GeorgeT
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Post by GeorgeT on Mar 30, 2018 13:50:03 GMT
While this thread title is a bit too much like a Daily Mail headline and is too blunt and extreme, some of the comments in this thread are quite measured and balanced and it is true to say that in the past criticism of Lendy on here has led to them listening and making improvements. Not enough IMO but I am sure their star of an Oscar winning film and communications chief will be noting the comments and formulating a good strategy for the period ahead and the next fortnightly newsletter may contain some very upbeat news if even one or two of the proposed repayments come to fruition. If nothing else, all that has been written and said recently must be concentrating the minds at Lendy Towers and I think it would be impossible for them to ignore the cacophony and not make changes.
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Post by investor1925 on Mar 30, 2018 13:57:25 GMT
Repayment delays, over-valuations, defaults etc will always go hand in hand with perfect loans that run their course on time with repayments all met.
What will either rescue or sink Lendy's reputation is it's actions in recovering outstanding debts from defaulted loans which have been sold at auction at below expected values (like a certain castle)
If they get the money back from the borrowers , however long it takes, they'll be OK. If they walk away , they're sunk.
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dandy
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Post by dandy on Mar 30, 2018 14:11:11 GMT
They have failed as they have lost the trust of the majority of investors. Therefore they cannot fund any new loans they put up unless they are heavily underwritten off platform. Most important they cannot fund existing development loans so they are what is known as toast - and frankly are now just an irritating liability to p2p in general and specifically to anyone who does any business with them as a lender, borrower or otherwise How do you know that they lost trust of the majority of investors? Just because there are some people complaining here? And complaining about what exactly? That there was a risk in investing via Lendy and the 12% interest weren´t just a free meal? That it is not guaranteed to exit any time via the secondary market because it relies on supply and demand? That some valuations of complex loans are too optimistic? That there are some delays with some loans/borrowers? Sorry but most complains here are just ridiculous because the issues are inherent in the system of property briding/development loans or p2p loans in general and if someone blames Lendy for it, it just shows how little they understood in what they invested... But your second point - the funding of existing development loans - is a real concern, especially if there is so much agitation against Lendy going on here. Lendy proved in the past that they can value property correctly and also that they can recover debts quite well. Furthermore, they have a very profitable business model and therefore I think there is still enough air in the interest spread to offer cashback etc. to attract lenders into existing development loans, if needed, until the sentiment about Lendy changes again. I know they have lost investors due to the number investing in new loans. I didn't make it up. It's a fact. But good luck to you if you are the one remaining. Just turn the lights out when you're done.
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dandy
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Post by dandy on Mar 30, 2018 14:13:06 GMT
While this thread title is a bit too much like a Daily Mail headline and is too blunt and extreme, some of the comments in this thread are quite measured and balanced and it is true to say that in the past criticism of Lendy on here has led to them listening and making improvements. Not enough IMO but I am sure their star of an Oscar winning film and communications chief will be noting the comments and formulating a good strategy for the period ahead and the next fortnightly newsletter may contain some very upbeat news if even one or two of the proposed repayments come to fruition. If nothing else, all that has been written and said recently must be concentrating the minds at Lendy Towers and I think it would be impossible for them to ignore the cacophony and not make changes. Hello Georget - we are waiting for you to confirm your connections to the most fabulous platform in the universe. That being collateral apparently.
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zedi
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Post by zedi on Mar 30, 2018 14:25:04 GMT
How do you know that they lost trust of the majority of investors? Just because there are some people complaining here? And complaining about what exactly? That there was a risk in investing via Lendy and the 12% interest weren´t just a free meal? That it is not guaranteed to exit any time via the secondary market because it relies on supply and demand? That some valuations of complex loans are too optimistic? That there are some delays with some loans/borrowers? Sorry but most complains here are just ridiculous because the issues are inherent in the system of property briding/development loans or p2p loans in general and if someone blames Lendy for it, it just shows how little they understood in what they invested... But your second point - the funding of existing development loans - is a real concern, especially if there is so much agitation against Lendy going on here. Lendy proved in the past that they can value property correctly and also that they can recover debts quite well. Furthermore, they have a very profitable business model and therefore I think there is still enough air in the interest spread to offer cashback etc. to attract lenders into existing development loans, if needed, until the sentiment about Lendy changes again. What debts have been recovered well, the garden center? Which properties have been valued correctly? Any of those overdue or in default? I think not, if they were then it would be a fairly painless process to recover the full amount outstanding. No one is complaining about the risk, people are pi$$ed at the completely incorrect valuations, in some cases so far off that they may have been scrawled by a 5 year old, and that a repayment for dfl 05 has been completely misappropriated, so yes, any one with a bean in dfl 05 has zero trust in Lendy, which is likely to be a high percentage of investors. What they have done is simply outrageous. I am not going to list every loan they repaid or recovered but so far they operate since 2013 and the provision fund who covers only 2.2% of the loanbook did pay only 4 times and could always reimburse the full difference. That´s an impressive track record if you ask me and therefore their valuation can´t be so wrong. Of course, the PF covers only roughly 10% of the defaulted loans at the moment, thus it is probable that it will eventually run out of money if just one big loan fails to recover. The correct valuation is crucial for Lendy´s business model and I am also invested in DFL005 but i am waiting with my judgement until that story is finished. As I already mentioned in another post, a lot of loans are scheduled to repay in April (20m GBP) and if they really repay- I predict- the mood here will improve drastically as will the SM. What people often don´t recognize is that the majority of loans don´t default and run smoothly (means that their valuation can´t be so wrong, otherwise who would buy it from the developer?), the defaults and their valuation always get much more attention.
