jjc
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Post by jjc on Dec 21, 2018 16:36:13 GMT
We will never know. Seems like the borrower walked of laughing.Possibly. But maybe not. What we're missing here is the rate the borrower was paying for the loan. I've gone thru the loan's history (started back in Jul'15 as a 45k 12% loan, with a further 15k added at 14% a month later until both loans were eventually consolidated in Apr'17 at 13%) & the borrower has paid lenders have received £20,474 in interest over approximately 1247 days. Which amounts to 10%. But the borrower will presumably have been paying much more than the lender rate (with FS pocketing the difference, in addition to any fees earned for bringing the loan on). If the borrower's rate was actually 25%, he/she actually paid £40,438 over the 984 days during which interest was paid (I am assuming no interest was ever paid since 2/4/18). Which means FS made a profit of c. £20k (£19,964 to be exact, & ignoring any fees) vs a lender loss of c.£50k for those unlucky to be in the last loan. If the borrower's rate was actually 30%, he/she actually paid £48,526 over the 984 days during which interest was paid. Which means FS made a profit of c. £28k (£28,052 to be exact, & ignoring any fees) vs a lender loss of c.£50k for those unlucky to be in the last loan. Now I don't mind FS making a profit (profitability is one of the platform risk boxes I look to tick, & on this count FS have been much more successful than other P2P platforms), but on loans like this that have gone so badly awry (a sales price of under 12% the valuation, jeez) surely there is a case for FS to refund any profit they've made on the interest rate spread, or at the very least declare what that profit (or the borrower's rate of interest) actually amounted to.Failing that, the door is open for platforms to charge (unbeknownst to lenders) punitive rates of interest to borrowers that can realistically never be serviced, leading to high default rates (& losses) for lenders, whilst the platform takes rich pickings. "Fairness" arguments aside, this would not bode well for the P2P sector, & is arguably an important blind spot the regulator has to date not fully appreciated. Naturally, I have no issues with FS taking reasonable upfront fees for bringing a new loan on (there are costs associated with this service). But charging potentially very high rates of interest (without telling lenders when this is happening) is to me a big no-no that ought to be addressed. tagging fundingsecure (& mrclondon if of interest)
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r1200gs
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Post by r1200gs on Dec 21, 2018 16:41:10 GMT
Yet another borrower walking off with our money after making a very successful sale by pawn at a hugely inflated valuation. It really ticks me off that I am going to be unable to simply forget this shower because I'm certain that gems (ha!) such as Whitehaven are going to drag on forever.
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arby
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Post by arby on Dec 21, 2018 16:44:54 GMT
We will never know. Seems like the borrower walked of laughing.Possibly. But maybe not. What we're missing here is the rate the borrower was paying for the loan. I've gone thru the loan's history (started back in Jul'15 as a 45k 12% loan, with a further 15k added at 14% a month later until both loans were eventually consolidated in Apr'17 at 13%) & the borrower has paid lenders have received £20,474 in interest over approximately 1247 days. Which amounts to 10%. But the borrower will presumably have been paying much more than the lender rate (with FS pocketing the difference, in addition to any fees earned for bringing the loan on). If the borrower's rate was actually 25%, he/she actually paid £40,438 over the 984 days during which interest was paid (I am assuming no interest was ever paid since 2/4/18). Which means FS made a profit of c. £20k (£19,964 to be exact, & ignoring any fees) vs a lender loss of c.£50k for those unlucky to be in the last loan. If the borrower's rate was actually 30%, he/she actually paid £48,526 over the 984 days during which interest was paid. Which means FS made a profit of c. £28k (£28,052 to be exact, & ignoring any fees) vs a lender loss of c.£50k for those unlucky to be in the last loan. Now I don't mind FS making a profit (profitability is one of the platform risk boxes I look to tick, & on this count FS have been much more successful than other P2P platforms), but on loans like this that have gone so badly awry (a sales price of under 12% the valuation, jeez) surely there is a case for FS to refund any profit they've made on the interest rate spread, or at the very least declare what that profit (or the borrower's rate of interest) actually amounted to.Failing that, the door is open for platforms to charge (unbeknownst to lenders) punitive rates of interest to borrowers that can realistically never be serviced, leading to high default rates (& losses) for lenders, whilst the platform takes rich pickings. "Fairness" arguments aside, this would not bode well for the P2P sector, & is arguably an important blind spot the regulator has to date not fully appreciated. Naturally, I have no issues with FS taking reasonable upfront fees for bringing a new loan on (there are costs associated with this service). But charging potentially very high rates of interest (without telling lenders when this is happening) is to me a big no-no that ought to be addressed. tagging fundingsecure (& mrclondon if of interest) Thanks for the pretty balanced post. Gives a few things to consider. While we know that FS only get their share after the lenders get their capital, I'd never considered the issue of multiple renewals. I assume here that FS got their full fee at each renewal, and have only lost out on this final fee, but as it's just a renewal, there were only minal expenses actually associated with it anyway (item hadn't been revalued since 2015)
