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Post by Financial Thing on May 24, 2018 15:14:16 GMT
I was recently looking at AC's stats page and was quite surprised by the high actual lifetime default rates. Just wanted your opinions on if you think these numbers are troublesome or inline with your expectations? ACTUAL LIFETIME DEFAULT RATE 2013: 42.7%, 2014: 33.0%, 2015: 9.2%, 2016: 12.5%, 2017: 3.0% |
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Post by GSV3MIaC on May 24, 2018 17:28:03 GMT
The 40%+ is rather too high for my liking, but the others are not that much of a surprise .. basically it says that up to 1 in 3 of the loans (by value, rather than count) didn't repay as per schedule, and recovery action of some sort was required. Much more interesting is the 'and what was the outcome in terms of capital+interest actually lost'. Many of these borrowers were at the desperate end of the spectrum, and (no surprise) failed to get any refinancing, or find buyers, or complete projects and sell in timely fashion. Not an issue if the security covered the loans.
If you want to go look at the equivalent figures at FC and Ly, last time I looked (some time ago) FC were batting about 25% (if I included late, as well as actually defaulted), and Ly were South of 50%, although it's hard to compare since both companies are much slower to call 'default' than AC are, and several FC/Ly loans were refinanced by themselves, which runs up the total loan book and makes the default rate look better than it actually is.
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Post by Financial Thing on May 24, 2018 17:34:39 GMT
Thanks for your input. The other question becomes, what exactly qualifies as default action to contribute to these numbers? If a loan is repaid two weeks late after the AC recovery team negotiated this late repayment, does this count as an official default?
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benaj
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Post by benaj on May 24, 2018 18:59:16 GMT
According to AC:
"A 'Loss' or 'Bad Debt' is the actual or expected loss to lenders, if any, on a loan in 'Default' after recoveries of the loan amount achieved and/or expected. Assetz Capital takes realisable security for all loans in order to mitigate some or all capital losses from a defaulted loan and Defaults should not be expected to lead to a bad debt or loss in many cases. The 'Default' rate can therefore be considerably higher than the 'Loss' or 'Bad Debt' rate on our lending."
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Post by Butch Cassidy on May 29, 2018 16:00:59 GMT
I was actively investing during that early period & there were some very smelly loans, several recoveries of which are still rumbling along 4/5 years later (I did manage to avoid most of them fortunately) but several were defaulted & eventually fully recovered (a couple given small shortfalls after lender votes) so although very slow & tedious AC ALWAYS DO THINGS BY THE RECOVERY BOOK & tend to get good results albeit often years later. All this pre dates any form of PF so lenders just had to wait for the legal wheels to turn; feedback from this period did result in a much better trading system being introduced that allowed discounting (especially in impaired loans) to allow those who wanted a quick exit for a small haircut to be allowed to achieve this & those happy with the security to buy at a discount & hold. Interestingly now that AC have evolved into a savers platform that system feature has effectively been suspended (like most impaired loans!) & no longer applies which is a very retrograde step IMHO.
Other than FC I believe AC have one of the best recovery procedures across P2P but whether that performance can be maintained as volumes grow or if 6-8% returns warrants the risk I remain very sceptical.
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