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Post by charliebrown on Mar 30, 2018 14:34:46 GMT
I don´t understand all the negativity about Lendy lately. Everyone should have known that 12% interest doesn´t come without risks and so far Lendy overall did a great job! April will be an interesting month for Lendy (especially for the tone in this forum), I think the mood here will turn rapidly if there really will be something close to 20m in repaiments within one month. We all know that there are risks, we understand that and we also understand that we’re unlikely to receive 12% always and forever. However, the proportion of the loanbook that has defaulted and continues to default, the protracted recovery process and the ultimitate sales at a fraction of valuations is not just a risk it’s a total disaster. ISTM that existing investors are withdrawing as soon as they can (most are angry and will not be returning in a hurry). Any new investors who look at the defaults tab, this forum or TrustPilot reviews are unlikely to invest. Therefore, I think the question “Lendy about to fail” is a fair one and whilst I’m no expert I’d think there’s a real danger of this. Incidently, why are loans such as The Castle removed from the defaults tab? As far as I’m concerned these loans are still defaulted even though the security has been sold. Is this another example of lack of transparency.
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zedi
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Post by zedi on Mar 30, 2018 14:42:15 GMT
How do you know that they lost trust of the majority of investors? Just because there are some people complaining here? And complaining about what exactly? That there was a risk in investing via Lendy and the 12% interest weren´t just a free meal? That it is not guaranteed to exit any time via the secondary market because it relies on supply and demand? That some valuations of complex loans are too optimistic? That there are some delays with some loans/borrowers? Sorry but most complains here are just ridiculous because the issues are inherent in the system of property briding/development loans or p2p loans in general and if someone blames Lendy for it, it just shows how little they understood in what they invested... But your second point - the funding of existing development loans - is a real concern, especially if there is so much agitation against Lendy going on here. Lendy proved in the past that they can value property correctly and also that they can recover debts quite well. Furthermore, they have a very profitable business model and therefore I think there is still enough air in the interest spread to offer cashback etc. to attract lenders into existing development loans, if needed, until the sentiment about Lendy changes again. For someone who only appears to have made their first post around two hours ago, you seem to have been rushing around a lot supporting Lendy and criticising their detractors. Well, as with many forums, I was reading here since a long time and following many discussions before posting. And the point with many detractors is that they are criticising things like delays and over-valuations and these are things that can occur in that kind of business and recovery needs time. So far nobody knows how much can be expected from the recovery of the current defaults but people are already complaining...
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zedi
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Post by zedi on Mar 30, 2018 14:59:07 GMT
We all know that there are risks, we understand that and we also understand that we’re unlikely to receive 12% always and forever. However, the proportion of the loanbook that has defaulted and continues to default, the protracted recovery process and the ultimitate sales at a fraction of valuations is not just a risk it’s a total disaster. ISTM that existing investors are withdrawing as soon as they can (most are angry and will not be returning in a hurry). Any new investors who look at the defaults tab, this forum or TrustPilot reviews are unlikely to invest. Therefore, I think the question “Lendy about to fail” is a fair one and whilst I’m no expert I’d think there’s a real danger of this. Incidently, why are loans such as The Castle removed from the defaults tab? As far as I’m concerned these loans are still defaulted even though the security has been sold. Is this another example of lack of transparency. The proportion of the loanbook that defaults naturally rises because: 1. Lendy was growing rapidly over the last years and that rise in originations has "hidden" the "true" default rate for some time as it takes some time until new loans default, so a increasing volume of new loans will optically lower the default rate 2. It can take a lot of time to recover funds and for that time frame also "old" defaulted loans from an already repaid cohort appear If you want to know the "real" default rate, you musst check single cohorts which are already past due date. That new investors are frightened from those discussions and TrustPilot reviews is a real problem... and that´s why I say that we should wait until losses in a particular loan materialize before accusing Lendy of not working thoroughly enough. I also don´t like the handling of The Castle and hope this will stay an exception.
