baldpate
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Post by baldpate on Oct 4, 2019 20:47:56 GMT
Happy to see that you recently implemented the change described in the previous post : to show the aggregate LTV , rather than the individual tranche LTVs, on multi-tranche loans. Thank you for that.
Very much less happy to read what you have to say in your recently emailed 'LOANPAD UPDATE'- that you intend to increase the maximum size from £500K to £750K. Particularly so, as this immediately follows a paragraph which starts "As diversification is a key element of our model, ...".
Unless you can undertake to match - indeed exceed - the 50% increase in loan limit with a corresponding increase in the number of borrowers you are lending to, then your claim to treat diversification as 'key' must be seen as disingenuous at best, and at worst downright untrue.
I have already pointed out the unfortunate trend towards risk concentration in this earlier post. Your latest announcement does nothing to assuage my concerns. As I said previously, I do like the concepts underlying your lending proposition : I would like to feel able to invest further, but I cannot do so until I see some real diversification alongside a growth in the loanbook.
I hope you will take this as constructive criticism from one who wishes your platform well, and would like to see your lending proposition thrive.
EDIT: And the very day after I made the above post - as if timed perfectly to further illustrate my concern - a large multitranche loan (9309254) was repaid. As a result, more than 81% of the loanbook is now concentrate in just 9 development projects. That's not diversification - that's risk concentration!
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Post by mrclondon on Oct 7, 2019 11:39:31 GMT
And as forewarned, two loans have today issued £250k tranches taking their total drawn to £750k. (Loan ids 9129586 and 9452130)
Fortunately, and by pure chance, I had scheduled a withdrawal for today which has meant my exposure per loan is still within acceptable bounds. Others may wish to check their exposure to these two loans to review whether the total remains acceptable.
Each of these two loans now represent 14.3% of the live loan book.
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zlb
Member of DD Central
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Post by zlb on Oct 8, 2019 11:38:52 GMT
And as forewarned, two loans have today issued £250k tranches taking their total drawn to £750k. (Loan ids 9129586 and 9452130)
Fortunately, and by pure chance, I had scheduled a withdrawal for today which has meant my exposure per loan is still within acceptable bounds. Others may wish to check their exposure to these two loans to review whether the total remains acceptable.
Each of these two loans now represent 14.3% of the live loan book.
see what you mean. yes definitely over-exposure, but I didn't think that one could do anything about this - can one request funds withdrawn from a specific project? 9747924 = 8.5%, 2 tranche 9188969 = 10% / 5 tranche, 9135259 = 9% / 3 tranches, and so on.
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Post by mrclondon on Oct 8, 2019 11:45:09 GMT
Today's changes sees another multi-tranche loan repaid (9518099) and another loan receive a 5th tranche taking the total drawn to £750k (9188969)
The 3 loans of £750k each represent 14.7% of the loan book (44% combined)
The 4 loans of between £400k & £500k (inclusive) represent a further 34% of the loan book combined. (So just 7 loans currently represent 78% of the loan book)
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Post by mrclondon on Oct 8, 2019 11:50:48 GMT
see what you mean. yes definitely over-exposure, but I didn't think that one could do anything about this - can one request funds withdrawn from a specific project? No the only solution is to withdraw funds from the platform completely to bring the exposure to the largest loans down. Loanpad was a good concept, but as with many platforms they are struggling to scale. When they launched they indicated they had other lending partners in the wings, its a shame that they haven't concentrated on this aspect of expanding the number of loans rather than focus on an ever dwindling number of large loans from the launch partner.
I suspect their view is most lenders are passively involved, and won't notice (or care too much even if they do) that their exposure per loan is rising through lack of diversification.
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zlb
Member of DD Central
Posts: 1,422
Likes: 333
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Post by zlb on Oct 8, 2019 12:05:14 GMT
see what you mean. yes definitely over-exposure, but I didn't think that one could do anything about this - can one request funds withdrawn from a specific project? No the only solution is to withdraw funds from the platform completely to bring the exposure to the largest loans down. Loanpad was a good concept, but as with many platforms they are struggling to scale. When they launched they indicated they had other lending partners in the wings, its a shame that they haven't concentrated on this aspect of expanding the number of loans rather than focus on an ever dwindling number of large loans from the launch partner.
