chris1200
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Post by chris1200 on May 4, 2020 9:17:40 GMT
Well I’ve clicked the withdraw button now, I lost money with the boiler room op that was Lendy and can’t afford to lose any more . hopefully will get my £10000 in June / July looking at current payout times . I'm thinking about the same for my withdrawal from 13 March (maybe June rather than July) - but I really hope you're the one that's right!! (Edit: If we're talking about Access)
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Post by Ace on May 4, 2020 10:14:32 GMT
Well I’ve clicked the withdraw button now, I lost money with the boiler room op that was Lendy and can’t afford to lose any more . hopefully will get my £10000 in June / July looking at current payout times . I'm thinking about the same for my withdrawal from 13 March (maybe June rather than July) - but I really hope you're the one that's right!! (Edit: If we're talking about Access) Surely there's no chance of requests made today being satisfied any time this year. There will be zero new cash going in, only a very small trickle of reinvestments from the unaware and no-one cancelling their withdrawal requests. Releases are going to be a very small fraction of what they were going forward. Most likely that were all going to have to buckle- up for the remainder of our loan contracts, and quite likely for a capital haircut as well. Have to feel sorry for all those that were persuaded to cancel their RYI requests.
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wapping35
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Post by wapping35 on May 4, 2020 14:07:07 GMT
Remember this ? April 8th 2020: "£4.65 boost to Provision Fund"...Quote is the headline from RS's email....
I have asked RS to clarify what the impact of this is / was on the PF coverage ratio now at 74%....
==================== Dear RateSetter,
I denote the email below which you sent on April 8th and today you telling me the PF coverage ratio effective April 1, 2020 has fallen to 74% and we have entered a stabilisation period for 8 months with a 50% interest rate hair cut.
Can you please confirm what impact the debt sale had on the PF.. i.e. Are you saying the coverage ratio of 74% reflects the £4.65m "boost" (I quote from you) and the fall would have been even greater if you had not completed the debt sale, Or are you saying the debt sale happened after April 1 2020 and it will lift the coverage ratio (if so by how much??)..
I note you say the debt sale occurred "last week" which given the email was sent on a Wednesday 8th April means the week of March 30- April 3rd which spans April 1st so the position is entirely confused and unclear, which is not acceptable as a communication given you are starting a material change i.e. a 50% interest rate hair cut. If there was no hair cut, I agree the question would be moot.
Can you please clarify.. i.e. Does the 74% Coverage ratio reflect the "boost" (your words) of the debt sale ? i.e. The number would have been even worse if the debt sale had not occurred...
With regards,
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Post by Ace on May 4, 2020 14:20:52 GMT
Remember this ? April 8th 2020: "£4.65 boost to Provision Fund"...Quote is the headline from RS's email.... I have asked RS to clarify what the impact of this is / was on the PF coverage ratio now at 74%.... ==================== Dear RateSetter, I denote the email below which you sent on April 8th and today you telling me the PF coverage ratio effective April 1, 2020 has fallen to 74% and we have entered a stabilisation period for 8 months with a 50% interest rate hair cut. Can you please confirm what impact the debt sale had on the PF.. i.e. Are you saying the coverage ratio of 74% reflects the £4.65m "boost" (I quote from you) and the fall would have been even greater if you had not completed the debt sale, Or are you saying the debt sale happened after April 1 2020 and it will lift the coverage ratio (if so by how much??).. I note you say the debt sale occurred "last week" which given the email was sent on a Wednesday 8th April means the week of March 30- April 3rd which spans April 1st so the position is entirely confused and unclear, which is not acceptable as a communication given you are starting a material change i.e. a 50% interest rate hair cut. If there was no hair cut, I agree the question would be moot. Can you please clarify.. i.e. Does the 74% Coverage ratio reflect the "boost" (your words) of the debt sale ? i.e. The number would have been even worse if the debt sale had not occurred... With regards, Since the sale happened at the price the loans were already accounted for in the PF it will have had no impact on the value of the PF.
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Post by Deleted on May 4, 2020 14:32:03 GMT
Since the sale happened at the price the loans were already accounted for in the PF it will have had no impact on the value of the PF. That's what I thought, but the new FAQ says (my bold): We always do all we can to ensure the loan portfolio performs, and our borrower customer service team and our collections and recoveries teams are working very hard to support borrowers and keep the loan portfolio performing. We also recently successfully completed a debt sale which brought in £4.65m of cash in to the Provision Fund and boosted the Interest Coverage Ratio because the sale proceeds were higher than our expected recovery assumptions. We have also increased the amount that new loans pay into the Provision Fund, with new loans being written with a Coverage Ratio above 100%.
