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Post by mrclondon on Feb 17, 2016 16:33:04 GMT
Also not happy ... 11% is a poor reflection of the ongoing risk that the borrower will be unable to service the loan even at this reduced level.
If this goes through I will dump on the SM at the first opportunity. I've replied to their email saying "to provide balance there really should be some commentary on the alternative strategy of a demand on the loan, and appointment of receivers to realise the security.".
Apologies to those lenders that feel the borrower should be "helped" ... even with the reduced interest rate I'm not seeing anything that remotely looks like a sustainable long term business plan.
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Post by Butch Cassidy on Feb 17, 2016 16:33:20 GMT
The refinancing is long overdue & I am appalled AC have allowed this situation to drag on for so long, pushing what is clearly a cooperative borrower with a viable business deeper into trouble, I invested in P2P to get away from such bank style practises. Many lenders will not be happy at the lower rate, even though it is justified IMO & the obvious solution is to allow trading in loan parts, so the dissatisfied can liquidated their position, however AC seem dead set against such trading (without providing any reasons to justify their position, even after repeated requests) even though I would suggest that lifting suspensions doesn’t compel investors to buy or sell, only allows those who choose to do so that freedom (which IIRC was why the new trading system was introduced); enabling the market to work as Adam Smith intended.
I won’t bother posting on the Q&A as anything even remotely negative is removed, as a matter of course, even if it is loan specific & relevant, which is another example of poor AC practise. I’m afraid the handling of this loan along with #45 Leeds fiasco has extremely reluctantly caused me to question whether my AC investments have a long term future.
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mikes1531
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Post by mikes1531 on Feb 17, 2016 17:13:48 GMT
... I've just bought this on SM so not happy  : How did you manage that? I thought trading in this loan has been suspended since early December.
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Post by davidricketts1 on Feb 17, 2016 17:15:18 GMT
Got email today about few ideas like decreasing interest rate ect... I've just bought this on SM so not happy
Investboy The loan has been suspended since 03/12/2015 so not sure how you can have just bought it?
@butch Cassidy This isn't the forum for me to argue with you but without the correct financial information and input from the borrower (which was only obtained last week) I cannot decide what is and isn't affordable for the borrower and therefore cannot put something to lenders. Otherwise somebody would be accusing me of just making it up.
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Post by Butch Cassidy on Feb 17, 2016 17:41:43 GMT
@butch Cassidy This isn't the forum for me to argue with you but without the correct financial information and input from the borrower (which was only obtained last week) I cannot decide what is and isn't affordable for the borrower and therefore cannot put something to lenders. Otherwise somebody would be accusing me of just making it up.
This loan has been struggling with affordability since April 2015, obvious from it's repayment schedule, perhaps even before - Was AC having monthly monitoring conversations? The easiest short term answer to affordability stress is to extend the term or reduce the rate or a combination of both - Why wasn't AC at least exploring these avenues with the borrower for the last 9 months? Whilst platform rates are now averaging 9% (last 30 loans issued) this one was increased to 15% - Did no one question whether this might actually make things worse & not better?
I'm afraid that from the outside getting anything done at AC appears to be like wading through treacle, so whilst IT, compliance, marketing, legals & all the correct documentation is very important, the overriding issue must be sourcing, issuing & monitoring loans because without success in these areas everything else becomes meaningless & unfortunately I fear some of your more fleet footed rivals will catch, overtake & make your platform irrelevant - I certainly hope not (as a soon to be shareholder) but simply locking investors into loans (even under performing & defaulted ones) is unacceptable, especially when your trading system is specifically designed to enable discounting & blocking trades until investor acknowledgements of credit events are given.
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agent69
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Post by agent69 on Feb 17, 2016 18:00:49 GMT
Read the update and can't say that I am particularly impressed. The offer appears to be for possible jam tomorrow and I've herd that one before.
So if the borrower can't afford the agreed rates, then the proposal is to reduce the rate to a level that he can afford. That would set a very nasty precedent. I think it took 3 goes to get this loan off the ground. If the borrower can't fund the current £440k, just think what a mess he would be in if the first offering (I believe about £700k) had got off the ground.
