|
Post by GSV3MIaC on Feb 1, 2018 11:33:26 GMT
/Mod hat off General update on the site (login to read) indicates that rollover will now be the default for everyone, and if you want out of an extended loan you'll need to use the SM, rather than 'failing to rollover and hoping someone else will pick up the pieces'. I suspect this is inevitable, since otherwise the maturity mismatch (I want out, the borrower wants to continue, nobody wants to buy) leaves the platform exposed to unacceptable risk, unless they have an underwriter (I note that BPF used to guarantee to buy at date-X). It also state that extension will not be the norm, but I suspect that will turn out to be quite often breached, since the cost of calling in the administrators vs allowing another couple of months will push us to the latter. Hopefully (but not stated) 'unwanted' extensions will come with some interest premium .. yes MoneyThing ?
|
|
r00lish67
Member of DD Central
Posts: 2,691
Likes: 4,048
|
Post by r00lish67 on Feb 1, 2018 11:36:05 GMT
Ok, so on the one hand, this makes sense. If there are not sufficient lenders who wish to participate in an extension that has already been agreed then it seems right that existing lenders should be locked in.
On the other, IMV, this is going to exacerbate the weaknesses of the SM that MT have (yes, the people have spoken etc etc).
On the third hand (I can have a third, I'm a robot) I suspect this might be triggered by Bolly. A big loan coming up for renewal at the end of this month with plenty of availability already on the SM for which there is a quite genuine risk of the rollover not filling and otherwise requiring incentives.
In short, IMV, good for improving platform stability for existing loans, good for training investors to only invest when they really believe in a loan, bad for active loan management, cold feet-ers, hesitant bolly investors, and bad probably for MT in filling new loans as investors have one less shred of comfort blanket to hold onto when deciding to invest.
|
|
jlend
Member of DD Central
Posts: 1,817
Likes: 1,444
|
Post by jlend on Feb 1, 2018 11:48:35 GMT
On AC there are sometimes votes on things like extensions.
Have MT ever asked lenders to vote on anything to do with a particular loan?
|
|
archie
Posts: 1,839
Likes: 1,842
Member is Online
|
Post by archie on Feb 1, 2018 12:28:56 GMT
Bolly and the MTAS default should have repaid by now. It's not surprising the amounts on the sm are large. Good developments if only they'd complete them.
|
|
|
Post by mrclondon on Feb 1, 2018 12:39:44 GMT
MoneyThing you say that extensions will not be granted if there are arrears on the account. Collateral go further, and say no extension will be granted until interest is received from the borrower. Can you clarify whether you will need to have received at least one months interest before enacting an extension on the platform. Whilst this applies to all loans, I think it is particularly important for loans that have had 100% interest retained. A loan with all interest retained reaches its maturity date, and you pay the final months interest from the retained interest buffer. The account is not in arrears, but the borrower has thus far demonstrated zero ability to service the loan from his/her cashflow.
|
|
|
Post by westcountry on Feb 1, 2018 12:56:40 GMT
MoneyThing you say that extensions will not be granted if there are arrears on the account. Collateral go further, and say no extension will be granted until interest is received from the borrower. Can you clarify whether you will need to have received at least one months interest before enacting an extension on the platform. Whilst this applies to all loans, I think it is particularly important for loans that have had 100% interest retained. A loan with all interest retained reaches its maturity date, and you pay the final months interest from the retained interest buffer. The account is not in arrears, but the borrower has thus far demonstrated zero ability to service the loan from his/her cashflow. MoneyThing, I agree with all mrclondon's points. As well, what about a loan such as MTAS713, where the latest QS report (23rd Nov 17 update) states that the development is behind its projected completion and significantly over budget - will loans such as this be eligible for extension as long as the borrower keeps paying interest? I'm not impressed by this extension policy, and trust that when future loans are listed it is made clear that the repayment date may be extended, with lenders having no choice in the matter. Given how clogged the secondary market is for some loans nearing their end date, exit by secondary market sale isn't much of an alternative to knowing you can get your investment back at the original end date.
|
|
Brainer
Member of DD Central
Posts: 186
Likes: 323
|
Post by Brainer on Feb 1, 2018 13:39:58 GMT
It also state that extension will not be the norm, but I suspect that will turn out to be quite often breached, since the cost of calling in the administrators vs allowing another couple of months will push us to the latter. Hopefully (but not stated) 'unwanted' extensions will come with some interest premium .. yes MoneyThing ? If MTAS844 is indicative of MT's thought process then this situation may result in quite a lot of 'defaulted but not in formal recovery' loans, which will entail an interest premium but also no trading ability.
|
|
|
Post by oktaeder on Feb 1, 2018 15:25:05 GMT
IMHO a serious change and not a good one . 2nd market does not work for many loans now, waiting weeks or longer in the queue.
|
|
oik
Member of DD Central
Posts: 254
Likes: 349
|
Post by oik on Feb 1, 2018 19:49:29 GMT
It's a change of policy that would only impact loans that are unpopular or go sour. Good loans will always find a buyer. Seems that MT are anticipating more loans going sour.
