michaelc
Member of DD Central
Say No To T.D.S.
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Post by michaelc on Apr 8, 2018 17:40:32 GMT
No offence taken! I am looking at the facts....lending on this stuff is not a slow process. I could lend £100k right now in a click of a button! I don't think we are still learning anything really about loans. Lending against assets has been going on for a long time and secondary markets on these loans have also been around for a long time. It's nothing new. Having hope you can sell out of a loan is not an issue as long as you invest fully aware that this may not be possible. Having said that I think there is always the right price for everything (even if that is zero), like I said loans have been traded for centuries, even distressed loans. I understand that you may invest happy to hold every loan to maturity. I don't have a problem with that at all but I don't understand why you don't want to allow people to trade out of an investment at the right (market set) price...it doesn't impact you, it doesn't change the risk of the loan, you can just stay in it to term. It may make people feel uncomfortable seeing a loan they hold trade at a 5% discount but I think it's important they have this visibility and understand why it is happening. My real objection is that a lot of people want to keep things simple because they think they are investing in a simple product. That is just not the case and I think it is wrong to give that illusion. Forcing something to trade at par does not mean it is worth par and I think platforms that do so are sending the wrong signal to investors and this leads to many people making very bad investments. If someone doesn't understand a 1% discount on a loan then they really shouldn't be investing in loans at all. Doing the DD on a loan and investing at the right price is way more complicated than understanding a percentage. People will never learn if the market is set at par...and you say "are all learning about what is a new industry". I say people are not. Let me give you a recent MT example..the Birkenhead loans. The project had gone into Administration, I knew that after the loan end date which was a few weeks away (interest was held on account until then) there was zero possibility of any more interest being paid on these loans and that any money invested would likely be tied up for years (in loans paying zero interest). What's more I knew there was a significant possibility of a capital loss for tranche B. I held both tranche A and B but because the market was forced trading at par I was able to sell many thousands of pounds of loans at face value. People were just looking at the LTV and the rate and thinking it's a safe investment. Is that fair? Is that simple? If there had been a true market, tranche B would have been trading at 80%, probably less (I would have sold at 80% for sure) providing significant protection for investors (who probably shouldn't be investing in such loans in the first place). Forcing something to trade at the wrong price is not simple, fair and it hides he risks. I would go so far as to say it should not be allowed at all and I think it's only a matter of time until MT realise this an implement a fully flexible market. When they do this I will consider investing again. Hi Bg. I agree with what you wrote there - makes perfect sense. I do have one small tangential question though which is does your description of the Birkenhead loans imply that it was public knowledge the project had gone into Administration (at least to those who had checked the gazette and CH etc) before the loans were suspended? I would expect that normally by the time anyone knew the project was going south, the secondary market bid/ask price would tank (or in the case of a fixed price "market", no trades would be done).
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Liz
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Post by Liz on Apr 8, 2018 18:51:31 GMT
alanp . With over £4m on the SM and a choice of 16 loans (I counted Wigan only once) it should not be that difficult to invest new money. Most of those loans have forbidding queues but that may not necessarily indicate they are poor loans. It would be interesting to know the proportion of lenders in these queues who jumped in for the cashback but are frustrated flippers or those positioned in the queue merely hoping for potential liquidity at some stage. One way to find out would be for MT to stop paying interest for parts on the SM. Or how about a fee [1%?] charged by the platform for all successful sales. Lenders needing their cash urgently might agree. And the platform might welcome the additional income, particularly at a time when new loans are scarce. Did I put the cat amongst the pigeons? MoneyThing any thought on what measure would help dilute the queues? Evening. We are still considering what 'features' could be implemented to help increase the liquidity of our SM (in addition to getting some recoveries positively concluded). However I can say that one thing we will not do is stop paying interest to sellers (since they contractually hold that loan part and therefore risk until sold)...I really would not be surprised if this practice is curtailed in due course. Kind regards, Ed A 1% selling fee should do the trick.
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p2pmark
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Post by p2pmark on Apr 8, 2018 19:29:39 GMT
Evening. We are still considering what 'features' could be implemented to help increase the liquidity of our SM (in addition to getting some recoveries positively concluded). However I can say that one thing we will not do is stop paying interest to sellers (since they contractually hold that loan part and therefore risk until sold)...I really would not be surprised if this practice is curtailed in due course. Kind regards, Ed A 1% selling fee should do the trick. I think only 0.25% would be enough to stop the current practice of people putting stuff on the market simply to reserve their place in the queue, knowing that if they sell they can easily buy back again. Ideally the revenue generated would be used to fund a bonus to the holder of the loans at maturity to better reflect the risk profile.
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Post by Deleted on Apr 8, 2018 19:33:52 GMT
Lenders WANTING higher fees? Who says Turkeys don't vote for Christmas?  |
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hazellend
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Post by hazellend on Apr 8, 2018 19:58:43 GMT
Lenders WANTING higher fees? Who says Turkeys don't vote for Christmas? I also want the platform to profit so it is in good financial health
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Post by mike1963 on Apr 8, 2018 20:12:19 GMT
A 1% selling fee should do the trick. I think only 0.25% would be enough to stop the current practice of people putting stuff on the market simply to reserve their place in the queue, knowing that if they sell they can easily buy back again. Ideally the revenue generated would be used to fund a bonus to the holder of the loans at maturity to better reflect the risk profile. PLEASE, NO FEES!!!... YES to Discount/Premium option on selling loan parts... Because: 1) It would speed up the queue by allowing a truer market rate 2) The Discount Buyer is paid to take on the Risk. 3) The Premium Buyer has the option of paying a bit for quality 4) The Discount stays within the Lender community, rather than MT, who have already been paid. 5) The need for queue positioning is reduced/eliminated 6) It could give MT a tool to use to fill slow filling loans A few new loans and satisfactory Default resolution would help too.