I suspect their view is most lenders are passively involved, and won't notice (or care too much even if they do) that their exposure per loan is rising through lack of diversification.
Unfortunately contributing to the currently decreasing P2P options.
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Post by Loanpad on Oct 8, 2019 13:51:46 GMT
Thanks to all for the feedback here
As a young platform of course it will take time for diversification to increase. Diversification will continue to build steadily and we have a very strong pipeline over the coming weeks and months.
Diversification does spread risk but does not necessarily reduce risk and only loan quality can truly reduce risk. So whilst it takes time to build large levels of diversification (especially with property loans) we hope it is the loan quality that ultimately shines through as that it the most important thing.
To add some context we are talking about developments that are now complete, valued at £5m + and where we have increased from £500,000 to £750,000. It is hardly extravagant and they are the loans where we believe our investors’ money is best invested. So it is a bit surprising to see some of the reaction to that even though we share everyone’s desire for more diversification.
On the topic of new lending partners, several are already exceptionally keen to work with us (when we have the capacity to do so of course) so that is something we look forward to, hopefully in the very near future. Our current lending partner has an incredible pipeline for us to tap into so there is little point in looking elsewhere at this stage.
We appreciate everyone’s continued support
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Post by Badly Drawn Stickman on Oct 8, 2019 14:32:37 GMT
Thanks to all for the feedback here As a young platform of course it will take time for diversification to increase. Diversification will continue to build steadily and we have a very strong pipeline over the coming weeks and months. Diversification does spread risk but does not necessarily reduce risk and only loan quality can truly reduce risk. So whilst it takes time to build large levels of diversification (especially with property loans) we hope it is the loan quality that ultimately shines through as that it the most important thing. To add some context we are talking about developments that are now complete, valued at £5m + and where we have increased from £500,000 to £750,000. It is hardly extravagant and they are the loans where we believe our investors’ money is best invested. So it is a bit surprising to see some of the reaction to that even though we share everyone’s desire for more diversification. On the topic of new lending partners, several are already exceptionally keen to work with us (when we have the capacity to do so of course) so that is something we look forward to, hopefully in the very near future. Our current lending partner has an incredible pipeline for us to tap into so there is little point in looking elsewhere at this stage. We appreciate everyone’s continued support perhaps if I share a few of my thoughts with you as to why I am likely to reduce my funds with you, you could try and address them. It is time consuming and arguably unnecessary to establish how good some of the newer loans are compared to the relatively 'simple' loans initially offered. A more detailed listing would make this a easier task. In my view the platform is only as good as its weakest loan when participation is not optional. Loan updates would also be useful. The Premium account at 60 days is not really comparable to some other platforms rates (yes platform performance is clearly a factor in the choice) you current promotion suggests this could be improved to retain funds. Your membership has not noticeably soared since its introduction maybe keeping what you have should factor more into your thinking. There are other reasons, but maybe the key ones are a starting point.
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Post by mrclondon on Oct 8, 2019 15:12:32 GMT
Diversification does spread risk but does not necessarily reduce risk and only loan quality can truly reduce risk. Understood, and conceptually undoubtably true.
Where I think we differ is the definition of a quality loan ... or more precisely quality security underpinning a loan. In my case a quality asset is one that could be auctioned within 28 days, and for the capital outstanding (in the context of LP thats our capital + that of the loan partner) to be approximately fully covered with a 99% probability. (The LP senior ranking then giving an additional comfort margin). That feels to me an appropriate level of risk for 4%.
Auctioning an almost complete 45 unit apartment block "somewhere up north" (said to highlight it is well out of your lending partner's normal geographical comfort zone) that has already been the subject of a debt write off by another alternative finance provider earlier in the project is unlikely to provide a satisfactory outcome for anyone. Without evidence of agreed sales it is impossible for lenders such as myself to put a firesale value on the asset.
