance interest from new loans to pay interest on old loans isn't that a Ponzi scheme? Whilst i like the thought of regular high interest payments i dont want to invest my cash if there is a chance this will implode. can anyone explain to me how they fund all the defaults while protecting investors money. Hi John Lendy isnt paying the interest. Loans that arent in default pay interest from sums retained at drawdown ie the interest is advanced to the borrower and is repaid at term along with the capital. On loans in default, the interest will only be paid if the loan is repaid or sufficient funds are recovered to cover interest, so no interest is being paid on defaulted loans.
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mary
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Post by mary on Oct 2, 2017 14:44:21 GMT
i am a cautious guy but am intrigued by the high return that SS/lendy are offering. i saw an article in the press that said that lendy have a lot of loans in default something like 25%? how can they continue to pay me a monthly interest if loans are in default? where do they get that money from? if they are using advance interest from new loans to pay interest on old loans isn't that a Ponzi scheme? Whilst i like the thought of regular high interest payments i dont want to invest my cash if there is a chance this will implode. can anyone explain to me how they fund all the defaults while protecting investors money. Lendy is not a magic money tree! Capital is at risk, and while none has been lost to date, it is highly likely that some loans in default will produce losses, just that the recovery can take years, during which you get zero interest and your capital is frozen. I suggest you read the reviews and many threads on this forum and tread carefully, only investing what you can afford to lose.
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fasty
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Post by fasty on Oct 2, 2017 16:08:26 GMT
At interest rates as high as these, you should anticipate some losses and plan for them, for example by appropriate diversification.
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Post by rooster on Oct 2, 2017 22:36:14 GMT
i am a cautious guy but am intrigued by the high return that SS/lendy are offering. i saw an article in the press that said that lendy have a lot of loans in default something like 25%? how can they continue to pay me a monthly interest if loans are in default? where do they get that money from? if they are using advance interest from new loans to pay interest on old loans isn't that a Ponzi scheme? Whilst i like the thought of regular high interest payments i dont want to invest my cash if there is a chance this will implode. can anyone explain to me how they fund all the defaults while protecting investors money. To be clear and perhaps a little more optimistic: Your and my interest and repayment ultimately comes from either one of x2 sources: The borrowers bank account (when the loan is NOT in default) or by the sale of their secured asset/property (when it is in default). Sale of the asset is expected (though not guaranteed of course) to fully cover the loan and interest. If the borrower is in default and the asset sale somehow fails to meet value expectations, in a perhaps limited number of cases, the valuer's insurer may even be approached for recourse.
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Post by grotdog on Oct 3, 2017 7:49:28 GMT
I've been invested in lendy for some time now - and have seen it in the days when there was an active secondary market - you could sell out of a loan, diversify, move around in the loan portfolio. Now, almost EVERY loan is moving into a default position. Lendy make announcements about performance, and change them a week later. One loan recently was 'about to be repaid in full' a couple of days later "oh - um... we only got some of the money - we'll chase them for the rest" Their behaviour is unprofessional at best in my view. Having looked at the valuations, the majority are a joke. One house, valued at £1.7 million is in default, and lendy is saying they have to list for £1m to have a chance of selling it - that means it will sell for less than that. Is the valuer going down for unprofessional work, and being sued for the balance on his indemnity insurance? The default list grows rapidly - and with it, any chance of making a decent return because no interest is being paid on those 'investments' The secondary market is dead - most loans have major amounts of money outstanding - and few if any transactions happening - whilst your money is on the SM it apparently doesn't earn interest - presumably that's to deter people from putting loans on the SM - and make it look better. One loan turns out to be a plot of worthless goat pasture - the valuation is based on a cock and bull story about some new waste processing method being tried out on the land - and not on recoverable assets. Yet again, lendy investors have been led up the garden path by a supposedly rock solid valuation, written by a rics chartered valuer etc etc. Whether the valuer should be barred from rics, is another question. lendy need to seriously buck their ideas up - at this rate all the loans will be in default - they just announced a large London investment of many millions is going to default because the borrower has not even showed them evidence he has enough money to do the development. WHY DID THEY HAND HIM THE MONEY FOR THE PROPERTY before he gave them proof of project funding?  I'd steer clear... getting my money out as it trickles through. Some people on these forums seem to think it is ok to take large risks with your money - it is - but it is the responsibility of company directors to ensure they play with investors money with due care - clearly this doesnt seem to be happening. I suspect half the people posting things like 'you take your own risks etc' are lendy staff. |
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fp
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Post by fp on Oct 3, 2017 8:04:41 GMT
I get why you are feeling frustrated grotdog, but some DD before investing and an active eye on the ball can help help you avoid dropping into most of these holes if you set out with some sort of game plan and don't rely on the VR's, which are usually geared to make sure the borrower gets as much as possible from the loan. I withdrew all my investment from Ly a few months ago, and have foolishly dipped my toes back in twice since, within a week or so of doing so another 2 or 3 potentially loss bearing loans have reared their heads, i'm now out and staying out for the time being. The list of defaulted loans is one thing, but there are a number of other potentially "problem loans" on the books (IMO) which still haven't slipped down that wayside just yet, Ly was my biggest platform last year, but this year I think I would be over-egging it if I said I had invested in 2 out of every 10 loans offered, because not much has made the mark for me. I have to question Ly's past DD process due to the amount of chickens now coming home to roost, there are claims that this is now improving, we'll have to see, i'm going to stick to my word this time and stand at a safe distance and see whats left after the firework display ends.
