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Post by beeje13 on Jan 1, 2018 15:35:29 GMT
Seriously stuartassetzcapital , Quote: "On the point re the 1.9% differential, in fact our average MLA (manual lending account) rate is around 8% not 5% so the current inflation premium available to investors is circa 4.9% pa gross, pre any losses." Please try to stop twisting my words in a bid to divert attention Away from your decreasing rates policy, I was specifying your lowest rate and using this to illustrate just how low you have stooped with your offered returns. Interesting that you have chosen to focus on this then spin your motives for dropping rates across the board. Poor show Stuart, and no I didn't come up the Clyde in a Banana Boat. Fudge all you wish, bluster too if you feel inclined but take a wee look at your SM, properly listen to your investors and watch carefully as funds leave... Happy New Year or was it a Bah Humbug, I didn't quite catch your drift? AC have clearly answered the lower rates before: there is increasing platform competition and ever growing demand from investors for loans in the space that they are operating in. They stated that they are not going to drop loan quality standards to chase higher returns, particularly in times of economic uncertainty. The rates are lower because the borrowers are paying lower rates. I see Stuart trying his best to answer questions here, and he gives really good insight and data that you would never get from some platforms.
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Post by stuartassetzcapital on Jan 1, 2018 15:51:29 GMT
Thank you beeje13, we really value every single piece of feedback from all of our investors including all those who aren’t keen on our offerings or proposals and this poll is in relation to some of some of that past feedback and a way that we could address those wishes whilst not lowering loan quality. I will repeat that there is no intention to change our business’s earnings here, nor change our current investor model but to offer some additional choice to investors with higher or lower risk and return aims than our current untranched vanilla loans. There seems to be good demand for this proposal and so we will review further but existing investors will still have our current offerings too and we have no plan to change those. If we can create a spectrum of investor offerings from the same loan origination then so much the better - too many platforms offer a single model and I feel that forces investors that don’t match that exact offering off platform.
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Post by mrclondon on Jan 1, 2018 18:38:59 GMT
At one time I would have voted for such a proposal without a second thought. However, now with the experience of studying dozens of valuation reports, I'm really not sure. Loan 330 (SD Cheshire) has a 42% shortfall after disposal of the asset, which would have meant pretty much a total wipeout for second charge tranche holders had that loan been tranched as per the proposal. (Remembering that the 1st charge holders get their interest upto the point of capital redemption before 2nd chargeholders get their capital.)
Other than "mass market" residential property, it is pretty much impossible to have confidence in the firesale valuation of any secured asset, and to my mind the proposed 2nd charges for 50-75% LTV slices would need 15-18% pa to adequately reflect the risk.
As a shareholder my concern is the reputational damage to AC if a number of these 2nd charge tranches become total capital losses.
I have reluctantly voted not interested.
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trouble
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Post by trouble on Jan 1, 2018 19:28:45 GMT
At one time I would have voted for such a proposal without a second thought. However, now with the experience of studying dozens of valuation reports, I'm really not sure. Loan 330 (SD Cheshire) has a 42% shortfall after disposal of the asset, which would have meant pretty much a total wipeout for second charge tranche holders had that loan been tranched as per the proposal. (Remembering that the 1st charge holders get their interest upto the point of capital redemption before 2nd chargeholders get their capital.) Other than "mass market" residential property, it is pretty much impossible to have confidence in the firesale valuation of any secured asset, and to my mind the proposed 2nd charges for 50-75% LTV slices would need 15-18% pa to adequately reflect the risk. As a shareholder my concern is the reputational damage to AC if a number of these 2nd charge tranches become total capital losses. I have reluctantly voted not interested. My view is that if the 'safe' tranche is 5/6th of the loan (50% ltv with total ltv 60%) then the top slice should get 6x the return, this is senior debt/mezzanine lending in all but name. At the rates proposed given the risk then i have zero interest in such lending.
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Mike
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Post by Mike on Jan 1, 2018 19:28:53 GMT
I'd be more interested in a genuine split of LTV where tranche A loans £x against 60% of the property and tranche B loans £x against 40%. So both could suffer capital loss but to different extents and rarely ever 100%. Maybe this is harder to structure?
A plain first and second charge makes the sale price a very sensitive parameter for the second charge holder which is too hard to estimate and properly price for me. Add to that accrued interest, default interest, and etc. on the first charge and it gets more complicated - would there be two votes and tranche B can default the loan and appoint receivers against the wishes of tranche A? As a tranche A holder there's not much reason to hasten recovery if the LTV is as good as billed. But tranche B will want it asap one assumes -- and all on the same platform...
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trouble
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Post by trouble on Jan 1, 2018 19:31:34 GMT
How would you control a voting structure on accepting a firesale offer. The topslice lenders would be screwed.
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angrysaveruk
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Post by angrysaveruk on Jan 1, 2018 19:58:21 GMT
Something else you might like to consider is having a secondary market for people to buy and sell loans that are suspended. One of the biggest risks for some people is having their money locked up for a long time if the borrower defaults. Allowing people to sell loans that are suspended at a discount is something that might be useful.
