wapping35
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Post by wapping35 on Mar 10, 2018 11:37:54 GMT
In answer to the question I was aware that you loose the accrued interest when you sell loans via RR. I recall this being asked on the old internal Zopa forum, which is how I learned of the issue. i.e. Not from the Zopa website although I am sure it is there somewhere. I would agree Zopa's communication of the process is not very clear, but to be honest I have been on their case (emailing directly) on their communication issues for literally years. Even in the good old days of low / no defaults (SG). The above said I do feel emailing them and pointing out the issue is not explained clearly might be worth a try. Sometimes they do listen and sometimes they don't. W35 ======== Someone just kindly e:mailed to me the bit of the Zopa website that covers the RR accrued interest forfeiture. I certainly could not find it. help.zopa.com/customer/en/portal/articles/2329339-how-can-i-access-my-money-from-the-new-lender-products-"Finally, accrued interest is not paid to the seller. If you have repayments due in 3 days, for example, but request a loan sale before then, you will not receive those repayments." |
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Post by fuzzyiceberg on Mar 10, 2018 14:25:46 GMT
As Wapping said this was all extensively debated back in the days of the Zopa forum, and I had got the impression that those on here had been around then hence my use of 'well known'.
Do not forget that you will have gained the accrued interest on the RR purchases - tax free to boot - and this will offset your 'losses' of accrued interest on the RR sale. If one is a taxpayer (and have used the interest savings allowance) then I would be incredibly surprised if the net of tax net gain/loss position on accrued interest is anything but a small gain.
It will be fascinating to see if Zopa are willing to do the detailed calculation.
Be interested to hear what response anyone gets from the FCA too.
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benaj
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Post by benaj on Mar 10, 2018 14:58:45 GMT
Zopa core and plus are baskets of loans from new borrowers and loans from Rapid return. The “projected return” is optimised by its algorithm, hence the earning accrued interest by acquiring loans from other lenders won’t be obvious at all when accrued interest from previous lenders are not shown on the monthly statement.
Zopa doesn’t even allow an investor to buy secondary market loans only to earn accrued interests.
Right now, zopa tells me I’m earning @ “18.8%” at the projected return of 8.4% even monthly My loan book has 100% missing payments from 8 loans on my Zopa plus after selling off 1000+ loans in January ‘18.
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aju
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Post by aju on Mar 10, 2018 15:12:07 GMT
In answer to the question I was aware that you loose the accrued interest when you sell loans via RR. I recall this being asked on the old internal Zopa forum, which is how I learned of the issue. i.e. Not from the Zopa website although I am sure it is there somewhere. I would agree Zopa's communication of the process is not very clear, but to be honest I have been on their case (emailing directly) on their communication issues for literally years. Even in the good old days of low / no defaults (SG). The above said I do feel emailing them and pointing out the issue is not explained clearly might be worth a try. Sometimes they do listen and sometimes they don't. W35 Thanks wapping35 I have emailed them regarding this and am awaiting a response. I can agree on your comment about them listening. I have had some success with them but not sure what might happen this time around. I had some old RR way back when it first started - I think I was trying to get rid of some "bad rates" loans at the time but it was not as controllable as I thought. It never occured to me at the time to check the "accrued interest" issue at the time. To be honest I trusted Zopa more then but recently they have been messing all sorts of things up I am more wary.
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aju
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Post by aju on Mar 10, 2018 15:23:47 GMT
As Wapping said this was all extensively debated back in the days of the Zopa forum, and I had got the impression that those on here had been around then hence my use of 'well known'. Do not forget that you will have gained the accrued interest on the RR purchases - tax free to boot - and this will offset your 'losses' of accrued interest on the RR sale. If one is a taxpayer (and have used the interest savings allowance) then I would be incredibly surprised if the net of tax net gain/loss position on accrued interest is anything but a small gain. It will be fascinating to see if Zopa are willing to do the detailed calculation. Be interested to hear what response anyone gets from the FCA too. Ah the old zopa forum I remember it well - that was one time they weren't listening I feel. Sadly I didn't always get involved with the stuff I was affected by at the time so I probably missed that. I remember trying to get them to keep it online but to no avail. I copied some of the stuff I had myself onto threads on here when it died but nothing in this area. As I said above I have a question of this very nature out with them already perhaps they will say something similar to what you have said. The think is though how would you know you have picked up the accrued interest on the purchase of an RR other than the initial interest is higher perhaps. Is the calculation that detailed though with all the data it at their disposal its not that hard. I can do it with Excel if I thought it was worth it. At the moment my data set in Excel for the statements alone is so big even with all my processors turned on in excel it takes about 5 minutes to just detail one loan - I have over 700 that need to be analysed. I'm waiting patiently for their response ;-), Mrs Aju is still resolving some of her issues with the Relend settings debacle from a transfer back in middle of Jan. The seem to have a solution that probably uses RR as well though.
