shimself
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Post by shimself on Sept 2, 2014 12:23:43 GMT
I found myself wondering what would happen in by some mischance Lendinvest went bust (or Montello the mortgage company behind them). My general take on p2p is that it's meant to be ok because the borrower owes the lender, with the company/platform taking a slice but not actually owing the lender anything.
Indeed their website says
allowing investors to lend directly to borrowers; and allowing borrowers to borrow direct from investors.
I read the contract document and I got the impression Lendinvest seem to be somewhat different to tht simple idea (should they be called p2p in fact?).
I wrote to them and I am posting here the reply I got, which sounds ok, but would sound more OK if other people here thought so. I have to say though it doesn't sound to me like the blurb: "allowing lenders to lend direct to borrowers"
This is why they say it's ok:
There would be no impact on your funds if LendInvest were to wind up as LendInvest is currently an agent facilitating the sale of receivables (loans already completed by Montello). At present all security held by Montello is held in the Montello lending entity's which are all separate to the Montello management company. This means that all funds for loans, including interest payments are held in a segregated bank account, so these payments will be 'bankruptcy remote'. - i.e. these funds are therefore easily identifiable and will be managed accordingly in the event of an insolvency event.
What do other wise heads make of this please?
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debeast
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Post by debeast on Sept 2, 2014 12:55:32 GMT
It seems to make sense overall but my reading is that it doesn't necessarily link the distinct loans with the amounts invested
??
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shimself
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Post by shimself on Sept 3, 2014 16:47:07 GMT
Today it seems to me that the Montello Lending Entities (entity's) are perhaps spvs, one per loan?
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shimself
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Post by shimself on Oct 1, 2014 13:50:37 GMT
With today's announcement that Montello and Lendinvest have merged how will that affect the future loans in terms of who owes whom?
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shimself
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Post by shimself on Mar 30, 2015 14:05:24 GMT
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Post by 4thway on Apr 1, 2015 17:58:49 GMT
Hi all I'm afraid that article on the 4thWay site was wrong, so it's been taken down till it's corrected. Although it was written by Matt, the error came through me (Neil). It was a misunderstanding while talking to someone at LendInvest. Probably also some poor note taking by me as well. And maybe a fuddled memory! The thing is (and I'm not trying to pass the buck on the mistake, for which I take responsibility) the explanation I was given was very convoluted and so is the contract, and so I misunderstood. It's probably convoluted just because the structure is not easy to explain, but even after LendInvest blew their top at me this morning about the article, it still took a couple of attempts to get an answer that I understood. I asked first: Just to absolutely confirm: you're saying that the lender has a contract with each borrower and so no other creditors can ever possibly have a legal claim on that loan part or any monies repaid on that loan part?LendInvest answered: I'm not saying that the lender has a direct contract with the end borrower. However, I am saying that an investor on our platform does make a direct investment in the underlying loan, and this is done through a security trustee arrangement (ie the contract is with them, for the exclusive benefit of the investors).So I tried again: I'm still not crystal clear in my head on all the ramifications of that. Can I take it the following statement is correct? If an investor buys a loan part on LendInvest, no other creditors can ever possibly have a legal claim on the loan part, or any monies repaid on that loan part?
LendInvest answered: Yes, that's correct.So the structure of the loans appears to be as safe as "pure" P2P lending. And answer: YES! Unless you can see any loopholes in the way I phrased that statement? I'd appreciate your opinions!
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shimself
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Post by shimself on Apr 1, 2015 20:01:50 GMT
Well if they can spell out what would happen in a disaster and show us how the contract makes it so then fine.
But if there's room for doubt then there's plenty of room for lawyers to spoil things.
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Post by 4thway on Apr 4, 2015 15:49:47 GMT
Well if they can spell out what would happen in a disaster and show us how the contract makes it so then fine. But if there's room for doubt then there's plenty of room for lawyers to spoil things. I'm chairing a property P2P lending panel show at the Property Investor Show in London in two weeks. Christian Faes of LendInvest will be on the panel. I'm allowed to seek questions in advance through my network, so if you want to phrase a question around that then I'll see if I can get the question in. Neil
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shimself
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Post by shimself on Apr 4, 2015 18:32:44 GMT
Well if they can spell out what would happen in a disaster and show us how the contract makes it so then fine. But if there's room for doubt then there's plenty of room for lawyers to spoil things. I'm chairing a property P2P lending panel show at the Property Investor Show in London in two weeks. Christian Faes of LendInvest will be on the panel. I'm allowed to seek questions in advance through my network, so if you want to phrase a question around that then I'll see if I can get the question in. Neil Dear LI There's quite a lot of confusion (not least my - Neil's- part recently) about how much your offering is "genuine" p2p OK you've said to me If an investor buys a loan part on LendInvest, no other creditors can ever possibly have a legal claim on the loan part, or any monies repaid on that loan part and that sounds fine but it's not contractual Are you going to include those words as a condition of contract?
