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Post by loftankerman on May 16, 2018 13:42:09 GMT
If it wasn't so tragic it would be hilarious. The email tone almost makes out as if RICS and Lendy are somehow equals, yet Lendy is a merely a drop in the water. It's a bit like a guy who was forced to knock of £25,000 on his house sale saying that the entire valuations industry needs to look at themselves, for he cannot possibly be wrong. It is fact that the really poor recovery rates on some loans indicate there is something clearly wrong, but IMO the fault lies with the P2P platforms keen to finalise deals. Not just here but on other platforms some of the valuations have turned out to be surprisingly high, but also quite convieniently allowing for a 70% LTV loan to be made. It has always puzzled me that so many wanting to borrow on P2P, ( Lendy and elsewhere ) always wants an amount that is 70% of some asset they can offer as security. What's the chance of that? I have assumed that maybe they need less and think they are playing safe by giving themselves a hefty contingency. It also figures that if anyone is planning to grab the cash and dump a relatively worthless security on the lender, there's no point in doing things by halves.
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withnell
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Post by withnell on May 16, 2018 14:11:04 GMT
Could be they need 75% and if that 5% is at unsecured rates then they'd get all they could at the relatively lower P2P secured rate
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Post by rb5286 on May 16, 2018 14:41:36 GMT
If it wasn't so tragic it would be hilarious. The email tone almost makes out as if RICS and Lendy are somehow equals, yet Lendy is a merely a drop in the water. It's a bit like a guy who was forced to knock of £25,000 on his house sale saying that the entire valuations industry needs to look at themselves, for he cannot possibly be wrong. It is fact that the really poor recovery rates on some loans indicate there is something clearly wrong, but IMO the fault lies with the P2P platforms keen to finalise deals. Not just here but on other platforms some of the valuations have turned out to be surprisingly high, but also quite convieniently allowing for a 70% LTV loan to be made. Haha, yeah. It reads like a statement from HSBC, or another big lender! KISS (keep it simple stupid) - as alluded to a few comments above: hire the guy who did the 2nd, accurate valuation, to do the first.
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Post by Paul64 on May 16, 2018 14:54:09 GMT
When Paul64 refers to legal privilege regarding any possible future action do we think he means: A/ He can't discuss anything to do with any possible future action due to legal privilege between Lendy and their solicitors and/or B/ We shouldn't discuss on this public forum anything to do with possible future action e.g. our views on specific valuations? If A then sounds reasonable but I'm no solicitor. If B then a bit more worrying due to conflict of interest - i.e. Lendy (and many lenders) clearly would rather less of this sort of thing was discussed. Personally, from talking and reading from others some of whom are employed in the p2p industry, the problem is not so much RICS but how their agents are instructed. If being instructed by the borrower's broker then there is a problem right there. Hi michaelc, thanks for the post. For clarity, yes, it is A, which we have communicated a number of times over recent months on here and to investors. We have no intention of stifling constructive comment on the forum, which is what it was designed for. KR, Paul
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adrianc
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Post by adrianc on May 16, 2018 17:47:39 GMT
When Paul64 refers to legal privilege regarding any possible future action do we think he means: A/ He can't discuss anything to do with any possible future action due to legal privilege between Lendy and their solicitors and/or B/ We shouldn't discuss on this public forum anything to do with possible future action e.g. our views on specific valuations? If A then sounds reasonable but I'm no solicitor. If B then a bit more worrying due to conflict of interest - i.e. Lendy (and many lenders) clearly would rather less of this sort of thing was discussed. All you need to do is look at a few of the defaulted loans' updates, especially those where the security has been sold and the shortfall is in legals, and the answer is fairly obvious. Indeed - if you're buying a house, nobody relies on the vendor's valuation, do they? BUT... If you're buying a house with a mortgage, then what do the lender go by for their security? A RICS surveyor's valuation... BUT - many lenders need surveyors to be on their "panel", and if the surveyor that the buyer has chosen to do the actual survey isn't, then the lender will insist on a valuation from a surveyor who is. Perhaps that's the answer? A "panel" of approved RICS surveyors, to avoid the wilder edges of the industry, apparently in cahoots with the vendors - many of whom are property industry professionals, so will have much more established relationships with their local surveyors than the P2P industry can possibly hope to have. Obviously, it's not realistic to expect each lender to develop such a list. But perhaps the P2P industry as a whole could do so? End of the day, if a RICS surveyor is putting their name to a valuation that isn't their absolute best-guess of a fair market value, they are breaking their professional membership of RICS, and that brings the surveying industry into disrepute. It's in RICS interest to slap a lid on that as hard as poss, as soon as poss.