There's been no repayment since September, and the proposal appears to be to backdate the reduced interest rate to this point. If I vote against the proposal, but it goes through will I be forced to accept the lower backdated rate or will I get paid the current 15% (which I assume I am contractually entitled to)
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Feb 17, 2016 19:27:15 GMT
It is a surprising decision to reduce the interest rate by 4%. I imagine most MLIA investors will want to sell.
I thought AC price loans to risk, that implies the loan is more secure than previously. On that basis I think this loan should be eligible for inclusion in the GBBA where it is afforded provision fund status.
If not, then AC are sending out a confusing message.
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daveb4
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Post by daveb4 on Feb 17, 2016 20:09:45 GMT
I totally understand everyone's frustration here and I think I agree with most comments especially setting precedents.
However was it not the banks enforcing on most businesses randomly that helped us get into this position in 2008.
Which way I will vote, really not sure, principle against being helpful to a person who is trying to run a business and make it work, a difficult one!
Let's wait and see what we are going to be specifically asked to vote on.
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mikes1531
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Post by mikes1531 on Feb 18, 2016 4:55:10 GMT
Let's wait and see what we are going to be specifically asked to vote on. I expect that many people, when presented with two options -- one of which will mean the loan becomes trade-able on the SM and the other means it will not -- will opt for the trade-able choice whatever that involves so that they will be able to try to exit the loan. And then there will be a mad rush for the door!
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sl75
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Post by sl75 on Feb 18, 2016 9:40:56 GMT
Let's wait and see what we are going to be specifically asked to vote on. I expect that many people, when presented with two options -- one of which will mean the loan becomes trade-able on the SM and the other means it will not -- will opt for the trade-able choice whatever that involves so that they will be able to try to exit the loan. Perhaps it will depend on how AC "spin" it in the description given in the call for votes... In the past if they want people to vote for the option where it DOESN'T become tradeable, they emphasise the extra interest that accrues due to the default rate, and only after the votes have been counted tell people that this means the loan remains suspended from trading. In this case, if they're trying to persuade lenders to vote for the reduction in interest rate, they'll emphasise being able to re-enable trading on the loan... and that seems to be the way they're trying to swing it, as they've already started preparing lenders for it even before there's anything concrete to vote on!
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Post by chielamangus on Feb 18, 2016 9:53:57 GMT
I am one of those who suggested to AC that the interest rate should be reduced. As almost everyone here has remarked, the present business cannot support the current interest rate (which is one of the highest on the AC platform), so we have two options - force the sale of the asset in order to recover our capital (and put a family out of business), or reduce the interest rate to an affordable level to allow the borrower to get back on track. The latter course should return our capital and interest. But what about our 15 per cent, I hear some shouting. Think of the the merchant of Venice, what the lender did in that case, and then think again. The 11 per cent proposed is still one of the better rates on offer. samford71 's proposal for capital repayments first with the interest being paid off last is an interesting one, and worth exploring. However. I would still like this interest rate to be at the lower level of 11 per cent. I know that this does not guarantee that we will recoup all the capital and interest that will eventually be due, but that applies to every other loan we invest in on this or other platforms. When this loan first appeared, it looked to me as one of the probably unsustainable ones, given the interest rate. I supported it with a modest amount, & hoped the borrowers could turn the corner. There was some sentimentality in the decision, I admit, based on my history. Now we are where I expected we would probably be, and, for me, the issue is not one of how I can get everything legally contracted to me, but how lenders and borrower can reach a sustainable compromise which gives hope to both sides. It may be that the business cannot even afford 11 per cent. I don't know. It may be that a year or two down the track the borrower will have to relinquish the property to pay off the debt. But at least we give the chance. |
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Investboy
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Trying to recover from P2P revolution
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Post by Investboy on Feb 18, 2016 11:38:11 GMT
... I've just bought this on SM so not happy : How did you manage that? I thought trading in this loan has been suspended since early December. Got email today about few ideas like decreasing interest rate ect... I've just bought this on SM so not happy
Investboy The loan has been suspended since 03/12/2015 so not sure how you can have just bought it?
Ok, "recenlty" was a bit general term, which meant "I wasn't in this loan from the beginning, bought on SM". After looking into my transactions I bought my allocation between 26/11/2015-1/12/2015. So 2 days before it was suspended. Call it bad luck. I guess I made some sellers happy though. The proposition I put to AC is I can accept lower rate / interest only but all the arrears should be added to the loan principle so there is no escape from the responsibility. So at the end the borrower will pay what was agreed it will just take longer.