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ilmoro
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Post by ilmoro on Jan 1, 2018 20:28:02 GMT
Something else you might like to consider is having a secondary market for people to buy and sell loans that are suspended. One of the biggest risks for some people is having their money locked up for a long time if the borrower defaults. Allowing people to sell loans that are suspended at a discount is something that might be useful. Think this has been mentioned before and something that was being considered a while ago but nothing came of it. Cant remember is a reason was given. Im not sure how favourable the FCA would be to allowing investment in already defaulted loans (lendy suspension policy almost certainly a consequence of that) and there are additional complications as a loans purchased after legal recovery has been initiated are not eligible for loss relief. Would probably need to be restricted investor classes only as the risk profile is considerably higher.
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jj
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Post by jj on Jan 1, 2018 22:09:26 GMT
No thanks. That's why I invest via collateral for these kind of loans.
If AC did make a success of these type of loans it wouldn't be long before rates drop again.
I trust collateral's intent more than AC, sorry.
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Post by df on Jan 1, 2018 22:39:24 GMT
I've ticked "not interested". I don't see how the introduction of "split loans" could benefit me personally. However, if the change comes, I will adapt. I will probably go mainly for low rate/risk options, depending on the loan and rate.
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gibmike
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Post by gibmike on Jan 1, 2018 23:15:56 GMT
LendInvest did this on many of their loans in 2016 before the "competitive market" causes rates to plummet.
For the record, I would buy 60-70% of B and 30-40% of A depending on the rates.
Worked for me and I would be interested.
As it stands, there is 0 reason for staying when you have a LTV 75% loan paying 6% which is simply insulting.
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Post by peerlessperil on Jan 1, 2018 23:58:47 GMT
Mixed feelings on this. Pros - You can vary your risk/reward by weighting your allocation between tranches in a loan
- Attracts a broader spread of investors
Negatives - In a liquidation the interests of different tranches can be diametrically opposed, leading to conflict between fellow investors on the same platform. Not sure I fancy "peer vs peer" lending.
- AC would have a hell of a job being perceived as neutral when senior tranche investors vote for a quick firesale that leaves the juniors with nothing....
- AC will end up pricing to match supply & demand for each tranche, and the risk/reward proposition will be skewed. Great for sophisticated investors who can have a stab at pricing the structural subordination, but at the expense of the majority of p2p investors who can't?
- Junior tranches on anything other than prime resi will often get zero recovery, which is not great PR.
On balance, keep it simple and guard your reputation through a full cycle.
Let those complaining about declining rates exercise their right to seek higher returns where they think the grass is greener.
A genuine pooled product (not a loan allocation algobotch) that takes a junior tranche in every qualifying loan and steers clear of any direct conflict with senior lenders in recoveries/votes could be interesting (but would depress MLIA loan rates slightly). Mind you, AC isn't able to offer a properly diversified GBBA yet, so perhaps cover the basics first?
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Jan 2, 2018 3:10:55 GMT
sturatassetzcapital would the loans you are talking about be full drawdown loans on day 1 or, like most on assetz, phased drawdown, schedule not know to investors, until loan goes live?
The answer will change the attractiveness of your proposal for the gamers to the detriment of the inexperienced users of your platform.
You have raised an interesting talkng topic.
Another poster reminded us of your past comments about not dropping standards. Is this proposal not suggesting exactly that for rate chasers?
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duck
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Post by duck on Jan 2, 2018 7:36:19 GMT
Accepting that the devil is always in the detail and that is obviously not available at present my considered response at this time is 'No'.
Whilst I have been investing with AC since May 2013 I have not been increasing my accounts since the lower rates started to appear. I want a reason to but I don't feel this approach is the answer. Personally I don't mind digging into second tranches on other platforms and making my decision based on what I find. If something 'goes wrong' I'm quite prepared to accept that and put it down to 'experience/stupidity' ......... from reading this forum many are not.
One question that comes to mind is would the higher rate tranches have very clear 'health warnings' or a requirement (as on another platform I invest through) to self certify as 'sophisticated investor / HNWI' ?
So my 'No' is probably based more on the potential reputational damage that could be (self) inflicted on AC.
..... open to be convinced.
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m2btj
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Post by m2btj on Jan 2, 2018 9:18:10 GMT
It's a no from me too!
I view this type investment class as sub prime. I have concerns that when they go bad they can lead to the sort of contagion we saw in the 2008 financial meltdown. Greed drove the creation of US based 'junk' assets based on sub prime mortgage lending. A simple economic downturn saw these investments go bad & they eventually had a devastating effect on global markets. I also have concerns that if they go bad they will undermine the foundations of the AC platform, putting all other investment categories at risk.
AC has built a solid reputation for good quality investments, responsibly sourced & based on high quality DD. There is no need for AC to create this type higher risk commodity. If I want to risk losing my shirt there are plenty of platforms out there willing to do it for me!
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