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Post by chris on Sept 30, 2014 9:20:18 GMT
Who are these shady "introducers", and what is their cut? When I joined AC, I thought the only "middleman" was AC itself. Too many middlemen means the rates to the borrowers, with all fees, become unsustainable.
Another thing is worrying me slightly about this thread. There are several lenders here who saw the writing on the wall and got out of the troubled bridging loans quickly. As a newbie to AC (but not to P2P), I find it a little disturbing that rumours can spread about loans being potentially in trouble "from chats, or elsewhere", and those in the know, or with more experience in AC, can sell up, leaving inexperienced or newbie investors holding the can. I'm not naïve, and I knew there were considerable risks in expecting a 12% yield, and I'm also well diversified on AC. However, on most platforms I've had experience with, even some that folded, loans are blocked from sale at the first sign of trouble.
Another thing that disturbs me is that even when a loan is blocked from sale, AC has the habit of forming some kind of extension loan to the same borrower, and because it is now a "new loan" with no history of non-repayment, suddenly the units are available for sale again. This practice -- if I've understood it correctly -- doesn't seem fair to me, for the simple reason that it benefits insiders, experienced lenders and underwriters at the expense of those who do not understand the intricate ins and outs of the AC platform. How is a newbie supposed to know that a "new" loan with no history of default, is in fact a repackaged version of a loan that got into trouble previously, even of one that could not be sold before? Yes, the knowledge *might* be available if the newbie reads every bit of documentation (arguably they should), including all the forum posts, but even so it takes a while fully to understand the system. Any loan from a borrower with a history of repayment problems, including asking for an extension at the last minute, should not be saleable even in repackaged form. Period. And AC should be much more proactive in blocking sale of loan units as soon as they receive news that a borrower is in trouble. Why are introducers automatically shady? Every platform uses them, most banks use them, they're a backbone of the industry both traditional and non-traditional. Loan origination is part of what AC, and other platforms, do but we have enough challenges to worry about without also having to source 100% of our loans directly and often using established channels is cheaper than developing your own channels. As always a healthy combination of routes and sources is the best approach. Some platforms list loans introduced to them without significant additional vetting but we do not believe in this approach. All loans on AC go through the same AC assessment and credit control procedure. The only difference, and the one that is causing frustrations in this case, is that with some introducers borrower communication has to go via that third party. With all our loans the second a payment is late that loan cannot be traded on the aftermarket. All lenders are in exactly the same situation, any lending strategies some lenders are pursuing are based entirely on the same set of rules and restrictions all other lenders are operating within. Our loan extensions are a legacy of the existing loan model on the site that is rigid when it comes to changing the repayment plan after loan drawdown. However each loan has large warnings on its listing, all auto invest instructions are reset, and all aftermarket listings are cancelled. All lenders have to start again specifying if they want to increase or decrease their holdings in full sight of the warnings. We feel that this is fair and transparent whilst giving lenders the chance to trade should they wish to do so. We have a new loan model that will be going live later today that will remove the need for new loans to be created in this way, so the full history will be directly available, instead of linked. However the policy of resetting everything and putting warnings on the page will be continued.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Sept 30, 2014 9:38:57 GMT
<snip> We have a new loan model that will be going live later today that will remove the need for new loans to be created in this way, so the full history will be directly available, instead of linked. Is that what I think it is slipped in at the end there? The much promised upgrade launch? 
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Post by chris on Sept 30, 2014 9:40:56 GMT
<snip> We have a new loan model that will be going live later today that will remove the need for new loans to be created in this way, so the full history will be directly available, instead of linked. Is that what I think it is slipped in at the end there? The much promised upgrade launch? Unfortunately not. We've decided to use a more cautious approach and to split the upgrade in two, getting the new loan model live today so that the site is still fully compliant when the new rules hit tomorrow. The new website / user interface will have a launch date very soon that will be announced this week. Just going through the final checks on that first part now.
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Post by jackpease on Sept 30, 2014 10:18:39 GMT
>>>doesn't seem fair to me, for the simple reason that it benefits insiders, experienced lenders and underwriters at the expense of those who do not understand the intricate ins and outs of the AC platform.
A lot of people here have 'dipped their toe' in as newbies and lurked for weeks/months with a small sum invested to get the feel of what is going on. Then mistakes are made with small sums (how long did we use Funding Circle's autoinvest before we figured it out!) before feeding in larger sums and getting a feel of what to avoid. There are platforms that are noob-friendly such as zopa and ratesetter but a lot of the rest are a gamble and newcomers have a choice as to whether they inform themselves or go in blind. I really hope that in a few years time we are not all plagued by automated sales calls offering to reclaim money lost on "mis-sold" p2p investments! Jack P
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bugs4me
Member of DD Central
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Post by bugs4me on Sept 30, 2014 10:29:43 GMT
>>>doesn't seem fair to me, for the simple reason that it benefits insiders, experienced lenders and underwriters at the expense of those who do not understand the intricate ins and outs of the AC platform.