Similiarly auctioning sites (of which you are loaning against two) for which planning applications have been withdrawn is probably unlikely to provide a satisfactory outcome for anyone.
I've been investing in p2p for 13 years now, and have accumulated over £100k of distressed loans that were once described as "quality" by their respective platforms, and I expect many tens of thousands of pounds of capital write offs from assets that can not (could not) be auctioned immediately for the value of the loan.
The nature of the loans offered on Loanpad has gradually shifted in the months since launch, with more large multi-unit development projects and sites without planning, and fewer single / low unit assets. Whether right or wrong, my perception is the overall risk profile of the loanbook has steadily increased since launch. I'm struggling to convince myself that 4% is an appropriate return for the level of risk as I currently perceive it.
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Post by mrclondon on Oct 8, 2019 18:29:00 GMT
After a pause for reflection, I think its worth expanding on the point made by Badly Drawn Stickman regarding updates, to raise an aspect that is a concern to me.
Three loans have had their maturity date extended, two by 1 month of which one has repaid within the extra month, and one by 3 months. Unfortunately lenders have not received any updates to explain whether there was/are reasonable grounds to expect repayment during the extension, or whether these are more examples of the p2p disease of "kick the can and hope for the best". We have no idea if the extensions have been formally and legally documented by the lending partner, or whether a reservation of rights document has been issued to the borrower, or whether its just an arbitary shift in the end date. Infact there is nothing to show that these loans have exceeded their original maturity date.
I'm not suggesting there is an actual issue here today, merely that we have no visibility of an area of loan managment that is badly handled by many platforms to the detriment of lenders.
We have no indication of which of the development loans are subject to monthly (or similiar) reporting by independent monitoring surveyors, and whether Loanpad are party to such reports when they are produced. The loan that has received a 3 month extension (9922376) at the beginning of Sept felt from a site visit I made a few days previously to be a very long way off completion, and struck me as typical of the many high risk projects seen by p2p lenders. I hope that Loanpad are paying close attention to the IMS monitoring of this project.
The planning application for loan id 9825468 was withdrawn on 6th August, and as far as I can tell no new planning application has been made since. There is no indication on the loan that the described exit strategy is now very unlikely to be achieved in the timeframe stated.
For a new lender on Loanpad the information presented on each loan may be severely outdated, and simply wrong/mis-leading. Probably fair to say there is only minimal impact at this early point in Loanpad's life, but has the potential to spiral as time goes by.
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Post by nooneere on Oct 8, 2019 20:03:05 GMT
On the topic of new lending partners, several are already exceptionally keen to work with us (when we have the capacity to do so of course) so that is something we look forward to, hopefully in the very near future. Our current lending partner has an incredible pipeline for us to tap into so there is little point in looking elsewhere at this stage. I think this forum would like you to get going with the new lending partners, even if you think it unnecessary.
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Post by Loanpad on Oct 10, 2019 9:44:28 GMT
Loanpad perhaps if I share a few of my thoughts with you as to why I am likely to reduce my funds with you, you could try and address them. It is time consuming and arguably unnecessary to establish how good some of the newer loans are compared to the relatively 'simple' loans initially offered. A more detailed listing would make this a easier task. In my view the platform is only as good as its weakest loan when participation is not optional. Loan updates would also be useful. The Premium account at 60 days is not really comparable to some other platforms rates (yes platform performance is clearly a factor in the choice) you current promotion suggests this could be improved to retain funds. Your membership has not noticeably soared since its introduction maybe keeping what you have should factor more into your thinking. There are other reasons, but maybe the key ones are a starting point. It is fair to say that loan updates is one area where there is room for considerable improvement on our part and this is already being addressed. Firstly, we will be providing more frequent updates on every loan (typically monthly). Secondly, there will soon be an Updates tab where you will be able to see updates on all loans in chronological order to make this much easier to check. We’re always happy to hear any other suggestions. We spend a very negligible amount on promotions/marketing. It is normal to offer newcomers an additional incentive especially when we believe they will be very satisfied with the platform and continue to use it which is proving to be the case. If you are referring to the L+ promotion, we believe there is no better champion of a product then those that use it. Going by the average investment of each L+ referral, this is proving to be our highest quality channel of new investors. We believe our rates are very attractive for the investments being made – other platforms may offer higher rates but that bears no relevance to us as we just focus on doing the best that we reasonably can. If other platforms can do better, fair play to them, we want all platforms to do well.
