tony
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Post by tony on Oct 5, 2018 8:45:20 GMT
I have opted out of renewing all of my loans and at one time this meant that when the original loan period came to an end I could choose either to have my capital and interest repaid or to reinvest in the extended loan which was given a new number. Now it seems that FS are prepared to renew all loans, under the original reference number, providing the borrower has paid the interest to date but no longer allow the lender to receive their money back even though they have opted out of renewing. So as far as FS are concerned there are renewals which you can opt out of and there are renewals which you can't!
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locutus
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Post by locutus on Oct 5, 2018 9:00:14 GMT
Which loan are you talking about? Who said you can't opt out of a renewal?
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paulb
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Post by paulb on Oct 5, 2018 9:01:51 GMT
Could you please provide a loan number where this has happened? I've seen a few cases where loans are not paid on time (obviously!), some of which have been given an official extension (as shown on the loan statistics page), but it's not clear to me which ones these are. Some are just late, but I don't recall seeing any where interest has been received and the original loan getting a later end date. There are some (quite big) loans where interest has been received, but they've not renewed yet, pending renewal(s) of earlier tranche(s).
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baldpate
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Post by baldpate on Oct 5, 2018 21:18:03 GMT
This would indeed be a worrying development, if as suggested - tony , please could you give an example of a loan where this has happened? |
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tony
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Post by tony on Oct 11, 2018 15:25:22 GMT
Not offhand but I do know that all of my loans are way past their original loan term and that almost every day I receive an email advising me that a loan (not one that I have invested in) has been renewed because the borrower has paid the interest to date. I have had similar emails in the past referring to loans in my portfolio but because I have deleted them so I am unable to easily provide loans identification numbers.
The point I am making is that if FS are happy to provide borrowers renewal after renewal, on the grounds that they are up to date with their interest payments, what is the point of quoting a loan term when the loan is first offered up for investing and what is the point of having an "opt out" feature if such renewals are not considered to be renewals eligible for opt out?
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technik
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Post by technik on Oct 11, 2018 16:11:34 GMT
Not offhand but I do know that all of my loans are way past their original loan term and that almost every day I receive an email advising me that a loan (not one that I have invested in) has been renewed because the borrower has paid the interest to date. I have had similar emails in the past referring to loans in my portfolio but because I have deleted them so I am unable to easily provide loans identification numbers.
The point I am making is that if FS are happy to provide borrowers renewal after renewal, on the grounds that they are up to date with their interest payments, what is the point of quoting a loan term when the loan is first offered up for investing and what is the point of having an "opt out" feature if such renewals are not considered to be renewals eligible for opt out? Have been trying to make sense of what you've been saying by piecing together your various posts in here - are you using the term 'renewal' in relation to both a) the loans you are in that have gone past the 6 month loan term and are still marked as active, even though they are just overdue and simply accruing interest AND b) for those given a new number? That's how I've started reading what you've said, and that you are disgruntled because where loans get a new number any parts you have marked as non-renewal will be paid back, but yours are sitting overdue and aren't giving you a chance to get out. If my reading is correct, only case b) is actually a renewal. Yes an overdue will keep accruing interest like a renewal with a new number, so the effect is the same to us day to day, but the key difference is no interest has been paid to FS to secure another 6 months on the loan term. Everyone with an overdue loan that hasn't been renewed and given a new number is in the same boated, tied to the loan until it is resolved with no way to cash it in. I might have that wrong, but that was why people were concerned when you suggested that actual renewals (where interest paid and new number created) had not allowed you to cash out. That would be a serious technical issue with the system, not a choice anyone is aware FS have started making.
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tony
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Post by tony on Oct 11, 2018 21:30:45 GMT
I am sorry if my threads have confused you, and perhaps others, but they seem quite clear to me when I read them back! When a loan is up to date with its interest payments, and presumably the capital has been repaid, the borrower can request to have the loan renewed and, if this request is granted, the loan is given a new number and a new term. The investor then has the choice of investing in the new loan or having their outstanding interest and their capital returned. FS call this procedure "a renewal".
If a loan is overdue, i.e. the capital has not been repaid but interest payments are up to date. FS will, rather than default the loan, offer the borrower an extended term with the loan number remaining unchanged. In this case the investor does not have choice of having their capital returned but do of course continue to receive their monthly interest. FS also call this procedure "a renewal". The investor is then stuck with such loans unless they decide to sell them. In these cases a "loan term" is meaningless because FS can continue to grant this type of "renewal" time and time again for year after year if they so choose.