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mary
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Post by mary on May 16, 2018 18:01:03 GMT
Unfortunately, "constructive discussions" and "working proactively" sound like PR platitudes.
I'd much rather hear about how Lendy intends to strengthen its own valuation processes to help restore some investor confidence in the platform. Indeed, I think we're at the stage where multiple RICS valuations are needed for properties that are unusual and / or over a certain price point.
You are correct, these platitudes are meaningless, hence used frequently by PR, Marketing and Politicians. Only successful, and repeated, legal action against the Valuers PI insurance may have some effect, as the insurers will raise premiums for those that they are having to pay out for. However, this will take a lot of time, due to the drawn out legal process, and then it may still not have a noticeable effect as P2P is small vs all the other sources of instruction that keep all these RICS people in business.
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michaelc
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Post by michaelc on May 16, 2018 20:34:49 GMT
BUT... If you're buying a house with a mortgage, then what do the lender go by for their security? A RICS surveyor's valuation... BUT - many lenders need surveyors to be on their "panel", and if the surveyor that the buyer has chosen to do the actual survey isn't, then the lender will insist on a valuation from a surveyor who is. Perhaps that's the answer? A "panel" of approved RICS surveyors, to avoid the wilder edges of the industry, apparently in cahoots with the vendors - many of whom are property industry professionals, so will have much more established relationships with their local surveyors than the P2P industry can possibly hope to have. Obviously, it's not realistic to expect each lender to develop such a list. But perhaps the P2P industry as a whole could do so? End of the day, if a RICS surveyor is putting their name to a valuation that isn't their absolute best-guess of a fair market value, they are breaking their professional membership of RICS, and that brings the surveying industry into disrepute. It's in RICS interest to slap a lid on that as hard as poss, as soon as poss. Yes in fact at least one platform I know of does have its own panel of valuers for that very reason. My understanding is that a borrower typically doesn't go to the platform directly but via a finance broker. That broker will have a lot of contact with valuers and will have those he trusts to spin the value as high as possible. Therefore platforms should absolutely not accept valuations from any old RICS valuer. The last time I needed a residential mortgage I seem to recall the mortgage company arranged everything to do with the valuation - I think it would be quite unusual for a borrower to attempt to instruct his own and as you say even if he did it might not be accepted unless on the mortgage company's panel. THIS is the issue Lendy and other platforms should be addressing !
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Post by crystal on May 17, 2018 6:28:53 GMT
This (and the comment relating to PI claims) hits the nail on the head - there is also the case of the property agent subsequently doubling as the valuer which at the very least *looks* like a conflict of interest.
Until this aspect of property P2P cleans up, a reasonable starting option is to multiply the valuation by a figure somewhere between 0.3 and 0.7 - which is a very unsatisfactory error margin.
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invester
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Post by invester on May 17, 2018 7:07:41 GMT
Yeah, the only real way would be to make the valuation totally independent with no information being passed at all between parties although that would be impossible to enforce.
I remember getting a valuation for a property whose purchase price was not a round figure due to incremental bids - £268,000. The valuation came in at exactly £268,000.
At the moment there seems to be a huge incentive for valuers to be good lads and not scupper deals - for some of these massive DFL projects they know that revaluations might be required at each tranche, and those bits of work would be incredibly profitable for them as a lot of the work has already been done.
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zlb
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Post by zlb on May 17, 2018 7:08:07 GMT
As others have suggested, have at least two valuers, which in domestic property purchase would be the case anyway.