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Post by chris on Feb 18, 2016 12:41:07 GMT
I am one of those who suggested to AC that the interest rate should be reduced. As almost everyone here has remarked, the present business cannot support the current interest rate (which is one of the highest on the AC platform), so we have two options - force the sale of the asset in order to recover our capital (and put a family out of business), or reduce the interest rate to an affordable level to allow the borrower to get back on track. The latter course should return our capital and interest. But what about our 15 per cent, I hear some shouting. Think of the the merchant of Venice, what the lender did in that case, and then think again. The 11 per cent proposed is still one of the better rates on offer. samford71 's proposal for capital repayments first with the interest being paid off last is an interesting one, and worth exploring. However. I would still like this interest rate to be at the lower level of 11 per cent. I know that this does not guarantee that we will recoup all the capital and interest that will eventually be due, but that applies to every other loan we invest in on this or other platforms. When this loan first appeared, it looked to me as one of the probably unsustainable ones, given the interest rate. I supported it with a modest amount, & hoped the borrowers could turn the corner. There was some sentimentality in the decision, I admit, based on my history. Now we are where I expected we would probably be, and, for me, the issue is not one of how I can get everything legally contracted to me, but how lenders and borrower can reach a sustainable compromise which gives hope to both sides. It may be that the business cannot even afford 11 per cent. I don't know. It may be that a year or two down the track the borrower will have to relinquish the property to pay off the debt. But at least we give the chance. Further to this I have spoken to the credit team and chielamangus wasn't the only lender to suggest this to us. The original rate was priced more to liquidity than risk simply because there wasn't as much appetite for that loan as many of our other loans pushing the rate up. 11% is still at or above the price for risk given by our loan model. As alluded to above I also get the feeling that some lenders are more focused on rate than return, equating the two where the relationship is more complex.
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Post by mrclondon on Feb 18, 2016 16:00:36 GMT
As alluded to above I also get the feeling that some lenders are more focused on rate than return, equating the two where the relationship is more complex.
Very true. The problem in this case is that at present my belief is the best return for lenders in monetary terms (as opposed to soft feel good factors) would be to call in the loan, and re-lend the money to other borrowers elsewhere in the country who do have a viable business plan.
For me this business is too unfocussed ... a student orientated pub, a mid-range bistro style restaurant and basic tradesmen accommodation. All opposite a Wetherspoons with their ultra-competitive pricing. I suspect it won't be easy to let the restaurant to a national chain. Remember they are in the financial mess they are in because of an ill-advised attempt to expand into Manchester city centre. I don't rate the business acumen of the borrower, and have seen enough to be very pessimistic of him being able to turn it around.
Somewhere (possibly further up this thread) someone reported having a pleasant meal in the restaurant. I too would make that my first choice if I was in town, but not if its converted to a pizza hut or equivalent.
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Post by chris on Feb 18, 2016 16:45:28 GMT
As alluded to above I also get the feeling that some lenders are more focused on rate than return, equating the two where the relationship is more complex.
Very true. The problem in this case is that at present my belief is the best return for lenders in monetary terms (as opposed to soft feel good factors) would be to call in the loan, and re-lend the money to other borrowers elsewhere in the country who do have a viable business plan.
For me this business is too unfocussed ... a student orientated pub, a mid-range bistro style restaurant and basic tradesmen accommodation. All opposite a Wetherspoons with their ultra-competitive pricing. I suspect it won't be easy to let the restaurant to a national chain. Remember they are in the financial mess they are in because of an ill-advised attempt to expand into Manchester city centre. I don't rate the business acumen of the borrower, and have seen enough to be very pessimistic of him being able to turn it around.
Somewhere (possibly further up this thread) someone reported having a pleasant meal in the restaurant. I too would make that my first choice if I was in town, but not if its converted to a pizza hut or equivalent. All good reasons for you, and I'm happy when lenders take an informed view like that and vote accordingly. It is after all your money and your prerogative as to how it is invested. I was more defending the position that AC are receiving direct criticism for this.
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