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Post by Deleted on Apr 8, 2018 20:38:55 GMT
Lenders WANTING higher fees? Who says Turkeys don't vote for Christmas? I also want the platform to profit so it is in good financial health Well any platform that reserves to right to make any changes to the loan terms it likes (see recent T&C changes), and then charges me a fee to sell if I don't like the new terms... such a platform will not be seeing any further investment from me, thats for sure!
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bg
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Post by bg on Apr 9, 2018 6:15:59 GMT
Hi Bg. I agree with what you wrote there - makes perfect sense. I do have one small tangential question though which is does your description of the Birkenhead loans imply that it was public knowledge the project had gone into Administration (at least to those who had checked the gazette and CH etc) before the loans were suspended? I would expect that normally by the time anyone knew the project was going south, the secondary market bid/ask price would tank (or in the case of a fixed price "market", no trades would be done). Yes it was public knowledge but trading was not suspended as MT did not consider the loans defaulted as they still had money on account to make the last couple of interest payments. People were still buying, presumably because of the seemingly lowish LTV and trust in MT.
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bg
Member of DD Central
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Post by bg on Apr 9, 2018 7:12:21 GMT
A variable priced marketplace would be exploited by those with greater investment acumen to the detriment of those who's greatest weaknesses are inexperience and naivety, many, many ordinary retail investors would be tempted into buying discounted loan parts not understanding why they were being offered in the first place. In a functioning market, the market finds it's level which prevents exploitation taking place. Check out how the market works on ABL (which is a smaller platform than MT). Right now on MT many ordinary retail investors are being tempted to buy loan parts at par when this is clearly (to more experienced investors) the wrong price. For example in the Birkenhead case, if someone had offered at a 1% discount, someone else would have offered at 3%, 4%....etc until the market found a level it judged the 'right price'. That offers significant protection to inexperienced/naive investors. Agreed but there are plenty of posters on here pushing a Socialist ideal. They believe in complete sharing of risks, equal returns, no decision making - in effect killing off private enterprise and the entrepreneurial spirit. What they don't understand is investing in Capital markets is Capitalism by nature. Everyone is in it to make money, lenders are investing to make a return, the platform has been set up to make money, the borrower is borrowing money to buy an asset in the hope that they can then flip for a profit. I find these arguments completely contradictory and think people pushing them shouldn't be investing in this sector in the first place. It is used fairly regularly, you just don't see it as there are lots of bids in to buy at -1% (if you don't believe this put a load of bids in and you will see your loan holdings start to creep up). What it does give investors is considerable comfort that they can sell out of a loan at any point (by offering a 1% discount) which builds trust and confidence in the platform. Of course that discounts rarely go above 1% indicates that investors are fairly confident in their loan choices but I'm not sure I would say the use of a variable priced marketplace on AC is leading to exploitation its investors.
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Post by webbski9 on Apr 9, 2018 17:18:07 GMT
Just look at Ablrate....their SM works ...VERY WELL....its not rocket science.
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Post by GSV3MIaC on Apr 9, 2018 18:12:14 GMT
It's certainly the only platform where you can buy, or sell, almost any loan you fancy, almost al the time (admittedly in limited quantity in most cases).
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johni
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Post by johni on Apr 9, 2018 20:58:28 GMT
But how many people want to sell or are just in the queue because the queue is there.
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Post by Badly Drawn Stickman on Apr 9, 2018 21:33:52 GMT
But how many people want to sell or are just in the queue because the queue is there. There are probably a range of reasons for people listing loans for sale, but patently a percentage would be looking to release funds urgently enough to discount if it was available. On some platforms I like the concept, but seriously doubt it would be suitable for moneything. Fairly academic for me at the moment as I am 'on the naughty step' for not agreeing to the new T&Cs. Only Moneything will know how many others are sitting with me (might just be me), however if there is any substantial number that should be their major concern. Logically for me I have listed anything with a queue, the rest will sell easily enough when it suits me. I think they need to rethink some aspects, the secondary market I would suggest is not a priority. Just as an aside, we seem to have wandered a long way from the origional posters gripe, hope they don't leave quietly in protest.
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Post by Deleted on Apr 10, 2018 3:16:03 GMT
I think they need to rethink some aspects, the secondary market I would suggest is not a priority. Agreed 100%. Messing around with the SM at this stage is just treating the symptom, not the cause. What needs sorting urgently are the issues around trust - the general post-Collateral malaise, the valuations, the default rate, and the need for concrete evidence that the recovery process can deliver good lender outcomes for these defaults.
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kmac
Member of DD Central
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Post by kmac on Apr 10, 2018 8:02:13 GMT
You are not alone, I am keeping you company. I suspect the naughty step is quite crowded. Does not worry me too much as I am currently not investing here.
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