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Post by Ace on May 4, 2020 15:24:17 GMT
Since the sale happened at the price the loans were already accounted for in the PF it will have had no impact on the value of the PF. That's what I thought, but the new FAQ says (my bold): We always do all we can to ensure the loan portfolio performs, and our borrower customer service team and our collections and recoveries teams are working very hard to support borrowers and keep the loan portfolio performing. We also recently successfully completed a debt sale which brought in £4.65m of cash in to the Provision Fund and boosted the Interest Coverage Ratio because the sale proceeds were higher than our expected recovery assumptions. We have also increased the amount that new loans pay into the Provision Fund, with new loans being written with a Coverage Ratio above 100%. Fair enough, but it does sound at odds with the statement they made when the sale was announced: "The debt sale process started in December 2019 and we are pleased to say that we did not need to reduce our price expectations in light of the coronavirus outbreak." It would seem natural to assume that their "price expectation" and their "expected recovery assumption" would have been the same thing, and would have been the value that it was accounted for in the PF.
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wapping35
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Post by wapping35 on May 4, 2020 15:25:56 GMT
Since the sale happened at the price the loans were already accounted for in the PF it will have had no impact on the value of the PF. That's what I thought, but the new FAQ says (my bold): We always do all we can to ensure the loan portfolio performs, and our borrower customer service team and our collections and recoveries teams are working very hard to support borrowers and keep the loan portfolio performing. We also recently successfully completed a debt sale which brought in £4.65m of cash in to the Provision Fund and boosted the Interest Coverage Ratio because the sale proceeds were higher than our expected recovery assumptions. We have also increased the amount that new loans pay into the Provision Fund, with new loans being written with a Coverage Ratio above 100%. Indeed and I am asking if the 74% reflects the "boost" or did it happen post April 1, 2020 so the current coverage ratio will be higher than 74% due to the £4.65m "boost". I too initially thought the impact was zero (back on April 8th) on the coverage ratio, but the position is now unclear hence the need for RateSetter to clarify.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on May 11, 2020 17:36:36 GMT
Thats a good point, i wonder by how many % points, i suspect few given it is realised cash upfront. So this could be a nice spin story.
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wapping35
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Post by wapping35 on May 13, 2020 10:09:16 GMT
This is the reply I just received:
Good Morning XXXX,
Thank you for your email.
We do apologise for the delay in our response. The coverage ratio of 74% reflects the £4.65m raised from the debt sale. The debt sale is a positive development as it brought forward money that was expected to be recovered over time from non-performing loans into a cash payment into the Provision Fund. Broadly, the movements from the debt sale have increased the Provision Fund cash, and reduced the Expected Future Inflows, along with increasing the Expected Future Losses.
If you have any further questions please do not hesitate to contact us.
Kind Regards XXX
RateSetter Customer Service
==========
I have asked them further clarification since if the £4.65m is indeed in the current numbers that would mean the cash balance in the PF of £5.84m would have been £4.65m lower if not for this recovery (effectively the PF cash fell near enough £5-6m in March) .
That said I think (hope) the RS CS guy has probably made a mistake.
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r00lish67
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Post by r00lish67 on May 13, 2020 10:43:47 GMT
This is the reply I just received: Good Morning XXXX, Thank you for your email. We do apologise for the delay in our response. The coverage ratio of 74% reflects the £4.65m raised from the debt sale. The debt sale is a positive development as it brought forward money that was expected to be recovered over time from non-performing loans into a cash payment into the Provision Fund. Broadly, the movements from the debt sale have increased the Provision Fund cash, and reduced the Expected Future Inflows, along with increasing the Expected Future Losses. If you have any further questions please do not hesitate to contact us. Kind Regards XXX RateSetter Customer Service ========== I have asked them further clarification since if the £4.65m is indeed in the current numbers that would mean the cash balance in the PF of £5.84m would have been £4.65m lower if not for this recovery (effectively the PF cash fell near enough £5-6m in March) . That said I think (hope) the RS CS guy has probably made a mistake. I doubt it's a mistake, personally. Bear in mind, the PF was quite commonly losing £1m - £1.5m cash per month in the good times. It doesn't seem unrealistic that they'd have lost 3 or 4 times as much (£5m-£6m) due to COVID-19. The other conclusion I drew when looking at this a while back was that they absolutely needed to halve lenders interest and have it diverted to the PF. That will add another circa £0.9m (from memory) per month, which combined with the PF cash total for this month may be just about enough to see the PF not go below zero next month. What they do after the next month.....umm...<shrugs> edit: updated borrower contribution figure (£0.9m, not £1.5m, had my maths wrong)
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r00lish67
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Post by r00lish67 on May 13, 2020 10:59:42 GMT
Whilst I'm at it, the other thing to look at is their PF net position i.e. ignore the ratios, just do some simple sums.