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Post by Loanpad on Oct 10, 2019 9:49:31 GMT
mrclondon Please see our earlier post about updates. We cannot get in to loan specifics on this forum as any loan information must be disclosed to all our investors. On the point made about auctioning a 45-apartment block that would not be a logical strategy that anyone would be adopting so is a moot point. If for any unforeseeable reason a fire sale was needed then auctioning/discounting just 6 of these ‘residential new-build apartments’ to end buyers would see our loan repaid. As for "can-kicking" our ICF was designed to make this very unattractive to us. We do not agree that the risk has materially shifted as you seek to suggest, but of course everyone can make up their own mind. There are currently ~ £20m of live loans with just ~ £5m to Loanpad (senior) and ~ £15m lending partner (junior). We do not think it is fair to continually judge us by other platforms’ standards whether with respect to loan quality, integrity, can-kicking, scalability or otherwise. We haven’t let anyone down, we are nothing without our investors, so we would just ask to be judged on our own merits. Thank you.
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Post by Loanpad on Oct 10, 2019 9:50:38 GMT
On the topic of new lending partners, several are already exceptionally keen to work with us (when we have the capacity to do so of course) so that is something we look forward to, hopefully in the very near future. Our current lending partner has an incredible pipeline for us to tap into so there is little point in looking elsewhere at this stage. I think this forum would like you to get going with the new lending partners, even if you think it unnecessary. We do understand and we also hope it won’t be long before we can do so
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Post by Badly Drawn Stickman on Oct 10, 2019 15:56:06 GMT
Loanpad perhaps if I share a few of my thoughts with you as to why I am likely to reduce my funds with you, you could try and address them. It is time consuming and arguably unnecessary to establish how good some of the newer loans are compared to the relatively 'simple' loans initially offered. A more detailed listing would make this a easier task. In my view the platform is only as good as its weakest loan when participation is not optional. Loan updates would also be useful. The Premium account at 60 days is not really comparable to some other platforms rates (yes platform performance is clearly a factor in the choice) you current promotion suggests this could be improved to retain funds. Your membership has not noticeably soared since its introduction maybe keeping what you have should factor more into your thinking. There are other reasons, but maybe the key ones are a starting point. It is fair to say that loan updates is one area where there is room for considerable improvement on our part and this is already being addressed. Firstly, we will be providing more frequent updates on every loan (typically monthly). Secondly, there will soon be an Updates tab where you will be able to see updates on all loans in chronological order to make this much easier to check. We’re always happy to hear any other suggestions. We spend a very negligible amount on promotions/marketing. It is normal to offer newcomers an additional incentive especially when we believe they will be very satisfied with the platform and continue to use it which is proving to be the case. If you are referring to the L+ promotion, we believe there is no better champion of a product then those that use it. Going by the average investment of each L+ referral, this is proving to be our highest quality channel of new investors. We believe our rates are very attractive for the investments being made – other platforms may offer higher rates but that bears no relevance to us as we just focus on doing the best that we reasonably can. If other platforms can do better, fair play to them, we want all platforms to do well. I appreciate the response LoanpadUsing the internationally recognised Meatloaf satisfaction standard that two out of three ain't bad, I guess one out of three is better than nothing. I suspect we would continue to disagree on rates, so would prompt you again on providing more detailed loan information so that a fair understanding of loan quality is easier to quantify.
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