oldgrumpy
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Post by oldgrumpy on Nov 1, 2014 12:01:18 GMT
"I've obviously missed an announcement somewhere. Where was it? And exactly what was it?"mikes1531 SS November update email 10:01 this morning.
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unmadem
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Post by unmadem on Nov 1, 2014 13:26:56 GMT
The end of the world is nigh!!!!! No more boaty loans, except for the occasional super yacht!!  Does seem a shame as it was something a little different where SS obviously had an expertise. I can see there was probably a very high overhead in the smaller boat loans but wonder if there was a middle ground.
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shimself
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Post by shimself on Nov 1, 2014 13:29:55 GMT
I don't really see how come it's too much bother for them, oh well.
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Post by mrclondon on Nov 1, 2014 15:38:38 GMT
Like mikes1531, I also didn't receive the SS email earlier today, so I'm still a bit in the dark. Whilst this may be a logical decision when considering the margin that Lendy need to make, a proportion of the lenders on SS are only involved with the platform as a diversification away from property security, so this may hinder attempts to increase the lender base. I also wonder what effect this will have on the liquidity of the secondary market.
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webwiz
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Post by webwiz on Nov 1, 2014 16:27:16 GMT
 This is really bad news. It was a useful diversification from the usual p2p offerings. I can see that it was a much more fiddly way of getting business - quite a lot of boats needed to do the same amount of business as a single property deal - and clearly see the business case for SS. With FS also going headlong in this direction too, it's going to be a crowded (sic!) market. I've obviously missed an announcement somewhere. Where was it? And exactly what was it? I don't suppose there would be any objection to posting the email here for those who have not received it. I don't believe that email is 100% reliable. Each email has to pass through a number of agencies all of whom are looking for spam and malware and I think some just get lost. Moderator, please delete if this breaks any rule. We can confirm October's monthly interest payments have now been credited to your accounts. We are currently focused on getting a number of deals to completion and also getting funds back in from deals that have come to the end of their agreed term. PBL001 has overrun which is embarrassing, but purely down to slow legals. New deal flow is constant and of good quality; for commercial reasons we will only put new deals up on the platform when we are confident of them completing within a reasonable time (current deals an exception, not the rule). Expect new deal flow to increase in the next few weeks. New Loans: PBL011/12/13 - Currently working through the delay caused by the death of one of the borrowers. Expect the Grant of Probate imminently. Borrower has given an undertaking to cover Lendy Ltd’s cost of fund losses. PBL009 - A restriction on the title has been lifted, Land Registry documents have been received. Working towards completion next week. Existing Loans: PBL001 - Funds expected any time. With the refinancer's lawyers. Should complete early next week. Pipeline Loans: £350k loan against 2 properties near Norwich. Client signed, DD underway, valuation booked, solicitors to be instructed next week. Drawdown mid November. £6m required for a piece of land in Somerset with planning for major commercial development plus additional security available in Amsterdam - £10m+ of security available. Major underwriters required, please contact us directly if you are interested in further information regarding this. With regards to the perceived move away from marine based loans, we would like to confirm that this is accurate and we will be focussing solely on short term property loans for the foreseeable future. We see property as a safer asset, more liquid (no pun intended), easier to secure, easier to dispose of, the valuations are more accurate, a broader and deeper market giving many more opportunities for lending and scalability. We currently have a number of boats on the book which we will be running down over their loan term but not renewing. We see super yachts as an exception to this rule, we can secure/value/register in a similar manner to real estate assets. We now have over 1,300 investors and have written nearly £11,000,000.00 in loans. We would like to say a big thank you to you all; we could not have achieved such a feat of extraordinary growth without you. We respect and actively seek your advice in the true spirit of the “crowdsource” movement and we thank you for bearing with us for any perceived annoyances. Thank you for investing in Saving Stream. Kind regards, The Saving Stream Team
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shimself
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Post by shimself on Nov 1, 2014 16:37:20 GMT
....... and it could be end game. If nothing else, I expect to see a few revisions made to the current T&C's. Most particularly turning it into actual p2p, where the borrower owes the lender; for a start if a loan does go bad then Lendy survive (even though we lenders all lose a few 10s/100s/1000s/10000s/ the loss would be limited to the loss on one single loan and maybe some 3rd party handling charges)
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Investor
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Post by Investor on Nov 1, 2014 19:58:22 GMT
Like mikes1531, I also didn't receive the SS email earlier today, so I'm still a bit in the dark. Whilst this may be a logical decision when considering the margin that Lendy need to make, a proportion of the lenders on SS are only involved with the platform as a diversification away from property security, so this may hinder attempts to increase the lender base. I also wonder what effect this will have on the liquidity of the secondary market. Absolutely agreed. SS were the 'alternative' to all the others who are moving rapidly into property loans. Diversification over various platforms is all well and good, but not if they are all moving into the same asset classes. There has been a lot of discussions about the current, and more importantly future risk of property as an asset so will not re-cycle any of those comments but will certainly be looking at shifting investments into other areas. If nothing else this is an excellent opportunity for ablrate who are promising a range of investments shortly all within a new asset class. The end of boaty loans may signal the start of significant investment in flighty loans.