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Post by 4thway on Apr 13, 2015 14:38:17 GMT
I'm chairing a property P2P lending panel show at the Property Investor Show in London in two weeks. Christian Faes of LendInvest will be on the panel. I'm allowed to seek questions in advance through my network, so if you want to phrase a question around that then I'll see if I can get the question in. Neil Dear LI There's quite a lot of confusion (not least my - Neil's- part recently) about how much your offering is "genuine" p2p OK you've said to me If an investor buys a loan part on LendInvest, no other creditors can ever possibly have a legal claim on the loan part, or any monies repaid on that loan part and that sounds fine but it's not contractual Are you going to include those words as a condition of contract? Thanks shimself! The questions have to be open to the whole panel so I'll take the liberty of making the question a bit more general.
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bugs4me
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Post by bugs4me on Apr 13, 2015 18:30:36 GMT
Dear LI There's quite a lot of confusion (not least my - Neil's- part recently) about how much your offering is "genuine" p2p OK you've said to me If an investor buys a loan part on LendInvest, no other creditors can ever possibly have a legal claim on the loan part, or any monies repaid on that loan part and that sounds fine but it's not contractual Are you going to include those words as a condition of contract? Thanks shimself! The questions have to be open to the whole panel so I'll take the liberty of making the question a bit more general. It's an important question and deserves a straightforward answer - a simple yes or no will suffice and not the latest (but not greatest gobbledegook) received by 4thway. So until then you're crossed off my potential P2P platforms. This question of security should really be asked towards all P2P companies in general. It's very easy to hide behind the FCA logo and offer those headline rates. Okay that's the marketing bit out of the way but we all are aware from experience, not necessarily first hand but certainly from the media that the FCA tend to be behind the curve on these things. It's of little comfort to know that a company has had their licence suspended, etc after my funds have gone AWOL. With the publicity being given to P2P especially with the derisory rates available from traditional lenders, then it's in everyone's interests to make sure that an acceptable level of security is in place. Lenders/investors can only go so far in doing their own DD on individual platforms. But one bad apple will impact the rest in the barrel and I often wonder whether the P2P companies realise this. If that bad apple gets into the hands of the media then it will impact them all. I doubt if this simple fact is realised by the P2P companies as many seem to operate in their own little bubble. Also, it occurs to me that apart from a couple of P2P's, their level of communication with their lenders leaves a lot to be desired. As usual they start offering the earth, moon and stars plus sometimes a weekly update newsletter. Then it stops. Normally it's the weekly newsletter that ceases. Just how difficult is it to generate one of these and block e-mail the thing. So one is left with the impression that everything should be taken on face value - or is it a fancy looking website. Not in my book guys. Once you start treating your lenders/investors, both actual and potential with contempt then........... Anyway, it's your business and how you choose to run it is up to yourselves. On the other hand (or is it boot), it's my money and where I choose to invest it is up to me. I'm really not interested in promises which translates in my mind as to 'with a bit of luck and a following wind'.
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Post by 4thway on Apr 14, 2015 9:43:47 GMT
Thanks shimself! The questions have to be open to the whole panel so I'll take the liberty of making the question a bit more general. With the publicity being given to P2P especially with the derisory rates available from traditional lenders, then it's in everyone's interests to make sure that an acceptable level of security is in place. Lenders/investors can only go so far in doing their own DD on individual platforms. But one bad apple will impact the rest in the barrel and I often wonder whether the P2P companies realise this. If that bad apple gets into the hands of the media then it will impact them all. I doubt if this simple fact is realised by the P2P companies as many seem to operate in their own little bubble. I know that some P2P companies are very worried about it. One director said to me last week that he thinks the bad apples are the biggest threat to his business and to the industry in general. From an active investor's point of view, though, it is not so bad at all. When the bad apples start rotting, we will probably have avoided taking a bite of them, or at least a big bite. Their investors will flee and the panic might well spread to other, safer platforms. This means higher interest rates for those of us who stay and perhaps even capital gain opportunities when loan parts are sold for a loss. I'm sure there are going to be massive opportunities to make a lot of money at low risk when everyone else is panicking. It's just like any other asset class really; we've seen it many times with the stock market. One thing I'm sure of is that P2P is here to stay; regardless of how bad it gets at the bad apples.
