technik
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Post by technik on Oct 15, 2018 11:04:13 GMT
Inspired by dan1 and his great work putting together the list of lost capital here: p2pindependentforum.com/post/292260/threadAt various times people have mentioned the valuations on loans and debated whether they are any good. I have wondered how the valuations put on loans compare with what is actually achieved when assets have to be sold. Looks like we are already a good proportion of the way there with the data in the above. Anyone fancy going through and picking out the loans where recoveries were made but capital was not lost? Put it all together and we should get a great overview of what really happens when a loan is finally defaulted and how well the valuations FS are getting stack up. Would even have an average % that we could use in loan assessment. If recoveries are less than 100% of the valuations for example, the LTVs being looked at are in reality higher than they first appear. |
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arby
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Post by arby on Oct 15, 2018 11:39:35 GMT
Inspired by dan1 and his great work putting together the list of lost capital here: p2pindependentforum.com/post/292260/threadAt various times people have mentioned the valuations on loans and debated whether they are any good. I have wondered how the valuations put on loans compare with what is actually achieved when assets have to be sold. Looks like we are already a good proportion of the way there with the data in the above. Anyone fancy going through and picking out the loans where recoveries were made but capital was not lost? Put it all together and we should get a great overview of what really happens when a loan is finally defaulted and how well the valuations FS are getting stack up. Would even have an average % that we could use in loan assessment. If recoveries are less than 100% of the valuations for example, the LTVs being looked at are in reality higher than they first appear. This is a tough one because there will always be a variance to reality in a valuation, be that up or down. However, where something is undervalued, it is less likely to end up in a distressed sale, with refinance or a private sale preferable. So by looking at the recoveries as you suggest, you're likely only picking up on the undervalued assets, which shouldn't necessarily then be assumed to apply to all assets.
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technik
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Post by technik on Oct 15, 2018 12:52:25 GMT
This is a tough one because there will always be a variance to reality in a valuation, be that up or down. However, where something is undervalued, it is less likely to end up in a distressed sale, with refinance or a private sale preferable. So by looking at the recoveries as you suggest, you're likely only picking up on the undervalued assets, which shouldn't necessarily then be assumed to apply to all assets. From what you're saying do you think I'm saying look at just those? As agree with last line if so, not useful. But what I was saying is the possibility for someone to pick out the non-negative capital recoveries (which would include a) under-valued assets that make more than their valuation, and b) the over-valued ones that don't meet valuation but haven't gone negative on capital return) as the c) negative capital recoveries are the part of the picture already covered in the capital losses post. Combining a) b) and c) would give the most complete picture available of what happens when the valuations are tested. Is that right?
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arby
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Post by arby on Oct 15, 2018 13:18:44 GMT
This is a tough one because there will always be a variance to reality in a valuation, be that up or down. However, where something is undervalued, it is less likely to end up in a distressed sale, with refinance or a private sale preferable. So by looking at the recoveries as you suggest, you're likely only picking up on the undervalued assets, which shouldn't necessarily then be assumed to apply to all assets. From what you're saying do you think I'm saying look at just those? As agree with last line if so, not useful. But what I was saying is the possibility for someone to pick out the non-negative capital recoveries (which would include a) under-valued assets that make more than their valuation, and b) the over-valued ones that don't meet valuation but haven't gone negative on capital return) as the c) negative capital recoveries are the part of the picture already covered in the capital losses post. Combining a) b) and c) would give the most complete picture available of what happens when the valuations are tested. Is that right? I think this will only be picking up the loans where the borrower isn't the one carrying out the sale. Where there is a clear profit, the borrower would typically dispose of the asset themselves to maximise the surplus that comes to themselves, rather then let some random receiver throw it in an auction with potentially no surplus for the borrower. As such, this analysis is more likely to pick up the overvaluations where the borrower knows/suspects there isn't any surplus and they just walk away from the loan. Edit: if you mean that we somehow find out the realised sale price of as many of the completed projects as possible then that would be amazing. Hard work, but it would be good to see how they compare to the initial and revised valuations
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Oct 15, 2018 13:41:27 GMT
Inspired by dan1 and his great work putting together the list of lost capital here: p2pindependentforum.com/post/292260/threadAt various times people have mentioned the valuations on loans and debated whether they are any good. I have wondered how the valuations put on loans compare with what is actually achieved when assets have to be sold. Looks like we are already a good proportion of the way there with the data in the above. Anyone fancy going through and picking out the loans where recoveries were made but capital was not lost? Put it all together and we should get a great overview of what really happens when a loan is finally defaulted and how well the valuations FS are getting stack up. Would even have an average % that we could use in loan assessment. If recoveries are less than 100% of the valuations for example, the LTVs being looked at are in reality higher than they first appear. This is very tricky to work out. eg. London Car Spaces - Valuation was accurate at 50% LTV, but the receiver charged extortionate fees for doing very little work, (£20k to do a leaflet drop to the foyer of a block of flats). As a result we lost all the interest and FS even made up a small capital loss.
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