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mikes1531
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Post by mikes1531 on Nov 2, 2014 11:51:35 GMT
The end of the world is nigh!!!!! No more boaty loans, except for the occasional super yacht!! Like mrclondon, I did not receive the email (and it didn't go into a spam folder), so thanks to webwiz for posting the contents here. I can understand this change of direction somewhat from a business point of view, in that the boat loans are so much smaller than the bridging loans and probably take as much effort to put together. But it would appear that the boat loans have a much larger 'spread' -- the difference between the interest rate the borrower pays and the rate the lenders receive -- so the profit potential might not be that different. I worry that Lendy/SS underestimate the work required to keep on top of bridging loans, including the monitoring of progress on development loans to make sure the LTV does not increase during the course of the loan and the progress the borrower is making toward their exit plan. savingstream have promised investors that they will return lenders' funds when loans are scheduled to mature, whether or not the borrower actually repays. This may be easy enough to do when dealing with a small boat loan, but the situation is very different with a large bridging loan. If AC's experience is anything to go by, bridging loan borrowers actually being able to repay at the end of a six-month term is a rather uncommon occurrence. And if/when that happens, the platform needs a whole different set of skills to deal with borrowers' failure to repay on time than they did to set up the loan in the first place. Do SS have those skills in-house, or will they run up large fees from outside experts in dealing with defaulting borrowers? The one thing I can't understand is why SS will not be renewing any of the boat loans if the borrower would want to do that. Once the loan has been set up, I would have thought that the effort required to organise a renewal would be minimal.
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Post by Duane Dibley on Nov 3, 2014 9:05:15 GMT
The one thing I can't understand is why SS will not be renewing any of the boat loans if the borrower would want to do that. Once the loan has been set up, I would have thought that the effort required to organise a renewal would be minimal. I do wonder whether that policy will increase the likelihood of default on maturing boat loans. There again if they're not been renewed there's no benefit in holding them to term and we might as well all bail out before they do mature, there's never been any shortage of demand for them in the past even when they've only had a couple of weeks to maturity.
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star dust
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Post by star dust on Nov 3, 2014 12:32:40 GMT
The one thing I can't understand is why SS will not be renewing any of the boat loans if the borrower would want to do that. Once the loan has been set up, I would have thought that the effort required to organise a renewal would be minimal. Actually, I think all bar two (smallest ones) of the current boat loans are already 'rolls', and indeed even the Super Yacht is for that matter; so I think I would question the ability of the borrower to repay and indeed the value of a presumably depreciating asset if further loan extensions were sought myself. However, I do think it unfortunate that SS wouldn't consider continuing Boat Loans if/ when approached or such loans are referred to them, perhaps they could raise the costs to the borrower to cover extra overheads? They were certainly popular among existing lenders, and provided some additional asset diversification value.
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gb007
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Post by gb007 on Nov 3, 2014 13:32:42 GMT
....... and it could be end game. If nothing else, I expect to see a few revisions made to the current T&C's. Most particularly turning it into actual p2p, where the borrower owes the lender; for a start if a loan does go bad then Lendy survive (even though we lenders all lose a few 10s/100s/1000s/10000s/ the loss would be limited to the loss on one single loan and maybe some 3rd party handling charges) The current set-up with a loan guarantee given by Lendy is one of the key attractions of Savings Stream IMHO. Although Lendy's equity is limited, the guarantee demonstrates significant "skin in the game" and provides strong incentives regarding the lending processes at all stages from loan choice to recovery. If there was a move to actual p2p, to obtain a comparable risk reduction, maybe a provision fund could be set up!
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mikes1531
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Post by mikes1531 on Nov 3, 2014 15:23:33 GMT
The one thing I can't understand is why SS will not be renewing any of the boat loans if the borrower would want to do that. Once the loan has been set up, I would have thought that the effort required to organise a renewal would be minimal. However, I do think it unfortunate that SS wouldn't consider continuing Boat Loans if/ when approached or such loans are referred to them, perhaps they could raise the costs to the borrower to cover extra overheads? They were certainly popular among existing lenders, and provided some additional asset diversification value. We have to remember that Lendy was making boat loans before SS existed. I expect that the idea behind the creation of SS was that it would allow Lendy to fund more loans than they could on their own and thus allow them to expand their business. The principle might be sound, but it doesn't seem to have worked out as hoped. Lendy just hasn't been able to find enough borrowers to arrange a steady flow of loans needing funding. So Lendy have borrowed from SS investors to have working capital for an attempt to expand the business and it just hasn't happened. Perhaps they've now concluded that there just isn't so much demand for boat -- and private aircraft and high-value car -- loans that they need SS to provide some of the funding. So they may go back to what they were doing before, which was making those loans from their own funds and being satisfied with that level of business. Which means that if a boat owner approaches Lendy asking for a loan in the future, Lendy will make that loan using their own capital. And if an existing borrower comes to Lendy asking to renew their loan, they'll be allowed to do so but SS lenders will receive their investments back via funds from Lendy and the loan will become entirely Lendy's. There's absolutely no point in Lendy borrowing from SS investors at 12% if they have the capital available that's required to make the loans themselves.