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greeb
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Post by greeb on Oct 3, 2017 8:20:36 GMT
Yet more doom and gloom from people who dived in in the good old days some even with a surveyor background. Reminder no one has lost any principal yet. All loans are not for sale. Take a look at the live loans page to seethe many loans that would fly off the shelf if anyone wanted to sell. I am not a Lendy fake supporter but I sleep well enjoying 12% returns and having an exposure that is within my loss capacity.
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SteveT
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Post by SteveT on Oct 3, 2017 8:38:25 GMT
(Mod hat off)
Undoubtedly Lendy (and their lenders) have had a challenging year and we will be living with the knock-on effects of the incautious 2016 growth splurge for some years to come. That said, my observations would be:
a) Lendy are far from the only platform in this boat and I'm more encouraged by their actions taken in recent months on late and defaulted loans than I am by, say, Funding Secure's approach of passing on borrowers' empty promises (in some cases, obvious lies) verbatim and hoping something turns up. I'm also encouraged that some lessons appear to have been learned as new tranches and new loans come forward.
b) I too have been invested in Lendy for some time (over 3 years now) and I still have yet to lose a penny, unlike on several other platforms, so my "net stake" is now down to 70% of my current holdings. Might I still end up out of pocket? Possibly, but I rate the probability fairly low. Did I ever expect to earn 12% net return? No, more like 7-8% after bad debts, and I'm amazed that losses have yet to hit my account (or that of any Lendy lender)
c) Is there something really smelly about the approach taken by some RICS Valuers to valuing non-standard commercial property and development schemes? Have P2P platforms been naive (at best) / complicit (at worst) in presenting such valuations as reliable? Undoubtedly yes and yes. Lessons must continue to be learned and the worst examples must be pursued until the valuers have been struck off ("pour encourager les autres")
d) Am I pulling funds out of Lendy? No, although I've been withdrawing monthly interest for a year or more, so my account total is broadly static. I certainly work harder than I used to at selecting loans that I'm comfortable holding to term and avoiding "excessive concentration" (for me, the term "diversification" is overly simplistic if it's taken to mean holding a little of every loan, bad ones as well as good)
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r00lish67
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Post by r00lish67 on Oct 3, 2017 8:54:57 GMT
Just as they've had two shots across the bow in nearly as many posts, I will add that I personally feel much more..err...secure in investing my funds in FundingSecure as opposed to Lendy. They have a significant loanbook supported by a large number of investors, a properly functioning and liquid secondary market which bypasses the total blockage at Lendy by simple variable pricing, and plenty of recoveries under their belt. One loan in particular over there has attracted totally justified (IMV) significant criticism in recent weeks and has cost them some reputation, but i struggle to see how they could be perceived as significantly worse than Lendy. (unless you were particularly concentrated in Whitehaven or the Turbine of course  ). NB: I'm not a total FS fanboy, and in fact have berated them fairly regularly in the past on this forum. Nonetheless, just for some balance.. |
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bugs4me
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Post by bugs4me on Oct 3, 2017 9:13:15 GMT
(Mod hat off) Undoubtedly Lendy (and their lenders) have had a challenging year and we will be living with the knock-on effects of the incautious 2016 growth splurge for some years to come. That said, my observations would be: a) Lendy are far from the only platform in this boat and I'm more encouraged by their actions taken in recent months on late and defaulted loans than I am by, say, Funding Secure's approach of passing on borrowers' empty promises (in some cases, obvious lies) verbatim and hoping something turns up. I'm also encouraged that some lessons appear to have been learned as new tranches and new loans come forward. b) I too have been invested in Lendy for some time (over 3 years now) and I still have yet to lose a penny, unlike on several other platforms, so my "net stake" is now down to 70% of my current holdings. Might I still end up out of pocket? Undoubtedly, but I rate the probability fairly low. Did I ever expect to earn 12% net return? No, more like 7-8% after bad debts, and I'm amazed that losses have yet hit my account (or that of any Lendy lender) c) Is there something really smelly about the approach taken by some RICS Valuers to valuing non-standard commercial property and development schemes? Have P2P platforms been