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jjc
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Post by jjc on Dec 21, 2018 17:06:15 GMT
who is the actual borrower? It would certainly be nice to know whether the borrower has any other loans with FS.These are valid points mentioned numerous times to FS. In this case perhaps particularly concerning given the (seemingly) special efforts made to conceal the borrower's identity - see the specific measurements of the stone not being disclosed & (for confidentiality reasons) the photo not being of the actual stone. As a layman I'm struggling to understand why these details were not disclosed. FS issue their loans to anonymous borrowers as normal procedure, what benefit is there to concealing this info (it's generally easier/easy to identify a borrower on a property loan)? Is it possible FS themselves received the redacted valuation from the valuer (& don't know the measurements)? If so, doesn't this point to possibly less wholesome behaviour on the part of the borrower (&/or valuer)? eg the former wanting to get rid (of possibly many more stones on the market) & the latter helping out? Maybe even over a course of months/years over a wide number of stones... fundingsecure a simple explanation should be possible? arby, thanks but it's not just the (likely zero cost) renewals (where FS get their fee upfront in any case). The issue is the (possibly very large) spread they're earning on the loan whilst it gets serviced. This spread can be so high that ultimately it entices (if not pushes) the borrower into default. FS have got their rich pickings already, lenders in the final tranche take a big hit. Not a healthy business model (for FS or the P2P sector).
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mjc
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Post by mjc on Dec 21, 2018 17:23:27 GMT
Don’t FS ask for ANY other security if their valuations are consistently so naff? Is that it then, no claim against any other assets they have? Proplend at least take PGs and often other security, they have respect for that! My few FS recoveries are all heading that way.
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Godanubis
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Anubis is known as the god of death and is the oldest and most popular of ancient Egyptian deities.
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Post by Godanubis on Dec 22, 2018 1:46:58 GMT
Don’t FS ask for ANY other security if their valuations are consistently so naff? Is that it then, no claim against any other assets they have? Proplend at least take PGs and often other security, they have respect for that! My few FS recoveries are all heading that way. Other security is unreasonable it is a pawnbrokers loan after all. They should just give loan based on lower LTV
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mjc
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Post by mjc on Dec 22, 2018 6:57:10 GMT
Don’t FS ask for ANY other security if their valuations are consistently so naff? Is that it then, no claim against any other assets they have? Proplend at least take PGs and often other security, they have respect for that! My few FS recoveries are all heading that way. Other security is unreasonable it is a pawnbrokers loan after all. They should just give loan based on lower LTV The idea of pawn is to take something of value. It was misleading for investors to think FundingSECURE held something of greater value than the loan. Hopefully within a few years I will turn a profit, I can invest in p2p sites I’m comfortable with. Just happens with FS and Lendy too often.
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arby
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Post by arby on Dec 22, 2018 8:10:38 GMT
Other security is unreasonable it is a pawnbrokers loan after all. They should just give loan based on lower LTV The idea of pawn is to take something of value. It was misleading for investors to think FundingSECURE held something of greater value than the loan. Hopefully within a few years I will turn a profit, I can invest in p2p sites I’m comfortable with. Just happens with FS and Lendy too often. FS had a signed certificate of value from what appears to be an accredited expert in the field. I can see why they proceeded with the loan on that basis. The end result beggars belief when compared to this 'expert' valuation though....
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Mucho P2P
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Post by Mucho P2P on Dec 22, 2018 8:12:45 GMT
FS update below. Wonder how the other jewellery/gem/ornaments items etc etc are valued.