It will introduce a further judgement for lenders to make and is probable that it will change lender behaviour. The cautious will want to be more sure that new loans will be popular; they may want to exit well before maturity; and there may be greater reluctance to buy into older loans. More new loans that might once have been given the benefit of the doubt may not get away and the move could introduce as many problems as it resolves.
I understand MT's difficulty and don't know what the answer is - other than better DD and transparency by the platform so that lenders can be confident there won't be nasty surprises that weren't known when the loan was launched. There will always be defaults but if lenders see that the risk to them has been increased, then they surely won't be encouraged to lend.
|
|
|
Post by ladywhitenap on Feb 1, 2018 20:01:44 GMT
I'm slightly mystified by this change as the renew tick boxes remain on the website. Does this mean that there is a difference between a "rollover extension" and a "renewal" ?
LW
|
|
bugs4me
Member of DD Central
Posts: 1,841
Likes: 1,466
|
Post by bugs4me on Feb 1, 2018 20:11:44 GMT
This will IMO prove to be a disastrous marketing exercise by MT especially as it's being applied to existing loans. I suspect it's been introduced out of fear.
With over £6m defaulted loans MT have come under the microscope with their current and future loan offerings. I expect this will also apply to any renewals where there is a possibility of funding failure - so lets lock existing lenders in. Sure you can flog your unwanted loans on the SM providing it is liquid.
My gripe with this new policy is that if I invest in a 6 month loan then that is the agreement I enter into. I do not expect that to be changed without my consent or at least a vote by existing lenders to do so. But no, we're not going to be afforded that courtesy
|
|
hazellend
Member of DD Central
Posts: 2,361
Likes: 2,179
|
Post by hazellend on Feb 1, 2018 20:19:31 GMT
Makes sense to me, the financial health of the platform needs to be a priority.
Discounting would solve all the problems.
|
|
|
Post by Badly Drawn Stickman on Feb 1, 2018 20:42:44 GMT
I'm slightly mystified by this change as the renew tick boxes remain on the website. Does this mean that there is a difference between a "rollover extension" and a "renewal" ? LW That is a nice easy question, I like those. A renewal is any loan that will almost certainly be popular and fill quickly should any be available. A rollover extension is a loan nobody wants anymore.
|
|
SteveT
Member of DD Central
Posts: 6,873
Likes: 7,918
|
Post by SteveT on Feb 1, 2018 20:45:34 GMT
This will IMO prove to be a disastrous marketing exercise by MT especially as it's being applied to existing loans. I suspect it's been introduced out of fear.
With over £6m defaulted loans MT have come under the microscope with their current and future loan offerings. I expect this will also apply to any renewals where there is a possibility of funding failure - so lets lock existing lenders in. Sure you can flog your unwanted loans on the SM providing it is liquid.
My gripe with this new policy is that if I invest in a 6 month loan then that is the agreement I enter into. I do not expect that to be changed without my consent or at least a vote by existing lenders to do so. But no, we're not going to be afforded that courtesy COL already did exactly the same a few months back...
|
|
empirica
Member of DD Central
Posts: 326
Likes: 235
|
Post by empirica on Feb 1, 2018 22:07:35 GMT
(Hopefully I'm not getting my platforms confused.)
I had been looking at MoneyThing as an alternative platform to my current selection (three - probably too few, I know) and was initially attracted by how interest was still paid on SM listings, but then read some comments saying that the SM is suffering because of the lack of any penalty.
I then read that a move to end the option of saying 'no thank you' to renewal / extensions.
Put the two together and the simplistic impression I get is that MoneyThing investors were expecting a fixed term, 'guaranteed' exit paying around 12% per annum, and if the loan isn't bought on the SM or there aren't enough investors to take on the renewal / extension, then the original investor is 'trapped'.
This sounds like investors were assessing the risk based on the popularity of the platform (a proxy for the popularity of P2P?) and the willingness of new blood to take over loans rather than the viability of the individual loan itself.
I guess that comes over as a bit judgemental, and my apologies if it does, but they say first impressions count and is it very wide of the mark?
|
|