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bugs4me
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Post by bugs4me on Apr 14, 2015 10:23:35 GMT
With the publicity being given to P2P especially with the derisory rates available from traditional lenders, then it's in everyone's interests to make sure that an acceptable level of security is in place. Lenders/investors can only go so far in doing their own DD on individual platforms. But one bad apple will impact the rest in the barrel and I often wonder whether the P2P companies realise this. If that bad apple gets into the hands of the media then it will impact them all. I doubt if this simple fact is realised by the P2P companies as many seem to operate in their own little bubble. I know that some P2P companies are very worried about it. One director said to me last week that he thinks the bad apples are the biggest threat to his business and to the industry in general. From an active investor's point of view, though, it is not so bad at all. When the bad apples start rotting, we will probably have avoided taking a bite of them, or at least a big bite. Their investors will flee and the panic might well spread to other, safer platforms. This means higher interest rates for those of us who stay and perhaps even capital gain opportunities when loan parts are sold for a loss. I'm sure there are going to be massive opportunities to make a lot of money at low risk when everyone else is panicking. It's just like any other asset class really; we've seen it many times with the stock market. One thing I'm sure of is that P2P is here to stay; regardless of how bad it gets at the bad apples. Agree with your thoughts but one of the factors behind P2P is trust and this is - falsely IMO - underpinned by the FCA logo. I've done some DD on some of the platforms and frankly not all the individuals behind them could be considered as desirable - again IMO. How they managed to pass the FCA fit and proper person test is beyond me but then again the FCA is the same as the largely discredited FSA - same address different name. Many lenders though are not fully aware of the risks involved in P2P lending - but they are aware of the risks with the stock market. So as the FCA is probably about as useful as a chocolate teapot, then it's really down to the individual P2P companies to do their own 'policing' possibly via the P2PFA - just a thought. I wonder if shimself has managed to get a straightforward answer yet.
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Post by 4thway on Apr 19, 2015 16:18:15 GMT
Hi all I was unable to ask the LendInvest question for the same reason I posted in this thread today: p2pindependentforum.com/thread/2466/ask-property-p2p-lendingHowever, someone in the audience - who I strongly suspect is a P2PIndie user - asked a similar question. I'm paraphrasing because I don't have a transcript, but he basically asked who owes to whom and LendInvest's David Serafini just answered that the borrower owes to LendInvest. I was surprised when he stopped there and didn't embellish his answer in a similar way to the answer LendInvest gave me (and that I shared with you in an earlier post in this thread). I'm going to try to get an answer to the specific question we agreed on, but, while LendInvest have said it's all forgotten, I want to leave it a bit to make sure they are not still sore with me before I approach them on this again. I won't forget though - I'll look for opportunities at every point of contact with them - and I'll keep you updated. Neil |
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bugs4me
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Post by bugs4me on Apr 19, 2015 17:27:51 GMT
Hi all I was unable to ask the LendInvest question for the same reason I posted in this thread today: p2pindependentforum.com/thread/2466/ask-property-p2p-lendingHowever, someone in the audience - who I strongly suspect is a P2PIndie user - asked a similar question. I'm paraphrasing because I don't have a transcript, but he basically asked who owes to whom and LendInvest's David Serafini just answered that the borrower owes to LendInvest. I was surprised when he stopped there and didn't embellish his answer in a similar way to the answer LendInvest gave me (and that I shared with you in an earlier post in this thread). I'm going to try to get an answer to the specific question we agreed on, but, while LendInvest have said it's all forgotten, I want to leave it a bit to make sure they are not still sore with me before I approach them on this again. I won't forget though - I'll look for opportunities at every point of contact with them - and I'll keep you updated. Neil Thank you for the feedback. So in simple terms, lenders/investors are effectively funding the activities of LendInvest and not directly the borrower. So if anything happens to LendInvest then lenders/investors are just on the list of normal creditors. So, to be kind, their website is deliberately misleading. I doubt if you will get a straightforward answer from this mob and until then there should be a wealth warning on their fag packet!!
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