Would you recommend FundingSecure?

If you buy anything on the sm you inherit the tax liability.

FS has made crass mistakes (IMHO even been negligent) in their own management of certain well documented and ongoing failing loans, and their bulls*****ng borrowers.
(So have other platforms).

For this reason some lenders have great mistrust over FS's actual competence, especially as they work on a pawnbroker principle, meaning a borrower does not pay a penny of interest while in possession of the loan, until it is redeemed.

Having stated the obvious, FS still has a lot of credible loans on its books and the flow of loans is good. Some of them appear well worth investigating, and investing in, especially when they are new ones, or properly monitored developments, but it is very useful to find out who the borrowers are on most of them; how many other loans they are taking out on various platforms,  and make judgements from their web reputations whether their use of your money is actually deserved rather than dodgy - never mind the apparent security value (which is almost always inflated). The secondary market is very good for selling. Be aware of the tax situation if you are buying; you pay the whole lot, not the seller.

So be wary, I'm still in FS.

FS is now my largest p2p platform, infact I have well over twice the amount in FS that I have in any other platform.

oldgrumpy 's post is a pretty good summary.  The deal flow is high, the SM astonishingly liquid (but this could change in a flash), and for tax payers the discount needed to guarantee a sale is significantly less than the tax liability being passed on.

The quality of the loans varies dramatically, and given FS's "lapses in concentration"  (putting it as politely as I can) the % loss on default across the whole loanbook is probably going to be higher than other platforms. That said, I've only had capital losses on two loans* since FS launched (some really awful modern art, and the NI Wind turbine), and I only hold two distressed loans (2 x powerboats) so I'm inevitably going to be more upbeat than most FS lenders who will be experiencing the anxiety of a multitude of distressed loans, some of which should never have been written by FS (e.g. Wimbledon, Rishton, Whitehaven development tranches)

But to be clear, almost all p2p platforms have written loans that they shouldn't have, and in many cases the chickens haven't come home to roost yet.


* whilst acknowledging that FS have covered minor capital losses as a goodwill gesture on a handful of other loans I've been involved in before the SM was launched.

I'd only recommend a handful of the perhaps 20 or so loans they email me each week. FS have some very low LTV loans with good rates but I have to admit I cherry pick these and stay away from most of their offerings. I'd recommend reading the loan summaries closely because they often state the loan is secured by a first legal charge then go on to say this particular tranche ranks behind other tranches. This means you effectively have a second or third charge security which in the case of a default is much more likely to suffer total capital loss (especially with over-optimistic valuations which seems to be rife on a lot of p2p platforms).

FS is my second largest p2p allocation (14%).  It's not because I like it, but probably a result of more frequent loan flow than L, MT, Col and ABL.  I prioritise diversification over quality, which results in having more funds in platforms like AC, FS and FC than in Abl, MT and Col.

FS is a pawn lender that moved into property sector, the same what happened to MT and Col.  There are still a fair proportion of pawn loans, but the renewals are difficult to get and the new ones are rare and come at lower rates.  Many pawn loans on FS are secured on obscure items such as medals, letters, guitar signed by former American president, miniature models of trains, books, boats etc. These are not easy to sell when defaulted.  Most loans are secured on property, but there is no comprehensive DD in place or available info to help you to do your own (very different from AC).  Probably bad comparison, but it is similar to FC - lots of loans, but lack of information for trying to do your own DD. I particularly dislike how they fiddle with loan names, probaly to get you investing in the same loan again.  You have to be careful - they swap words around, add new words to the title and give a new number when the loan is renewed.

Late payments are the norm, but like on Lendy, occasionally you get loan repaid on time or even earlier.  I have a substantial portfolio of "unredeemed" and up to 5 month overdue "active" loans.  I don't think FS handles defaults very well.

SM.  Buying is easy.  Selling is not unless you put a generous discount on your loan part.  If tax liability is an issue, you should avoid buying on SM.









 


 

You'll see threads of this ilk on the board. I have several loans in default from a year ago, I don't even bother reading their circuitous updates anymore.