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arby
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Post by arby on Oct 12, 2018 2:24:06 GMT
I am sorry if my threads have confused you, and perhaps others, but they seem quite clear to me when I read them back! When a loan is up to date with its interest payments, and presumably the capital has been repaid, the borrower can request to have the loan renewed and, if this request is granted, the loan is given a new number and a new term. The investor then has the choice of investing in the new loan or having their outstanding interest and their capital returned. FS call this procedure "a renewal".
If a loan is overdue, i.e. the capital has not been repaid but interest payments are up to date. FS will, rather than default the loan, offer the borrower an extended term with the loan number remaining unchanged. In this case the investor does not have choice of having their capital returned but do of course continue to receive their monthly interest. FS also call this procedure "a renewal". The investor is then stuck with such loans unless they decide to sell them. In these cases a "loan term" is meaningless because FS can continue to grant this type of "renewal" time and time again for year after year if they so choose.
The reason it's clear to you and nobody else is that your initial assumption is wrong. So of course you think you're right. No offence intended. An overdue borrower isn't offered an extension, in the same way that if you stop paying your mortgage you aren't offered an extension, rather a very slow recovery process begins.
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SteveT
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Post by SteveT on Oct 12, 2018 5:12:28 GMT
Your mistake is clear; when a FS loan is overdue, it means the interest payments are NOT up to date. Quite the reverse: the borrower has yet to pay anything (interest or capital). FS lenders do not receive any interest monthly, only when a loan is completed.
Only once a borrower has stumped up the accrued interest due on their existing loan can FS offer them a renewal loan.
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paulb
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Post by paulb on Oct 12, 2018 9:25:26 GMT
An overdue borrower isn't offered an extension This isn't always true - if you look at the FS stats page, the "August figure includes 76 loans with agreed extension, pending refinance / sale, totalling £28,092,201". This is a rather large proportion of the £35,482,051 showing as overdue, but I don't think any individual loans are marked as being extended, other than the vague "we expect payment soon" updates. As far as I've seen, these have never been referred to as "renewed" though.
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Post by dan1 on Oct 12, 2018 9:34:16 GMT
An overdue borrower isn't offered an extension This isn't always true - if you look at the FS stats page, the "August figure includes 76 loans with agreed extension, pending refinance / sale, totalling £28,092,201". This is a rather large proportion of the £35,482,051 showing as overdue, but I don't think any individual loans are marked as being extended, other than the vague "we expect payment soon" updates. As far as I've seen, these have never been referred to as "renewed" though. This is my major bugbear with FS. A lot goes on behind the scenes that they're unwilling to share with general investors although we know they share information not on updates with certain investors (underwriters, HNW, institutional investors etc). It's something I'd like to see the FCA enforce so that if platforms behave this way in future they will at least have to acknowledge they are breaking the rules. Ok, fine, there are agreed extensions. So, let investors take back control by opening up the secondary market in these situations.
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tony
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Post by tony on Oct 12, 2018 9:57:55 GMT
OK I am not expressing my concerns clearly for which I apologise - Senior Moments occur frequently when you are 84! However I do believe that new investors, particularly those whose experience in financial matters is limited to their dealings with their bank, mortgage provider and perhaps a few building societies, are mislead by the 6 month loan term which is shown in the details of a loan when it is offered up for investment. Six months means six months to banks, mortgage providers and building societies so they expect it to mean the same when they look at the details of FS loans and although they understand that borrowers may be offered an extended loan period, when the six months has expired, they believe that by ticking "do not renew" they will receive back their capital and interest when the initial six months is up. I was naïve enough to believe that but now find that all fourteen of my FS loans, including two defaulted ones, are months or years past their original loan term which, judging by the vague repeated information provided in the loan updates, are unlikely to be repaid in the near future or indeed in my lifetime!
To avoid this misunderstanding would it not be sensible for FS not to quote a fixed loan term but just state that you will get your money and any accrued interest back when the borrower has repaid both and add a warning that this could be after a prolonged indefinite period?
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technik
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Post by technik on Oct 12, 2018 10:32:15 GMT
This is my major bugbear with FS. A lot goes on behind the scenes that they're unwilling to share with general investors although we know they share information not on updates with certain investors (underwriters, HNW, institutional investors etc). It's something I'd like to see the FCA enforce so that if platforms behave this way in future they will at least have to acknowledge they are breaking the rules. Ok, fine, there are agreed extensions. So, let investors take back control by opening up the secondary market in these situations. This is absolutely spot on. Even in my limited experience and what I have read here there is 'behind the scenes' action taking place which at best leads to inconsistencies about the status of loans and at worst probably means terms are being breached (or for sure the general principles related to how investors should regard their investments and the security of assets). Across the P2P world none of this can be easily tested without legal proceedings against cases or platforms that have had issues, which are in turn not easy or cheap to bring as individuals, or for a group of unconnected members of the public who are kept apart through the anonymity of the platforms. Only forums like this bring enough people together to make that even vaguely possible.