As of now, PF cash = £5.8m, expected inflows £23m, expected outflows = £39m
So, the net position of the PF once we've reached the end of the current loanbook is simply £5.8m+£23m-£39m = -£10.2m
That I believe though excludes the lender contribution to the PF. The lender contribution will be about 2.2% of outstanding loans (£830m, so £18m), which equates to roughly £0.9m a month when divided by the average term (20 months)
If we assume the lender contribution continues for the duration, then that takes us to: -£10.2m + (£0.9m x 20) = +£7.8m
So that suggests to me that if their forecasts are accurate, then the PF should be restored to good health. That is a gigantic 'if' though. The immediate issue is how the PF will stay solvent (i.e. sufficient cash to service requests) if they have to continue to pay out £5m/month in the short term due to borrower lates/defaults.
I can't see that type of call on the PF changing for the next 2-3 months at least, personally. If that happens, it will presumably be solved by some combination of further lender interest rate cuts, RS stepping into the breach, and in the worst case, lender capital contributions (capital losses).
edit: all the above very fag packet of course, omissions/corrections most welcome.
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wapping35
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Post by wapping35 on May 13, 2020 11:16:14 GMT
I will see what RS states in response.
What is concerning is if the £5.84m at April 1, 2020 includes the £4.65m "boost" ,meaning they burnt £5-6m cash in March, is what happens when the 1st May numbers come out in 2 weeks.
i..e The interest rate hair cut only started from May 4th so it would means if March burn rates are the new normal (and i would say April is probably worse since it is a full lock down month v March) cash could have been down to below £1m when they started collecting the 50% interest hair cut.
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r00lish67
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Post by r00lish67 on May 13, 2020 11:22:25 GMT
I will see what RS states in response. What is concerning is if the £5.84m at April 1, 2020 includes the £4.65m "boost" ,meaning they burnt £5-6m cash in March, is what happens when the 1st May numbers come out in 2 weeks. i..e The interest rate hair cut only started from May 4th so it would means if March burn rates are the new normal (and i would say April is probably worse since it is a full lock down month v March) cash could have been down to below £1m when they started collecting the 50% interest hair cut. I think that's about the size of it. It's a bleak picture, but doesn't seem an unrealistic one in the circumstances, unfortunately.
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wapping35
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Post by wapping35 on May 13, 2020 11:32:17 GMT
I will see what RS states in response. What is concerning is if the £5.84m at April 1, 2020 includes the £4.65m "boost" ,meaning they burnt £5-6m cash in March, is what happens when the 1st May numbers come out in 2 weeks. i..e The interest rate hair cut only started from May 4th so it would means if March burn rates are the new normal (and i would say April is probably worse since it is a full lock down month v March) cash could have been down to below £1m when they started collecting the 50% interest hair cut. I think that's about the size of it. It's a bleak picture, but doesn't seem an unrealistic one in the circumstances, unfortunately. Yep it could well be correct, but if it is to me at least it begs the question why did RS not impose the hair cut sooner. i.e. April 1 not May 4th. If so no doubt the May 1st numbers will be delayed (into June) like the April 1 ones were, if they need to think about an additional hair cut above 50%. But for now I will await RS's response to my email.
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jlend
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Post by jlend on May 13, 2020 15:19:24 GMT
I think RS should consider not automatically taking whole loans into the PF after 3 missed borrower payments.
RS should think about leaving these loans on the market and simply covering the missed monthly capital and interest payments for longer than 3 months. Only when it becomes much clearer a loan is a lost cause should the PF pick up the whole of the remaining loan.
Over time this will make a dramatic impact on the cash balance RS need in the PF each month. Obviously it won't impact the amount of losses the PF has to cover longer term but it will help the PF cash balance RS need over the next few months while more people hopefully get back to work. This could be a short term measure.
I also hope the RS fund raising is successful as this may mean that RS are able to divert a bit more of the borrower/lender interest rate margin to the PF.
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