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michaelc
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Post by michaelc on Mar 30, 2018 16:18:40 GMT
Funny how you still can’t spell their name then. If by “fail” you mean become insolvent, I doubt it for the foreseeable future. Every loan that’s paying monthly interest to lenders (from the ring-fenced sums withheld at drawdown) is also paying monthly margin to Lendy, since the borrowers are charged much more than 12%. If there are approx £140m of live loans with "Interest on Account", and Lendy are charging 18% but paying 12%, that would suggest a margin income of some £700k per month. Certainly £500k+ My understanding is they take all the interest upfront from the lenders and then pay them back again presumably to give the illusion of stability of return. Since in their definition below they say "paid by the borrower" I assume that amount also includes Lendy's cut. So in other words, these loans are not paying Lendy (or us) back month by month? Caveat - I could be wrong! Quote below from their website: "IOA - Interest on account - Lendy is holding interest paid upfront by the borrower on account in order to service investor’s monthly interest."
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Post by skint4achange on Mar 30, 2018 16:24:09 GMT
My understanding is they take all the interest upfront from the lenders and then pay them back again presumably to give the illusion of stability of return. Since in their definition below they say "paid by the borrower" I assume that amount also includes Lendy's cut. So in other words, these loans are not paying Lendy (or us) back month by month? Caveat - I could be wrong! Quote below from their website: "IOA - Interest on account - Lendy is holding interest paid upfront by the borrower on account in order to service investor’s monthly interest."I think "Paid by the borrower" in this context just refers to the fact that the interest is added to the loan and is then withheld. I.e. The borrower wants £1m over 12 months, the loan (For example at 18%) is actually taken out for £1.18m and the £180k is held by Lendy.
My belief is that the borrower gives Lendy no money up front. But, again, I could be wrong.
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michaelc
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Post by michaelc on Mar 30, 2018 16:29:43 GMT
My understanding is they take all the interest upfront from the lenders and then pay them back again presumably to give the illusion of stability of return. Since in their definition below they say "paid by the borrower" I assume that amount also includes Lendy's cut. So in other words, these loans are not paying Lendy (or us) back month by month? Caveat - I could be wrong! Quote below from their website: "IOA - Interest on account - Lendy is holding interest paid upfront by the borrower on account in order to service investor’s monthly interest."I think "Paid by the borrower" in this context just refers to the fact that the interest is added to the loan and is then withheld. I.e. The borrower wants £1m over 12 months, the loan (For example at 18%) is actually taken out for £1.18m and the £180k is held by Lendy.
My belief is that the borrower gives Lendy no money up front. But, again, I could be wrong.
Yes mine too but the significance of using the word "borrower" means, I think, that BOTH lender and Lendy interest is withheld and that means Lendy doesn't receive an ongoing income stream from the loan.
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SteveT
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Post by SteveT on Mar 30, 2018 16:38:03 GMT
Tim Gordon once explained the Lendy business model here. The money withheld at drawdown will be held in a ring-fenced client account, since it can only be recognised as interest / income as it becomes due under the loan contract (so 4% upfront and then 1.5% per month, of which 1% goes to lenders and 0.5% to Lendy). If a borrower were to repay their loan early, the remaining interest on account would belong to them (or rather, they'd only need to repay the net sum owed). |
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Post by skint4achange on Mar 30, 2018 16:38:13 GMT
Yes, I believe you are correct to a degree. Lendy and Lenders interest would be held by Lendy on the loan being drawn, but I do not believe that Lendy would take all of their service fee straight away.
If the loan was to be repaid after 6 months (Stop laughing, it COULD happen!  ), Lendy would then have to repay 6 months of their servicing fees. Would be far easier for them to just take them monthly as the lenders do. But that is just my opinion. Maybe they do take them all at once.
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p2p2p
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Post by p2p2p on Mar 30, 2018 22:39:25 GMT
I can’t see why you’d expect property developers to pay interest before completion, as it’s only when they sell the property do they have any cash. I like the fiction that interest is paid monthly, cos it smooths cash flow and reassures me that my investment is working.
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rocky1
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Post by rocky1 on Mar 31, 2018 6:29:38 GMT
i thought that the interest is only our own money and the borrower only starts to have it deducted once it is drawn down.so will LENDY be paying all this months interest/cashback on all the loans that are live but not drawn down as they are not fully funded or does it come out of what is raised so far leaving even more funds needed to fill the same loans
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), Lendy would then have to repay 6 months of their servicing fees. Would be far easier for them to just take them monthly as the lenders do. But that is just my opinion. Maybe they do take them all at once.