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technik
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Post by technik on Oct 12, 2018 10:55:38 GMT
OK I am not expressing my concerns clearly for which I apologise - Senior Moments occur frequently when you are 84! However I do believe that new investors, particularly those whose experience in financial matters is limited to their dealings with their bank, mortgage provider and perhaps a few building societies, are mislead by the 6 month loan term which is shown in the details of a loan when it is offered up for investment. Six months means six months to banks, mortgage providers and building societies so they expect it to mean the same when they look at the details of FS loans and although they understand that borrowers may be offered an extended loan period, when the six months has expired, they believe that by ticking "do not renew" they will receive back their capital and interest when the initial six months is up. I was naïve enough to believe that but now find that all fourteen of my FS loans, including two defaulted ones, are months or years past their original loan term which, judging by the vague repeated information provided in the loan updates, are unlikely to be repaid in the near future or indeed in my lifetime!
To avoid this misunderstanding would it not be sensible for FS not to quote a fixed loan term but just state that you will get your money and any accrued interest back when the borrower has repaid both and add a warning that this could be after a prolonged indefinite period? Thanks for clarifying Tony, all this stuff takes precision to be involved in or even comment on and each one of us is learning all the time. Not your fault, and shows the community is working to pick up where discrepancies seem apparent. That precision is very relevant with P2P when you get into the FS types of platform, as opposed to the platforms that have simplified everything their offerings with a standard rate and where they handle all the investment logistics. FS allows more control, but that in turn makes it less for the general public (again, something lots of us are learning through our experiences). Totally agree with you that a 6 month loan term should be that, and that you are not made aware that if a default happens, FS's recovery time can and often does stretch to multiple years - the marketing is all focused on the best case scenario. There is a balance to be struck with assuring good value on a default by giving it time and cutting losses to return what money is available to investors. The argument that more seasoned investors will make is that these type of high % loans are usually offered as short term bridging loans or where there are more risks than a high street lender on a longer term project. That as such you can't expect them to run to the 6 month term. That is fair, but the average member of the public looking at P2P and all the marketing hype would not be aware of that, which is why people on here are talking more about regulators and regulations needing to be more involved. Anyone who has been here a while now has to take a much longer term view on when they might see money back, if any. If you were to read every thread listed in the forum (realise most will be the problematic loans which skews overall picture of platform health) I think the general consensus would be that FS are too slow to default loans, are too willing to believe borrower promises, don't keep investors informed well enough and don't recover funds fast enough. You might still make decent returns if you choose loans well, don't get caught out where loan descriptions don't seem to match reality and are diversified (though that the jury is possibly still out on returns given the forecasting about the overdues - p2pindependentforum.com/thread/13234/fs-all-active-past-loans ) but what I've said above is purely about the problematic cases. Just know you aren't alone. Have a look around, virtually all the negativity you will find relates to people in your circumstance - locked into loans that should have paid back, lacking a resolution after a long time but with no way to release any funds and little of meaning in the updates. Many are hoping FS have and are continuing to take steps to address this.
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tony
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Post by tony on Oct 12, 2018 13:13:06 GMT
Thanks Tecknic. I think the problem arises from the loose usage of terminology by FS and other P2P platforms. The dictionary definition of the word term is "a fixed or limited period" and defaulted is defined as "fail to fulfil an obligation, especially to repay a loan". This being so, should not a loan be designated as having defaulted if a borrower has failed to repay both interest and capital by the end of the original loan term? If this suggestion was adopted FS's loan book records would show an awful lot of defaulted loans and make potential investors more aware of the high risks associated with the enticing offers of very high interest rates.
I am not suggesting that receivers should be called in immediately unless FS are convinced that there is no other viable option. If FS decide that the best course of action is to allow the borrower an extended term then a new loan, under a new number, is arranged for an amount sufficient to enable the borrower to complete the project and also sufficient to enable those investors who have opted out to have their capital and interest repaid once the loan is fully funded. Loans that FS have been put into receivership should be marked "defaulted - put into receivership" and loans that have been offered an extended term should be marked " defaulted - extended see loan reference ******".
Do you think this would be taking transparency too far?
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