"We have sold the Malaya Garnet for the sum of £10,591.47. This results in a capital loss and no payment of interest.
In the time since the loan expired we have taken the stone to a number of potential buyers. This includes 4 reputable auction houses. We also contacted a number of dealers in Hatton Garden including the original valuer. The stone was finally sold via a dealer in Hatton Garden.
Naturally we are very disappointed that the stone should have yielded so little. It should be stressed that there was no question as to the authenticity. We did try to contact the original valuer to see whether they would purchase the stone back at a price close to their valuation. However, the valuer was unwilling.
We have explored all opportunities to recover further proceeds which have proved unsuccessful."
If I did not know better, it sounds like the valuers of such items are in a collusive oligopoly and do not stand by their valuation, with the aim to get the product at a lower price between themselves. I have a feeling if I were to walk into a Hatton Garden jeweller, I would somehow see the stone being marketed at its original valuation, or more!
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mariner
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Post by mariner on Dec 22, 2018 8:20:14 GMT
Pawn loans are now going t**s up, so what else is going to come crawling out of the woodwork?
Italian Books perhaps?
Two of the loans now overdue
7277943702 - £110,000 due 25/10/18
2064028675 - £250,000 due 29/11/18
Can the valuation really be trusted after all the latest fiascos?
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Mucho P2P
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Post by Mucho P2P on Dec 22, 2018 8:50:23 GMT
Pawn loans are now going t**s up, so what else is going to come crawling out of the woodwork? Italian Books perhaps? Two of the loans now overdue 7277943702 - £110,000 due 25/10/18 2064028675 - £250,000 due 29/11/18 Can the valuation really be trusted after all the latest fiascos? As we have seen, the valuation only holds water if someone is willing to purchase the item.
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benaj
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Post by benaj on Dec 22, 2018 8:57:34 GMT
Don’t FS ask for ANY other security if their valuations are consistently so naff? Is that it then, no claim against any other assets they have? Proplend at least take PGs and often other security, they have respect for that! My few FS recoveries are all heading that way. Other security is unreasonable it is a pawnbrokers loan after all. They should just give loan based on lower LTV The other pawnborkers loan platform, unbolted requires PG for loans over 60k. May be fundingsecure can perfect the recovery options as well.
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r1200gs
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Post by r1200gs on Dec 22, 2018 9:29:27 GMT
Valuations appear to be coming from fans of the items who give the price they would like to see the item sell for on a good day, if they were selling. Because gosh, it's such a lovely thing!
Walk in to the same guys store and ask what he'll give you for it, THAT is the valuation that should be used.
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nyneil
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Post by nyneil on Dec 22, 2018 10:25:10 GMT
fundingsecure Surely the valuer has some culpability here. Knowing the valuation was to support a significant size loan, he has a professional responsibility to provide an accurate valuation. + - 10 - 20% could be acceptable but 83%? No way! If this was a property valuation, a claim would be made against the valuer, so why can't a claim be made against this valuer? If the valuer is not entering into a legal contract with FS, then several valuations should have been obtained, to determine the consensus of opinion. Someone has been negligent, be it the valuer, FS or both. fundingsecure This is an unacceptable level off loss; you should do the decent thing and compensate lenders who have suffered as a consequence of the gross misrepresentation of this asset's value.
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arby
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Post by arby on Dec 22, 2018 11:12:11 GMT
fundingsecure Surely the valuer has some culpability here. Knowing the valuation was to support a significant size loan, he has a professional responsibility to provide an accurate valuation. + - 10 - 20% could be acceptable but 83%? No way! If this was a property valuation, a claim would be made against the valuer, so why can't a claim be made against this valuer? If the valuer is not entering into a legal contract with FS, then several valuations should have been obtained, to determine the consensus of opinion. Someone has been negligent, be it the valuer, FS or both. fundingsecure This is an unacceptable level off loss; you should do the decent thing and compensate lenders who have suffered as a consequence of the gross misrepresentation of this asset's value. I am personally pretty ambivalent with a realised sale of 50% of a valuation. That is my threshold. I do find it hard to see how a gem can reduce from a 100k valuation to a 10k sale. My limited understanding of this market says there should be less subjectivity compared to say military memorabilia, but obviously I'm wrong!
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