hazellend
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Post by hazellend on Dec 4, 2018 9:16:46 GMT
I don’t know if this is just anecdote but it seems there is a lot of lying with goal being to avoid paying back debt using every ridiculous trick in the book.
Is it immoral behaviour or is this just business?
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locutus
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Post by locutus on Dec 4, 2018 10:05:54 GMT
George Bernard Shaw.
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copacetic
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Post by copacetic on Dec 4, 2018 10:27:15 GMT
I don’t know if this is just anecdote but it seems there is a lot of lying with goal being to avoid paying back debt using every ridiculous trick in the book.
Almost makes you feel some solidarity with banks who've been putting up with it for the past few hundred years!
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blender
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Post by blender on Dec 4, 2018 11:15:22 GMT
Borrowers are no worse than lenders. It's just that in p2p the borrowers have more opportunity to improve their position. This is financial services and business, which works on the basis that all the stakeholders are motivated to maximise their financial benefit. Otherwise it would not work - the whole capitalist system relies on that motivation, that we are in the service of Mammon. So that's why we have contracts and regulation. Talking of sympathy for the banks, look at this PPI compensation business. Sure the banks mis-sold and should repay, but I reckon that a great deal of this PPI reclaim business relies on fraudulent claims generated using unscrupulous agents, which I would equate to the lender side of p2p. The reclaim side of Collateral will be one to watch, when it comes to divvying the pot. Let's see how lenders/creditors behave there. (I have neither PPI nor Collateral investments to reclaim)
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hazellend
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Post by hazellend on Dec 4, 2018 12:13:32 GMT
Borrowers are no worse than lenders. It's just that in p2p the borrowers have more opportunity to improve their position. This is financial services and business, which works on the basis that all the stakeholders are motivated to maximise their financial benefit. Otherwise it would not work - the whole capitalist system relies on that motivation, that we are in the service of Mammon. So that's why we have contracts and regulation. Talking of sympathy for the banks, look at this PPI compensation business. Sure the banks mis-sold and should repay, but I reckon that a great deal of this PPI reclaim business relies on fraudulent claims generated using unscrupulous agents, which I would equate to the lender side of p2p. The reclaim side of Collateral will be one to watch, when it comes to divvying the pot. Let's see how lenders/creditors behave there. (I have neither PPI nor Collateral investments to reclaim) Lenders won’t have a choice with collateral. It all depends on retrieval if loan part data
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benaj
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Post by benaj on Dec 4, 2018 12:38:41 GMT
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blender
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Post by blender on Dec 4, 2018 15:41:55 GMT
Borrowers are no worse than lenders. It's just that in p2p the borrowers have more opportunity to improve their position. This is financial services and business, which works on the basis that all the stakeholders are motivated to maximise their financial benefit
That's one perspective. But only one that applies in the traditional sense such as banks where borrower and lender can look each other in the eyes across the table and make their mind up.
The problem with P2P is there's a clumsy oaf of a middleman ... the platforms.
Some do a reasonable to almost good job. But too many allow borrowers to get away with murder and just point the lenders in the direction of disclaimers and say "well, its high risk, suck it up chum".
Some of this comes down to the lunatics running the asylum (the FCA) who had that stupid idea of allowing such a light-touch regime to apply to P2P.
Most of it realistically comes down to the platforms themselves, allowing borrowers to spin them tall stories and gumming away at the recoveries instead of being properly aggressive.
Yes, that's what I mean with p2p. The fact of the platform means that there are two relationships instead of one, and they are unbalanced. In that the borrower is a customer who gets far more say than the lenders, who are just a disorganised money supply. I think if the lenders had the whip hand, which they do not, you would see the worst of mob rule. (I speak as a lender, and a greedy inconsiderate b*st*rd).
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Godanubis
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Post by Godanubis on Dec 5, 2018 2:41:47 GMT
I would have to disagree with you there.
No doubt many lenders, like me, have been involved in running businesses.
With running a business comes the inevitable need to deal with delinquent clients.
Those people will no doubt understand perfectly what I mean by platforms not being "aggressive" enough.
It doesn't mean sending Boris The Russian round to break a few kneecaps.
It means using all the perfectly legal and legitimate tools as your disposable from day one, one tool after another, without having a siesta and taking an extended holiday in-between. You start with few polite letters, and if that fails, you carry on bombarding the client with your increasingly aggressive recoveries artillery until such time as irredeemable funds have been credited to your bank account.
Anyone who's run their own business knows the longer you leave it, the less effective the tools will be (and in the case of P2P with high-risk borrowers the banks won't touch, the longer you leave it, the greater the chance of the borrower not being there tomorrow).
As the old saying goes "its easier to do it with other people's money" . And I suspect that's a great part of the reason why many platform's recoveries process is so lethargic, they've got little (or in the majority of cases nothing) on the line financially, so its a lot easier for them to remain passive and allow the borrowers to lead them down the garden path.
