james21
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Post by james21 on May 20, 2019 9:54:49 GMT
The supplementary loan holders look like taking a total hit along with a portion of the development loan holders. How the borrower can screw up a simple development is beyond me
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adrian77
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Post by adrian77 on May 20, 2019 10:28:34 GMT
I thought this one was completed with a sale agreed - heard that one before!
In fact I don't even think it is completed and believe me any seller of an unfinished property can expect (normally) to take a very heavy hit.
However am I reading this right i.e. the borrower is offering to terminate the agreement by paying less then he owes - now I like to be pragmatic but I worry this would set a very unfortunate precedence!
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arby
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Post by arby on May 20, 2019 10:37:45 GMT
I thought this one was completed with a sale agreed - heard that one before! In fact I don't even think it is completed and believe me any seller of an unfinished property can expect (normally) to take a very heavy hit. However am I reading this right i.e. the borrower is offering to terminate the agreement by paying less then he owes - now I like to be pragmatic but I worry this would set a very unfortunate precedence! This is probably the most common form of settling up a loan in default. Institutions quite rightly are only interested in minimising any loss in these situations. If the receivers they've discussed with have said the net amount they would expect to return is less than the offer being given, then what would you suggest FS do? Of course it's not ideal, but if I was the borrower and I'd read the most recent update it would even cross my mind to lower the offer! The suggested solution could turn a certain lose-lose into a deal which is slightly better for both parties.
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adrian77
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Post by adrian77 on May 20, 2019 10:44:39 GMT
interesting one- I cans see both sides of the argument -my instinct is that FS can't set a precedence for this or all defaulted developers will be doing this and the repayment may possible be pre-planned in advance i.e. if the offer is accepted then the borrower gets to keep his property at a lower cost or if the offer is not accepted then the borrower gets to keep the money as it were. I tell you what I would like - FS to ask somebody who knows this business and the local market to oversee these crazy valuations and then we would never be in this position in the first place...
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iRobot
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Post by iRobot on May 20, 2019 11:13:45 GMT
interesting one- I cans see both sides of the argument -my instinct is that FS can't set a precedence for this or all defaulted developers will be doing this and the repayment may possible be pre-planned in advance i.e. if the offer is accepted then the borrower gets to keep his property at a lower cost or if the offer is not accepted then the borrower gets to keep the money as it were. I tell you what I would like - FS to ask somebody who knows this business and the local market to oversee these crazy valuations and then we would never be in this position in the first place... On this occasion, I'm not so sure the valuations are this issue. In April 20218, FS has two estate agents give their view on the completed value, which came back as £290-350k. What is apparent is that the Borrower has been lying with regard to the progress of the build (and quite possibly the level of purchase interest, too). Should FS have better control in place to validate borrower feedback. Yes. Absolutely. On a separate note - and across many platforms - it appears to be increasingly commonplace for Borrowers to 'buy back' their own distressed loans at below 'cost'. I'm only in the original £60k loan, but if I were in anything else and ending up financially disadvantaged (eg a capital loss), I'd be demanding to know exactly what information and calculations FS had used when deciding to settle with the borrower in this manner. Lastly, the property will need to be completed and eventually sold, is there no way FS can retain some rights to the sale process and proceeds?
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adrian77
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Post by adrian77 on May 20, 2019 14:42:15 GMT
good point - I have come across developments where a builder takes on an uncompleted development at a reduced cost and the original owner takes a share of the profit when sold - not sure whether this would work for FS ?
Considering there was the Whitehaven fiasco you would think FS had put in place better building and cost control controls but...
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alanh
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Post by alanh on May 31, 2019 18:46:14 GMT
Just been repaid in full together with some (about half) the interest. Happy days.
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baldpate
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Post by baldpate on May 31, 2019 19:14:28 GMT
Lenders in the priority 1 land loan (1355775736) get capital & interest in full Lenders in the priority 2 development loans get all capital and some interest (as reported above by@alanh). As far as I can make out, lenders in the priority 3 supplementary loan (3204728975) have unfortunately lost the majority of their capital, and all interest - they didn't lose everything because only 85% of this 10K loan was subordinated to the prio2 loans.
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Godanubis
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Post by Godanubis on May 31, 2019 19:20:56 GMT
Another predicted 100% loss that didn’t..... Like the Lib Dems the doom predictors will say but you didn’t get all you were promised
apart from supplementary ( never buy ) loans it is a satisfactory outcome.
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cwah
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Post by cwah on May 31, 2019 21:52:22 GMT
Another predicted 100% loss that didn’t..... Like the Lib Dems the doom predictors will say but you didn’t get all you were promised apart from supplementary ( never buy ) loans it is a satisfactory outcome. Depend on which loan tranche they were. The tranche 3 looks like a total loss
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Godanubis
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Post by Godanubis on Jun 1, 2019 7:59:20 GMT
Another predicted 100% loss that didn’t..... Like the Lib Dems the doom predictors will say but you didn’t get all you were promised apart from supplementary ( never buy ) loans it is a satisfactory outcome. Depend on which loan tranche they were. The tranche 3 looks like a total loss I got 5.6% on tranche 3
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cwah
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Post by cwah on Jun 1, 2019 8:36:41 GMT
Depend on which loan tranche they were. The tranche 3 looks like a total loss I got 5.6% on tranche 3 5.6% back? So 94% loss? Isn't it total loss or close to?
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adrian77
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Post by adrian77 on Jun 1, 2019 9:49:45 GMT
I have searched this thread for 100% and can't find any reference to a 100% loss - what I did find was my post
I don't think the house is finished ? And the third charge returned £1,560.67 out of £10,000
Not exactly a good result in my book - but true much better than a lot of other property loans!
Won't argue about not buying anything other than a first charge.
update - thinking about this - am I correct in thinking rather than the third tranche having a 100% loss - the second charge holder has taken a hit - if so not sure I would be happy with this if I was in the second charge...
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alanh
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Post by alanh on Jun 1, 2019 10:00:38 GMT
Lenders in the priority 1 land loan (1355775736) get capital & interest in full Lenders in the priority 2 development loans get all capital and some interest (as reported above by@alanh). As far as I can make out, lenders in the priority 3 supplementary loan (3204728975) have unfortunately lost the majority of their capital, and all interest - they didn't lose everything because only 85% of this 10K loan was subordinated to the prio2 loans.
Most of the loans related to this development have paid back in full. The 5.3% number is not the amount of capital returned - all the capital was returned and the 5.3% is the amount of interest received. The supplementary loan is the only one with a loss of capital. Taken overall (and with apologies to those in the supplementary loan) this is a pretty decent result.
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michaelc
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Post by michaelc on Jun 1, 2019 14:12:13 GMT
Unless you took a risk with a supplemental last charge, this was a good result in the end. Certainly, speaking selfishly in the upper two charges I'm very happy.
I don't quite understand though the policy for distribution. I had thought it was 1st charge capital, then 2nd captiol then 3rd capitol then 1st interest, 2nd interest etc. But that can't be the case?
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