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shimself
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Post by shimself on Nov 3, 2014 15:32:05 GMT
Most particularly turning it into actual p2p, where the borrower owes the lender; for a start if a loan does go bad then Lendy survive (even though we lenders all lose a few 10s/100s/1000s/10000s/ the loss would be limited to the loss on one single loan and maybe some 3rd party handling charges) The current set-up with a loan guarantee given by Lendy is one of the key attractions of Savings Stream IMHO. Although Lendy's equity is limited, the guarantee demonstrates significant "skin in the game" and provides strong incentives regarding the lending processes at all stages from loan choice to recovery. If there was a move to actual p2p, to obtain a comparable risk reduction, maybe a provision fund could be set up! It's more than skin in the game, it's body and soul, that's the difference; at present if a big bridge went awry Lendy would be unable to cope (imho), would fall into the hands of an receiver who would be able to spend huge amounts of money on themselves working out where we each stand in the credit line. As opposed to simply passing the repayment administration on to a bookeeper (or indeed on to one of Lendy's current people). I imagine a provision fund would take several percentage points from the 12%, if it were able to cope at all. And I don't see how it could kick in until the property was sold, ie about a year after the loan defaulted I stand to be corrected anyone please..
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bugs4me
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Post by bugs4me on Nov 3, 2014 15:40:26 GMT
The current set-up with a loan guarantee given by Lendy is one of the key attractions of Savings Stream IMHO. Although Lendy's equity is limited, the guarantee demonstrates significant "skin in the game" and provides strong incentives regarding the lending processes at all stages from loan choice to recovery. If there was a move to actual p2p, to obtain a comparable risk reduction, maybe a provision fund could be set up! It's more than skin in the game, it's body and soul, that's the difference; at present if a big bridge went awry Lendy would be unable to cope (imho), would fall into the hands of an receiver who would be able to spend huge amounts of money on themselves working out where we each stand in the credit line. As opposed to simply passing the repayment administration on to a bookeeper (or indeed on to one of Lendy's current people). I imagine a provision fund would take several percentage points from the 12%, if it were able to cope at all. And I don't see how it could kick in until the property was sold, ie about a year after the loan defaulted I stand to be corrected anyone please.. No correction necessary IMO. It's the old story though about what happens at the end of the term period. Is the loan simply rolled over into a new one, after paying existing investors/lenders the amounts they are owed. If there is a 'full' default, does SS have the required resources to sell the asset within a reasonable time frame and just how will the LTV's hold up after fees, etc. I know that SS have always maintained that Lendy would come to the 'rescue' but the platform has yet to be tested. There is of course a huge financial difference between a narrowboat and a property valued into the £millions. Guess we'll have to wait and see.
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mikes1531
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Post by mikes1531 on Nov 3, 2014 15:41:25 GMT
Most particularly turning it into actual p2p, where the borrower owes the lender; for a start if a loan does go bad then Lendy survive (even though we lenders all lose a few 10s/100s/1000s/10000s/ the loss would be limited to the loss on one single loan and maybe some 3rd party handling charges) If there was a move to actual p2p, to obtain a comparable risk reduction, maybe a provision fund could be set up! I'm not sure how feasible a provision fund would be for a platform like SS that has only a relatively small number of loans. A provision fund is an insurance policy, and those work best where the premiums can be spread over a large number of payers. The total amount of premiums collected has to be enough to cover any losses that occur. Consider an analogy of home insurance. If you have 1000 homeowners who pay £100 each, you have a £100k pot to pay claims out of. If you're insuring against burglaries, where the typical loss is maybe a few thousand pounds, you're fine. If you're insuring against fire, on the other hand, and a single loss could wipe out your entire claims fund, you have a different situation -- and a problem. So a platform that makes a lot of smaller loans, such as Zopa or RS, can run a provision fund reasonably reliably. But a platform like SS, which has a dozen or so bridging loans outstanding at any one time, would be hard pressed to charge their borrowers enough of a premium that they could create a provision fund large enough to make a meaningful contribution if any one loan went pear-shaped.
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This is really bad news. It was a useful diversification from the usual p2p offerings. I can see that it was a much more fiddly way of getting business - quite a lot of boats needed to do the same amount of business as a single property deal - and clearly see the business case for SS. With FS also going headlong in this direction too, it's going to be a crowded (sic!) market.
