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Post by stevefindlay on May 29, 2019 13:06:04 GMT
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adrianc
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Post by adrianc on May 29, 2019 13:20:12 GMT
I think that there is more that can be done to promote P2P as being a construct which bypasses banking as a positive thing, in order to attract better borrowers? It's definitely a good idea as a concept - but the problem is always going to be that "traditional" lenders are happy to give cheap rates to low-risk borrowers, leaving the higher-risk borrowers looking for investors happy to trade off a bit of risk for return. Great when the times are good, but when times turn harder...
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zlb
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Post by zlb on May 29, 2019 14:17:08 GMT
I think that there is more that can be done to promote P2P as being a construct which bypasses banking as a positive thing, in order to attract better borrowers? It's definitely a good idea as a concept - but the problem is always going to be that "traditional" lenders are happy to give cheap rates to low-risk borrowers, leaving the higher-risk borrowers looking for investors happy to trade off a bit of risk for return. Great when the times are good, but when times turn harder... what would draw low risk borrowers to P2P? Most of them are probably unaware of it, or it's a fuzzy cloud to be wary of, I would think. Maybe dodgy borrowers are attracted to p2p because they think they can get dodgy valuations.
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adrianc
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Post by adrianc on May 29, 2019 14:22:31 GMT
It's definitely a good idea as a concept - but the problem is always going to be that "traditional" lenders are happy to give cheap rates to low-risk borrowers, leaving the higher-risk borrowers looking for investors happy to trade off a bit of risk for return. Great when the times are good, but when times turn harder... what would draw low risk borrowers to P2P? Simple - better rates than they can get elsewhere. Rates as good as elsewhere will bring the "ethical consumer" segment of the market, but you want better rates for any volume. And that's pretty damn low. Which then raises the question for investors of why bother, when other investments offer better returns? Why would reputable surveyors hired by the platform give "dodgy" valuations favourable to the borrower...?
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zlb
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Post by zlb on May 29, 2019 14:38:02 GMT
what would draw low risk borrowers to P2P? Simple - better rates than they can get elsewhere. Rates as good as elsewhere will bring the "ethical consumer" segment of the market, but you want better rates for any volume. And that's pretty damn low. Which then raises the question for investors of why bother, when other investments offer better returns? Why would reputable surveyors hired by the platform give "dodgy" valuations favourable to the borrower...? it's not clear to me that they offer them, but valuation has clearly been significantly in error in some cases. Otherwise, I suppose I'm referencing many contributor comments here in relevant threads(not this platform), have implied that the valuation is somehow enlarged to match what is required for the development, therefore making LTV/risk look lower than it really is, in terms of the security.
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adrianc
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Post by adrianc on May 29, 2019 14:45:23 GMT
Why would reputable surveyors hired by the platform give "dodgy" valuations favourable to the borrower...? it's not clear to me that they offer them, but valuation has clearly been significantly in error in some cases. Then that's one for the surveyor's professional indemnity insurance to argue. Lendy have won one such case recently.
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zlb
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Post by zlb on May 29, 2019 14:53:05 GMT
it's not clear to me that they offer them, but valuation has clearly been significantly in error in some cases. Then that's one for the surveyor's professional indemnity insurance to argue. Lendy have won one such case recently. yes, but that doesn't guarantee that others will be won. It helps though,,but someone did point out a press article saying valuers were staying away from p2p for this issue.
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Post by propman on May 30, 2019 10:24:58 GMT
Simple - better rates than they can get elsewhere. Rates as good as elsewhere will bring the "ethical consumer" segment of the market, but you want better rates for any volume. And that's pretty damn low. Which then raises the question for investors of why bother, when other investments offer better returns? Why would reputable surveyors hired by the platform give "dodgy" valuations favourable to the borrower...? it's not clear to me that they offer them, but valuation has clearly been significantly in error in some cases. Otherwise, I suppose I'm referencing many contributor comments here in relevant threads(not this platform), have implied that the valuation is somehow enlarged to match what is required for the development, therefore making LTV/risk look lower than it really is, in terms of the security. In my experience the biggest discrepancies are not caused by incorrect valuations, but a flawed methodology. Every valuation agrees the basis of the valuation. Borrowers are loathe to call for valuations on a rapid sale basis with development valuations generally the market value of what they hope to create based on todays prices. This sometimes ignores the holding costs and cost inflation on the dubious grounds that prices will increase to cover these. So basically it includes all of their hoped for profit. Loans are often due during the development so when they are due the site has lost value (anyone taking over a partial development will discount heavily as they are not going to get meaningful indemnities on the work already done and so they are taking a big risk to complete).