I thought the whole point of asset based P2P was that does not matter what the morality of the borrower mearly the quality of the asset assigned to cover the loan. The success of any investments is in the hands of the valuers. If all loans were assigned using values that were no more than 70% of current auction valuation and defaults were acted on quickly I would doubt there would be any capital losses.
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Post by propman on Dec 5, 2018 15:47:30 GMT
That would only work if the valuations were done on a distressed rapid sale basis (I assume that this is what you meant by auction value). the trouble is that the disparity is often large to the "market value" and there would be few borrowers prepared to commit assets at the amounts concerned, while most of these would be prime borrowers only interested at very low rates. The largest asset class available are property development loans. Many sites are worth less than land cost in the early stages of decvelopment as few developers will take a risk on a previous developers work being up to scratch unless they get indemnities that are worth something from the seller (unlikely in a recovery position). Valuations are usually based on gross development value. ie what the final buildings are expected to be sold for. Clearly the recovery may be much less, particularly as the time of sale may be some time off and so the market may have changed. In addition, there will be sale costs. P2P Platforms favour this use as it shows lower % "value" of the loan.
As I have said before, asset backed lending is often in the absence of any other source of repayment funds. ie the loan can only be repaid by further advances or sale of the asset (either by borrower or to realise security). Too many people assume that the asset is additional rather than the only reason the loan was made. Furthermore, if large amounts are lent on similar assets, there will not only be losses in a downturn, but it may well be losses on all loans of that class at the same time!
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Post by GentlemansFamilyFinances on Dec 5, 2018 15:58:49 GMT
From the very invention of money, humans have found it not only very useful but also immoral or distasteful.
Are P2P borrowers unethical? They want money and are happy to not pay it all back.
Are P2P lenders unethical? They have money and want it all back - with interest!!!
I am not a philosopher but I have one loan on Zopa that was (possibly) taken out by someone who went ahead and died - they had a terminal illness and the underwriters at Zopa would have been better off talking to the undertakers. The whole loan was written off but the widow received the money from the loan before the death and I got nothing - a lovely bad debt in the days before loss relief.
Can you be unethical in death?
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Post by propman on Dec 6, 2018 9:52:33 GMT
Re exercising security, as I have said above security over a part built building is often not very valuable. I have been involved on the Developer side (not the defaulter!) and sometimes it has been better for the lender to advance enough additional funds to complete the project as we were unwilling to take the risk on the work to date without more of a discount than the lender was prepared to give. The immorality here is the loan arranger pretending that there is full security and probably trumpeting the "low" loan to value when the value was potential future value and contingent on the movement in the market and accuracy of cost estimates.
The other point is the relationship one. I suspect that many loans are either sourced through the same introducer or connected parties. it is conceivable that only a small minority have gone bad (poor location, issues with developpment such as archeological finds causing delays, cost errors, financial difficulties of parties to whom pre-sales/ pre-lets are agreed etc.) I can understand that the P2P company might be reluctant to play the heavy on the one bad apple although if a lender is only in that one loan it is not in their intrerest. it is an ethical issue whether the P2P company should act in the interests of the single loan creditors at the cost of a larger number on related loans. No P2P company has a policy on dealing with this conflict of issue to my knowledge.
- PM
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ozboy
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Post by ozboy on Dec 6, 2018 13:01:08 GMT
Re exercising security, as I have said above security over a part built building is often not very valuable. I have been involved on the Developer side (not the defaulter!) and sometimes it has been better for the lender to advance enough additional funds to complete the project as we were unwilling to take the risk on the work to date without more of a discount than the lender was prepared to give. The immorality here is the loan arranger pretending that there is full security and probably trumpeting the "low" loan to value when the value was potential future value and contingent on the movement in the market and accuracy of cost estimates.
The other point is the relationship one. I suspect that many loans are either sourced through the same introducer or connected parties. it is conceivable that only a small minority have gone bad (poor location, issues with developpment such as archeological finds causing delays, cost errors, financial difficulties of parties to whom pre-sales/ pre-lets are agreed etc.) I can understand that the P2P company might be reluctant to play the heavy on the one bad apple although if a lender is only in that one loan it is not in their intrerest. it is an ethical issue whether the P2P company should act in the interests of the single loan creditors at the cost of a larger number on related loans. No P2P company has a policy on dealing with this conflict of issue to my knowledge.
- PM Understatement of The Century! (Not a dig at you propman)
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cwah
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Post by cwah on Jan 26, 2019 19:27:57 GMT
I would say two things.
First, P2P is largely home to people who the banks would not touch. Hence the "junk bond" yield percentages being offered to lenders (which in my view in many cases are still too low for the risk people are taking on).
Second, yes, the behavior is grossly unethical. But really the onus is on the platforms for allowing the borrowers to game the system. There is one particular platform I can think of that pretty much allows borrowers to use every trick in the book ... kicking cans down the road, transferring assets to wives and all sorts of other shenanigans.
The platforms (some much more than others) need to grow some teeth in the recoveries process and remember that their bread is largely buttered on the side of the lenders, not borrowers !
Which platform use sheningans?
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