The lenders need their own RICS valuer in any p2p... How though?
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ptr120
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Post by ptr120 on May 17, 2018 7:12:15 GMT
At some point MT adopted the practice of including the following text in their instruction letter to valuers: When providing a valuation the Valuer must bear in mind that MoneyThing lend to borrowers who are unable to obtain loans from larger mainstream lenders (which operate higher loan eligibility criteria). As a consequence, there is a greater risk of a loan default and likelihood that the valuation will be subject to real-world testing via repossession and sale of the secured asset. It is essential that valuations are provided with this in mind and that they err on the conservative side particularly where there is wider valuation bracket due to e.g. lack of information or any assumptions made. Furthermore, the Valuer must not rely on financial information or projections provided solely by the borrower. The Valuer must also appreciate that (s)he is the lender's eyes and ears on the ground and in accordance with the RICS Red Book, (s)he must report on all factors that may impact on the valuation, its reliability and the suitability of the asset for secured lending. Paul64 will you commit to including similar wording in all valuation instructions going forward? It would seem to me that this is an obvious way to put yourselves in a far stronger position to issue a claim against a valuer in the event of an errant valuation. |
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webwizard
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Post by webwizard on May 17, 2018 7:28:36 GMT
At some point MT adopted the practice of including the following text in their instruction letter to valuers: When providing a valuation the Valuer must bear in mind that MoneyThing lend to borrowers who are unable to obtain loans from larger mainstream lenders (which operate higher loan eligibility criteria). As a consequence, there is a greater risk of a loan default and likelihood that the valuation will be subject to real-world testing via repossession and sale of the secured asset. It is essential that valuations are provided with this in mind and that they err on the conservative side particularly where there is wider valuation bracket due to e.g. lack of information or any assumptions made. Furthermore, the Valuer must not rely on financial information or projections provided solely by the borrower. The Valuer must also appreciate that (s)he is the lender's eyes and ears on the ground and in accordance with the RICS Red Book, (s)he must report on all factors that may impact on the valuation, its reliability and the suitability of the asset for secured lending. What an excellent suggestion. At last a proposal to move forwards instead of a complaint about how bad things are (which they are, don't get me wrong) but constructive suggestions for improvement are in everyone's interest. Lendy should incorporate something like this at the earliest opportunity to just get a handle on reality.
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11025
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Post by 11025 on May 17, 2018 8:37:52 GMT
Dear thegrumbler , thanks for your post. What you have stated however is factually untrue, and does not reflect in any way how Lendy undertakes it independent valuations. As you might have read in the recent investor update, we have had constructive discussions with RICS over recent weeks. We are now working proactively with them to help ensure that all their members adhere to the highest standards set by the institution, which we will be updating investors on in due course. Separately, on matters where Lendy is undertaking legal proceedings against third parties on behalf of investors, we need to be very careful that we do not breach legal privilege, which would almost certainly negatively impact our case, and therefore reduce the chances of a good and fair outcome for our investors. We will covering this issue in our podcast later in the month. If you DM me with your contact details, we would be more than happy to discuss this matter on the telephone with you, however there is no pressure at all for you to do this. Kind regards, Paul Paul ,
Surely when you are at the situation where almost every valuation in a default sale proves to be wholly inaccurate as we are seeing at this time
then something needs to be done as the business model isn't working properly and investor confidence is very low as a result ...
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withnell
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Post by withnell on May 17, 2018 11:06:18 GMT
I remember getting a valuation for a property whose purchase price was not a round figure due to incremental bids - £268,000. The valuation came in at exactly £268,000. I've had 3 valuations (house purchase, remortgage, house purchase). Every one was exactly the value I'd offered / asked for - despite the "remortgage" then selling for 42% more just over a year later. There's clearly a range that they're happy within, so I'd be happier if this was quoted within the valuation reports to show a confidence level
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ozboy
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Post by ozboy on May 17, 2018 14:58:49 GMT
"..... investor confidence is very low as a result"Yes, I am now " a tad miffed." And if matters don't improve then I think by next week I'll probably even be "rather peeved" 
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