- PM
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zlb
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Post by zlb on May 30, 2019 11:12:45 GMT
it's not clear to me that they offer them, but valuation has clearly been significantly in error in some cases. Otherwise, I suppose I'm referencing many contributor comments here in relevant threads(not this platform), have implied that the valuation is somehow enlarged to match what is required for the development, therefore making LTV/risk look lower than it really is, in terms of the security. In my experience the biggest discrepancies are not caused by incorrect valuations, but a flawed methodology. Every valuation agrees the basis of the valuation. Borrowers are loathe to call for valuations on a rapid sale basis with development valuations generally the market value of what they hope to create based on todays prices. This sometimes ignores the holding costs and cost inflation on the dubious grounds that prices will increase to cover these. So basically it includes all of their hoped for profit. Loans are often due during the development so when they are due the site has lost value (anyone taking over a partial development will discount heavily as they are not going to get meaningful indemnities on the work already done and so they are taking a big risk to complete).
- PM
thanks, v helpful. So there's an issue in running out of money before the development is ready? But just to clarify are you talking about property in general or Ly with its questionable valuations for posh houses as if they weren't right next to the M5? For example.
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Post by portlandbill on Oct 1, 2019 12:50:06 GMT
I'm getting concerned again. My recovery and watchlists totals are now over 3 times my total net returns.
Why the (relatively) sudden change just as the lights are going out?
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adrianc
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Post by adrianc on Oct 1, 2019 13:12:24 GMT
I'm getting concerned again. My recovery and watchlists totals are now over 3 times my total net returns. Why the (relatively) sudden change just as the lights are going out? The good stuff's been sold, and the platforms behind the other stuff are starting to stick warning signs up earlier? What do the lists give as the reasons for each loan? Looking at mine, the total return to date's about 13% of the total still invested. Watchlist is about 60% of total return, recovery is about the same. Very few don't give a reason, and most look relatively promising. Write-off to date is trivial.
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Post by stevefindlay on Oct 3, 2019 12:43:28 GMT
As per our monthly update:
"The total estimated write-downs for the entire book by the end of the wind-down period is 2.6%. The majority of this relates to an estimated write-down for Collateral positions of 1.5%. The remaining estimated write-down of 1.1% is in line with our expectations, albeit it is somewhat more conservative than what we have seen previously. The loan book continues to perform in line with expectations .
We expect a further 3.5% of interest to be paid across the book during the wind-down period. Therefore, across the whole book, we are still anticipating that the final amounts paid out to clients will be greater than the balances held in May 2019, when we ceased investing."
There is some variance across different clients, but these are the averages.
Re: selling early: as stated back in May, we are now looking (Q4 2019) at bringing in some loans earlier than their natural end dates, but we have sold very few loans early to date (Q3 2019). So it is not the case the portfolio is biased in this regard.
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Post by portlandbill on Feb 1, 2020 9:50:47 GMT
As this scheme winds down so the potential defaults are growing to the point where my predicted write-offs are nearly 40% of my all time actual interest received. Write offs, recoveries and watchlists are still growing as the windup progresses so I'm sure that there's more bad news to come. I'm still hoping to make something, but not anything like as much as hoped for. Will be keen to see how much I actually make after 3+ years of investment.
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pom
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Post by pom on Feb 1, 2020 12:12:12 GMT
My experience of the wind-down is probably rather different from most because by sheer luck I requested a (full) withdrawal the week before, leaving about 20% of my investment unsellable spread pretty evenly between watchlist and recovery. It's quite encouraging that about a third has since been returned...but the remainder is still significantly more than total interest earned, and very little has been written off yet, so not much help with the tax bill either. Hey ho, will still be better than losses on some other platforms anyway
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zlb
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Post by zlb on Feb 1, 2020 12:34:10 GMT
My experience of the wind-down is probably rather different from most because by sheer luck I requested a (full) withdrawal the week before, leaving about 20% of my investment unsellable spread pretty evenly between watchlist and recovery. It's quite encouraging that about a third has since been returned...but the remainder is still significantly more than total interest earned, and very little has been written off yet, so not much help with the tax bill either. Hey ho, will still be better than losses on some other platforms anyway Yes I requested out about a month before it closed, but had more left in there than you. I also had a look for tax - also found not that helpful. I saw a potential losses value listed - the matter is whether or not it turns out to be limited to that amount. Given that there are a lot of investments listed as borrower in admin / platform in admin, I wonder how the estimate is created.
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