Mousey
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Post by Mousey on Jul 23, 2018 13:24:50 GMT
I'm an investor in 2530766843 on FS and saw their latest update following a distressed sale at auction:
"As the property sold at auction on 16th July interest will stop at that point. As soon as funds are received they will be distributed to all investors."
I note a previous update states that following the auction "...it will take another 4-5 weeks before the funds are available".
I didn't realise this was a thing? Can a platform cease paying interest on lent funds?
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SteveT
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Post by SteveT on Jul 23, 2018 14:08:29 GMT
If the asset has been sold then your funds are no longer lent. You’re just waiting to receive them.
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Mousey
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Post by Mousey on Jul 23, 2018 14:15:16 GMT
Well my funds are lent until they are returned surely? It would be grossly unfair to consider that the point of return (ie the date funds are no longer lent) be dependant upon an unknown process of an unknown length that actually might not even be completed.
ETA: The contract with FS defines repaid as "the date that all repayments due under the Loan Agreement have been made to the FundingSecure Client Deposit Account"
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ceejay
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Post by ceejay on Jul 23, 2018 16:17:53 GMT
And who do you think is going to pay this extra interest? The platform? I don't think that's how P2P works...
Although I'm not familiar with that particular loan, if it has become distressed and the best available outcome was to auction the security, then the auction proceeds are presumably all that is available.
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Post by df on Jul 23, 2018 17:29:30 GMT
And who do you think is going to pay this extra interest? The platform? I don't think that's how P2P works...
Although I'm not familiar with that particular loan, if it has become distressed and the best available outcome was to auction the security, then the auction proceeds are presumably all that is available.
The property was sold at a price aimed to ensure repayment of the debt in full. I was in this loan at some point, but sold before it defaulted. It was due at last Christmas. It is comparatively quick return from defaulted loan. If I was still in this loan I would be very happy with the outcome 
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Brainer
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Post by Brainer on Jul 24, 2018 0:48:55 GMT
Well my funds are lent until they are returned surely? It would be grossly unfair to consider that the point of return (ie the date funds are no longer lent) be dependant upon an unknown process of an unknown length that actually might not even be completed.
ETA: The contract with FS defines repaid as "the date that all repayments due under the Loan Agreement have been made to the FundingSecure Client Deposit Account"
I'm in this loan and was similarly unimpressed when I read the update. By their logic half the defaults should stop accruing interest because they've got 'cheque's in the post' type updates. As you say, there's no guarantee when or if this auction sale will complete. Their terms and conditions does cover this specific scenario though: "6.2.7 Any amount due back to Investors will only be settled once cleared funds have been received from the auction house or the private buyer. Interest will not accrue between the date of the auction and the settlement date." Seems contradictory to the term you quoted, so which takes precedence? Whole thing could've been avoided if FS had the foresight to set the reserve price at the auction as capital + accrued interest + 28 days more accrued interest.
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bg
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Post by bg on Jul 24, 2018 9:35:19 GMT
Well my funds are lent until they are returned surely? It would be grossly unfair to consider that the point of return (ie the date funds are no longer lent) be dependant upon an unknown process of an unknown length that actually might not even be completed.
ETA: The contract with FS defines repaid as "the date that all repayments due under the Loan Agreement have been made to the FundingSecure Client Deposit Account"
I'm in this loan and was similarly unimpressed when I read the update. By their logic half the defaults should stop accruing interest because they've got 'cheque's in the post' type updates. As you say, there's no guarantee when or if this auction sale will complete. Their terms and conditions does cover this specific scenario though: "6.2.7 Any amount due back to Investors will only be settled once cleared funds have been received from the auction house or the private buyer. Interest will not accrue between the date of the auction and the settlement date." Seems contradictory to the term you quoted, so which takes precedence? Whole thing could've been avoided if FS had the foresight to set the reserve price at the auction as capital + accrued interest + 28 days more accrued interest. I don't think they can do this...pawn loans are clearly defined by law. When an item is sold at auction the Pawnbroker can take the loan + interest + auction fees but the surplus has to be returned to the borrower. They can't just arbitrarily add on another x days interest as a fee.
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Brainer
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Post by Brainer on Jul 24, 2018 18:02:40 GMT
I don't think they can do this...pawn loans are clearly defined by law. When an item is sold at auction the Pawnbroker can take the loan + interest + auction fees but the surplus has to be returned to the borrower. They can't just arbitrarily add on another x days interest as a fee. This was a property if that changes things? AIUI the receiver has a duty to balance the want of the lender with fairness to the borrower. FS / the receiver set the reserve as "the full debt". Had the reserve been set at "another x days" and the purchaser completed in < x then I'm sure the borrower wouldn't have complained about getting the surplus.
Not saying it's a big issue, about £10 per £1000 lent if it takes a month, but it just seems a bit odd/off that the transaction hasn't completed yet interest has stopped accruing - our funds are just in the ether earning nothing. For comparison, the Prestbury loan on MT took over a month between exchange and completion but AFAIK the interest still accrued during that time.
I'm sure those on the AC board that get rather irked by AC's tardiness in settling repayments costing them just a couple of days interest wouldn't be happy losing up to a month's worth.
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aligibbs
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Post by aligibbs on Aug 7, 2018 9:32:43 GMT
You get 28 days to complete after an auction, before the person buying the property has to pay the auction house- which then transfers the money. So, the price will have been set 28 days prior- so no interest can accrue- where would it come from? You could say that the p2p provider could provide interest- as long as there is spare capital after the sale to do so. This would seem impossible though- as surely otherwise the property wouldn't have gone to auction?
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