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aju
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Post by aju on Mar 10, 2018 15:45:47 GMT
Zopa core and plus are baskets of loans from new borrowers and loans from Rapid return. The “projected return” is optimised by its algorithm, hence the earning accrued interest by acquiring loans from other lenders won’t be obvious at all when accrued interest from previous lenders are not shown on the monthly statement. Zopa doesn’t even allow an investor to buy secondary market loans only to earn accrued interests. Right now, zopa tells me I’m earning @ “18.8%” at the projected return of 8.4% even monthly My loan book has 100% missing payments from 8 loans on my Zopa plus after selling off 1000+ loans in January ‘18. It might be more obvious on some perhaps. After I see what they are going to say I'll have a play with the ISA side of my data and see if there is any marked uplift interest in the first interest payments on those types of loans that does not correlate with ordinary loan purchases. Its probably not that easy to see but it's worth a go for fun although I'm starting to think I'd be better off breaking out an old copy of Oracle I have from when I was in the business - so to speak - to see if that makes it easier to pick this stuff up. Got to be easier to work with than Excel at this level. (Famous last words ;-) ) On your last point about running the book down to the level you have benaj if you are talking about 8 loans then they may well simply be higher interest defaulted ones that are left so hence they seem to display higher earnings level. Thing is though, I thought they had removed the defaults stuff values from all the summary entries apart from that stupid "Earnings" Info question mark click button that declares "bad debt not covered by Safeguard (£xx.xx)". I must check my stats stuff on the PreSafeguards I have, that would be quite easy to check I guess. I agree though its not very helpful and downright misleading declaring a percentage on any of the summaries if its including defaults it already thinks are lost money in the top line. This particularly bad for those that don't pay or in my case I think I had £7.50 returned in some 30+ defaults over the last year!. That must skew things away from the headline estimate. Edit: I'm not sure what you are comparing though as I checked my Pre-safeguards and the values on the summary seem correct for only those loans that are active (Not defaulted) bit for the rate and for the amounts. None the Lent to Borrowers rate is taking the Defaults into consideration. Are meaning something from other stats than the summary screen.
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Post by fuzzyiceberg on Mar 10, 2018 16:59:38 GMT
... The thing is though how would you know you have picked up the accrued interest on the purchase of an RR other than the initial interest is higher perhaps. Is the calculation that detailed though with all the data it at their disposal its not that hard. I think we need to be clear what we mean when we talk of accrued interest. It is simply the interest on the loan between the most recent loan payment date and the date the loan is bought/sold. So if a loan has a payment date of 1st month and is sold via RR on the 15th of the month the seller 'loses' the interest between the 1st and 15th. Similarly if the loan was purchased via RR on 15th the buyer 'gains' the interest between 1st and 15th as the buy /sell loan price* is simply the outstanding capital value of the loan. Easiest to see with an example - imagine a loan part paying 5% interest with £1 capital outstanding on 1 April all due to be paid off on 1 May. If this loan is sold on 15 April the seller receives £1. On 1 May the buyer receives £1.05. So the seller 'loses' the 2.5p accrued interest up to 15 April, and the buyer gains it. So if you have purchased any loans in your ISA portfolio with a monthly payment date earlier than the purchase date you will have 'gained' the accrued interest on those loans. * There is some effective adjustment to the capital value of loans where the loan interest rate is below the prevailing rate for those loans when the loan is sold. In this case the buyer is credited with 'RR upfront interest' which represents the difference between the interest that will be paid on the loan and the interest that would be paid at prevailing rate when sold on an equivalent loan. This also gets deducted form the sellers proceeds. But this is nothing to do with accrued interest.
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aju
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Post by aju on Mar 10, 2018 17:38:51 GMT
... The thing is though how would you know you have picked up the accrued interest on the purchase of an RR other than the initial interest is higher perhaps. Is the calculation that detailed though with all the data it at their disposal its not that hard. I think we need to be clear what we mean when we talk of accrued interest. It is simply the interest on the loan between the most recent loan payment date and the date the loan is bought/sold. So if a loan has a payment date of 1st month and is sold via RR on the 15th of the month the seller 'loses' the interest between the 1st and 15th. Similarly if the loan was purchased via RR on 15th the buyer 'gains' the interest between 1st and 15th as the buy /sell loan price* is simply the outstanding capital value of the loan. Easiest to see with an example - imagine a loan part paying 5% interest with £1 capital outstanding on 1 April all due to be paid off on 1 May. If this loan is sold on 15 April the seller receives £1. On 1 May the buyer receives £1.05. So the seller 'loses' the 2.5p accrued interest up to 15 April, and the buyer gains it. So if you have purchased any loans in your ISA portfolio with a monthly payment date earlier than the purchase date you will have 'gained' the accrued interest on those loans. * There is some effective adjustment to the capital value of loans where the loan interest rate is below the prevailing rate for those loans when the loan is sold. In this case the buyer is credited with 'RR upfront interest' which represents the difference between the interest that will be paid on the loan and the interest that would be paid at prevailing rate when sold on an equivalent loan. This also gets deducted form the sellers proceeds. But this is nothing to do with accrued interest. Thats clear as Mud ;-), but seriously though many thanks for that excellent description of what you were getting at, in the words of Professor Higgins "I think she's got it!" (No I won't bother Mrs Aju with any of this - not sure she gives a tinker's about it anyway.) So whilst we've been discussing this I've been trying to get my statements tables up to scratch today. I have 4 separate Excel workbooks, 2 for me and two for Mrs Aju. There is one each for Invest side and one each for ISA side statements. Anyway during that work I have been joining the tables together trying to get each loanbook and statement files better correlated with each other. Whilst doing this I quickly scanned across my sell and buy sides and noticed I have been giving bum steers on the loans we both purchased on the ISA sides. I'm not sure quite why I thought there were £10,£20 etc (New loans) in the purchases when in fact there were none so apologies for confusing the issue on that bit. Perhaps now I should take another approach and see what loans I sold relative to those I bought as I'm guessing there is probably a considerable proportion of them were my sales anyway. We'll see!. I'm still intrigued as to the slant Zopa will put on all this now though as I still think it was not clear to many of us this was the process or for that matter it would be done using RR either. Hopefully they are not watching and just go with your explanation ;-).
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