Sale of non performing loans.

My gut feel is that if people could sell at (say) a 10% discount there'd be lots of sellers and plenty of risk averse people willing to take a punt. Would surely get the secondary market moving?

Question - how does this benefit Lendy? At present they are paying no interest to anything stuck in a queue (which I fail to understand why someone would park their money in the queue knowing it wont sell before the due date anyway - but that's another story)

"Question - how does this benefit Lendy? At present they are paying no interest to anything stuck in a queue (which I fail to understand why someone would park their money in the queue knowing it wont sell before the due date anyway - but that's another story)"

We it looks to me like they are experiencing liquidity issues, with more and more in the non performing basket there must be an effect on peoples willingness to invest further, hence the Wealth product and the subsequent 500% drop in hurdle to enter. This situation is going south quite quickly now - with more than £30M going to be added to the NP loans section in the next couple of weeks by the looks of it.

Perhaps packaging the lot up and selling them to the highest bidder might allow them to clear this down and restructure. 10% discount is not realistic I wouldn't have thought, investors would be looking at more like a 35-50% hit.

In the past there was no restriction on selling overdue loans and I've seen people buying parts.  My guess is, they were hoping to get all capital back + accrued interest - some people go for high risk no matter what. I think 10% discount could do a trick clearing SM, but why would Ly need to do this? Those who are desperate to get out of non-performing loans are not likely to reinvest their 90% back into Ly loans. In my understanding the focus is on new investors to feed new tranches of existing performing loans. 

Just wouldn't happen IMO. 

The nature of some of these distressed loans means that the new owner of them would have to spend a lot of money on legal fees chasing up things with no real idea whether the claim can be realised. In the case of some of the underlying assets, some can be sold but at big losses to the valuation. Some of them don't seem to have buyers at all unless even more cuts are made to the asking price. Some of them have also organised their affairs so that it is offputting for anyone else but them to own it.

Any potential buyer would want a discount for size. 

I remember companies would package up their bad debts and sell them on as one to those 'debt recovery' specialists, who would then send letters masquerading as legal documents in order to intimidate people into paying. If I ain't wrong I seem to remember the buy price for these packaged debts were very low, like 10% of the face value of debt.

Whilst I don't see Lendy's bad loans in the same category as this, the same premise would apply - it'd have to be a really steep haircut, perhaps 30-50% to convince someone to take their bad loans.

And if they did do that, they would be finished. I mean, the obvious question would be, what if the next set of Lendy loans ends up going bad, would it be another packaged debt sale?

A variable priced secondary market would be more than welcome, although I reckon there would be some fairly desperate selling and huge discounts. Given that Lendy have the inside information and the ability to bend perceptions via their updates, it could be a good way to fill the Lendy Wealth subscriptions. Deliberately talk down a loan, and pick it up cheaper via people selling it at discount.

Sure, it's unethical, but coming from a company that seems to have paid for fake reviews, it wouldn't exactly be a surprise.

I think 30-50% is a reasonable expectation on haircut for sure. Although all the loans have security, so it would be a case of sorting the ones where that security has already been drawn against and not covered the capital return vs the ones where the security is still in place vs the ones where further investment might be required to release it (complete build out etc) and them making a judgement of value based on these factors.

As you say, a dynamic secondary market might well be a sensible short term solution, given there are people who are desperate for any amount of capital back they can achieve, convinced they won't see a penny at present and there are also people who are still comfortable with their investments (allegedly) I can't see a reason why that would prolong the life of Lendy, but it's no long term fix, the toxic debt still exists and it will continue to grow it just gets traded around and we all know how that ends after 2007....

Would it be the end of Lendy if they packaged the debt up and sold it off? Well perhaps in name, but they could rebrand, properly triage the existing live loans and get shot of anything that the know is going south in there and form a new business with a revenue stream and decent loanbook, with more realistic expectations and live another day. Given that we might well see a business where more than half the loan book is in default by year end, what choice do they have?

Getting fed up to put it mildly.... I now have no performing loans and 5 figures in there....
If I have a mortgage and I miss the payments, I lose the house..... why isn’t every non performing loan on the market for sale and every borrowers security being called in..... this business of negotiating doesn’t work as lendy appear to be incapable of getting even the slightest deal of any worth and if one even comes close we vote and ignore the result. Have I missed something here......

lendys valuations GDVs and LTVs along with their debentures and PGs are not worth a toss.one example is dfl020 overview GDV 14 odd mill revalued 6 months later and now the GDV is over 17 mill. 0.37acre land which after over 4 mill from lenders is still a bloody tarmac car park.this scheme along with many others were supposed to be completed many months ago.extension after extension suits lendy, for their fees come out of the money anyway and lenders get 1% of your own money back per month until it eventually goes IA.now you are stuck in the loan till the end.