When 'Interest on Account' is not 'On Account'
Nov 19, 2018 5:12:48 GMT
jjc, locutus, and 2 more like this
Post by r00lish67 on Nov 19, 2018 5:12:48 GMT
Having a look at Lendy's latest loans out of idle curiosity, I notice what seems to me a rather concerning development. It's been mentioned elsewhere in specific instances, but are Lendy now routinely granting extensions and increasing the number of days of 'IOA' without actually gathering the interest in advance?
The words themselves are pretty clear: IOA means IOA (Interest on Account), but just to be sure their Collections & Recoveries policy states:
"Lendy holds interest on account for the term of a loan" and "This means that borrowers are not infrequently granted extensions to their loans made via the Lendy platform to prevent loans falling past due and to improve the position of Lendy investors who will continue to receive interest for the extended period"
Despite this:
1) DFL003 was extended in late August 2018. Since then, tranches 14 to the latest, 18 (not yet drawn down), have all been partially to "cover part of the costs of a six-month extension through to March 2019". i.e. funding the agreed extension in retrospect, not in advance. So, when this loan was extended there was presumably very little IOA. 3 months later, it's clear there is still a shortfall.
2) DFL010 was extended by 2 months on the 17th October 2018, and yet the latest tranche (not yet drawn down) states "The fifteenth tranche...is now required to cover planning costs and the costs of the extension." A subsequent possible further extension is mentioned, but it seems pretty clear that this latest tranche is designated to pay for the old extension, not the new.
3) DFL022 was extended by 6 months in mid-July 2018 through to Feb'19. Since then, Tranches 10,11,14,15 explicitly (and it seems reasonable to assume T12,13 implicitly also) "covered part of the costs of extending the loan through to the end of February 2019. So, again, an extension without all the interest funding being in place.
4) DFL019 is still in positive IOA territory (136 days remaining as of now) and yet interest is now not being paid to investors, as despite the extension Lendy recently said "Whilst some funds have been raised via these tranches, sufficient funds have not been raised to continue to make payments of interest to investors" . This appears a clear example of 'days remaining' not equating at all to the number of 'IOA' days.
Unless I've misinterpreted something, and by all means dive in if I have, then this seems to mean to me:
a) IOA does not mean that Lendy have interest on account to cover the remaining +ve days term of the loan. Perhaps this was obvious to others, but not me.
b) Lendy are in direct contradiction of their C+R policy as above because they cannot possibly know that "Lendy investors will continue to receive interest for the extended period" because in some cases they've shown that they granted extensions that have yet to have their interest funded. This appears to have been made abundantly clear by the current situation with DFL019 where they've now declared that investors in fact won't receive interest for the extended period.
c) Further, they are also in contradiction of their own C+R policy as they appear not to be doing the following: "Lendy holds interest on account for the term of a loan".
d) Given that funding new tranches of many Lendy loans now seems to be a very slow and uncertain process, should it not be absolutely necessary for Lendy to share exactly how much 'IOA' there actually is remaining for each loan, especially when prior tranches have been expressly (partly) promoted for that purpose? Not doing so could be hiding significant risks for investors, that may not be easily identifiable for less experienced investors.
The words themselves are pretty clear: IOA means IOA (Interest on Account), but just to be sure their Collections & Recoveries policy states:
"Lendy holds interest on account for the term of a loan" and "This means that borrowers are not infrequently granted extensions to their loans made via the Lendy platform to prevent loans falling past due and to improve the position of Lendy investors who will continue to receive interest for the extended period"
Despite this:
1) DFL003 was extended in late August 2018. Since then, tranches 14 to the latest, 18 (not yet drawn down), have all been partially to "cover part of the costs of a six-month extension through to March 2019". i.e. funding the agreed extension in retrospect, not in advance. So, when this loan was extended there was presumably very little IOA. 3 months later, it's clear there is still a shortfall.
2) DFL010 was extended by 2 months on the 17th October 2018, and yet the latest tranche (not yet drawn down) states "The fifteenth tranche...is now required to cover planning costs and the costs of the extension." A subsequent possible further extension is mentioned, but it seems pretty clear that this latest tranche is designated to pay for the old extension, not the new.
3) DFL022 was extended by 6 months in mid-July 2018 through to Feb'19. Since then, Tranches 10,11,14,15 explicitly (and it seems reasonable to assume T12,13 implicitly also) "covered part of the costs of extending the loan through to the end of February 2019. So, again, an extension without all the interest funding being in place.
4) DFL019 is still in positive IOA territory (136 days remaining as of now) and yet interest is now not being paid to investors, as despite the extension Lendy recently said "Whilst some funds have been raised via these tranches, sufficient funds have not been raised to continue to make payments of interest to investors" . This appears a clear example of 'days remaining' not equating at all to the number of 'IOA' days.
Unless I've misinterpreted something, and by all means dive in if I have, then this seems to mean to me:
a) IOA does not mean that Lendy have interest on account to cover the remaining +ve days term of the loan. Perhaps this was obvious to others, but not me.
b) Lendy are in direct contradiction of their C+R policy as above because they cannot possibly know that "Lendy investors will continue to receive interest for the extended period" because in some cases they've shown that they granted extensions that have yet to have their interest funded. This appears to have been made abundantly clear by the current situation with DFL019 where they've now declared that investors in fact won't receive interest for the extended period.
c) Further, they are also in contradiction of their own C+R policy as they appear not to be doing the following: "Lendy holds interest on account for the term of a loan".
d) Given that funding new tranches of many Lendy loans now seems to be a very slow and uncertain process, should it not be absolutely necessary for Lendy to share exactly how much 'IOA' there actually is remaining for each loan, especially when prior tranches have been expressly (partly) promoted for that purpose? Not doing so could be hiding significant risks for investors, that may not be easily identifiable for less experienced investors.