naive (at best) / complicit (at worst) in presenting such valuations as reliable? Undoubtedly yes and yes. Lessons must continue to be learned and the worst examples must be pursued until the valuers have been struck off ("pour encourager les autres") d) Am I pulling funds out of Lendy? No, although I've been withdrawing monthly interest for a year or more, so my account total is broadly static. I certainly work harder than I used to at selecting loans that I'm comfortable holding to term and avoiding "excessive concentration" (for me, the term "diversification" is overly simplistic if it's taken to mean holding a little of every loan, bad ones as well as good) At least some balance brought back into the discussion - thank you SteveT. Agree, LY are at fault with those spurious VR's along with a few other platforms. It's essential that a platform moves into profit but unfortunately their 'enthusiasm' for doing so appears to have introduced more than a couple of proposals where the VR's have been wildly misleading.
A recent post by mrclondon - apologies, unable to find the link - highlighted the cavalier approach taken by platforms in attempting to portray everything was fine. The (possibly deliberate) omission of material facts either before or during a loan term is totally negligent or at the very least fails the duty of care test to lenders.
Then we are offered the comfort of a provision fund which by it's nature must be discretionary - fair enough. But the constant kicking the can down the road based upon the unlikely event that a few more pennies may be recovered from a defaulted loan begs the question just when, if ever, the provision fund is going to either reimburse the affected lenders or not. In adopting this can kicking approach the platform is able to conveniently sidestep the issue whilst still being able to market the comfort of a provision fund.
DD is essential to lenders but is often time consuming and costly. The results often paint a totally different picture of the loan proposal that is being offered by the platform. I find it difficult to believe that my discoveries were not known to the platform.
Possibly of equal relevance is doing DD on the platform itself. Some of the individuals behind the platforms leave a great deal to be desired but nonetheless our so called protector aka the FCA grant them authorisation.
So we have conveniently low LTV's, a provision fund (possibly), FCA authorisation, etc. All smoke and mirrors in many cases. Definitely a case of caveat emptor.
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mikes1531
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Post by mikes1531 on Oct 3, 2017 17:00:49 GMT
lendy ... just announced a large London investment of many millions is going to default because the borrower has not even showed them evidence he has enough money to do the development. WHY DID THEY HAND HIM THE MONEY FOR THE PROPERTY before he gave them proof of project funding? : Presuming the above is referring to DFL017, I wonder whether you might be being a bit overcritical. How much money does the borrower really need to do the development? This loan is a 'DFL' so a large amount -- possibly all -- of the necessary funds might be expected to come from further Lendy tranches. Have Lendy concluded they don't have enough investor support to provide that funding and are they now looking for an excuse to back out of their commitment to the borrower? Either way, it doesn't look encouraging for the Lendy investors who supplied £7.5M for this loan.
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mikes1531
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Post by mikes1531 on Oct 3, 2017 17:06:31 GMT
In adopting this can kicking approach the platform is able to conveniently sidestep the issue whilst still being able to market the comfort of a provision fund. ... while simultaneously being able to show a good track record and minimal -- or nil -- investor losses. There's an obvious conflict of interest here. Platforms want to avoid taking losses as long as possible, while their investors want to know how bad things really are, take their lumps, and move on.
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Post by zzr600 on Oct 4, 2017 10:28:55 GMT
I don't find defaults per se, an issue. If Lendy can negotiate a good outcome for investors beyond the due date of a loan, then why not. What bothers me more are high LTVs coupled with what appear to be some unrealistic valuations on some loans, esp. the DFLs. Looking at some problem loans, the LTVs should probably not exceed 50% in many cases and the valuations ought to be based on the current state of the property, not a future potential that may never materialise.
So far I haven't lost any money in Lendy (~3 years of investing) but it will only take a couple of badly managed defaults to take a significant chunk out of the interest I've earned so far. If, post defaults, I'm earning <6%, I don't see the point of investing in a platform like this, as returns are simply not worth the risk.
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