<snip> I really hope that in a few years time we are not all plagued by automated sales calls offering to reclaim money lost on "mis-sold" p2p investments! Doubt if many of the P2P platforms will still be around to reclaim money from. Hope I'm wrong - about them being around that is - but I suspect more than a couple are already struggling to make it worthwhile.
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Post by jackpease on Sept 30, 2014 10:58:44 GMT
Come on, man!!! Don't plant ideas in those vultures' heads!! 
Too late! New loan on FC #6543 17% £700k for P2P claims recovery start up call centre, directors only been made bankrupt a few times, secured against a tourist duck boat (refloated), a DH Comet plane and a clifftop cottage at Birling Gap, A++ rating and filling fast
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debeast
(o)(o)
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Post by debeast on Sept 30, 2014 13:03:56 GMT
Is that what I think it is slipped in at the end there? The much promised upgrade launch? Unfortunately not. We've decided to use a more cautious approach and to split the upgrade in two, getting the new loan model live today so that the site is still fully compliant when the new rules hit tomorrow. The new website / user interface will have a launch date very soon that will be announced this week. Just going through the final checks on that first part now. 'Very soon' = Naughty words list :-D
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niceguy37
Member of DD Central
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Post by niceguy37 on Sept 30, 2014 13:13:38 GMT
<snip> I really hope that in a few years time we are not all plagued by automated sales calls offering to reclaim money lost on "mis-sold" p2p investments! Doubt if many of the P2P platforms will still be around to reclaim money from. Hope I'm wrong - about them being around that is - but I suspect more than a couple are already struggling to make it worthwhile. The market is certainly a lot more crowded than a year or two ago. Perhaps there will be a flood of new lenders when NISA's are eligible for P2x lending. Otherwise the effect of competition may winnow out the less effective platforms.
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oldgrumpy
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Post by oldgrumpy on Sept 30, 2014 13:51:11 GMT
I wonder if they will use the "Loan guaranteed" wording on FC pages as the "no win no fee mis-selling" chink in the armour. 
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mikes1531
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Post by mikes1531 on Sept 30, 2014 14:33:55 GMT
With all our loans the second a payment is late that loan cannot be traded on the aftermarket. : The above may be a case of being 'economical with the truth'. Right now, loans cannot be traded once a monthly payment is late. All of the 'extension' loans, however, have missed making their bullet payment at maturity, yet they are still tradeable. I accept that nobody who does even a tiny bit of research before buying a part of one of these high-rate loans should be oblivious of the situation, and I agree that with these suitable notices in place there's no reason to halt trading in these loan parts. I'm not quite sure how the new system will operate. AIUI, it won't be necessary to have extension loans so a loan like Ha***ey, for instance, will be able to make all six of the retained interest payments despite failing to make the bullet payment. But what would happen after that? Do the 'overdue' notices appear and the loan then carries on accruing interest at the default rate? And AI mandates are de-activated but the loan parts remain tradeable?
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mikes1531
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Post by mikes1531 on Sept 30, 2014 14:41:06 GMT
It's common for some lenders around here to attempt to sell their loan parts when there's about a week to go, even if there's no indication of trouble. It must drastically reduce risk for the lender. That's certainly one possible strategy to adopt. It would reduce the risk -- if you could sell the units -- but it also would reduce the potential reward of the default interest rate if the security is good enough to provide sufficient proceeds at the end of the recovery process. And the lender has to be able to tolerate the complete uncertainty of when/if they'll see any of their capital and accrued interest paid out. That may be fine for investors who are happy to speculate, but it certainly won't suit everyone.
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Post by chris on Sept 30, 2014 14:46:24 GMT
With all our loans the second a payment is late that loan cannot be traded on the aftermarket. : The above may be a case of being 'economical with the truth'. Right now, loans cannot be traded once a monthly payment is late. All of the 'extension' loans, however, have missed making their bullet payment at maturity, yet they are still tradeable. I accept that nobody who does even a tiny bit of research before buying a part of one of these high-rate loans should be oblivious of the situation, and I agree that with these suitable notices in place there's no reason to halt trading in these loan parts. I'm not quite sure how the new system will operate. AIUI, it won't be necessary to have extension loans so a loan like Ha***ey, for instance, will be able to make all six of the retained interest payments despite failing to make the bullet payment. But what would happen after that? Do the 'overdue' notices appear and the loan then carries on accruing interest at the default rate? And AI mandates are de-activated but the loan parts remain tradeable? Perhaps I wasn't explicit enough but I disagree that I was being economical with the truth. The second any scheduled repayment is missed the system automatically removes the loan from the aftermarket. That is a simple fact. The extensions to the loans are a separate case that I then covered off, all of which had been removed from the market as I described once they had missed a payment. These are only tradable if lenders decide to trade having read the warnings. No previous buy or sell orders are processed they all have to be new instructions from lenders which in the case of buy instructions can only be made from the loan details page itself where all the warnings are. I had thought my previous post had been clear on this. On a platform that expressly prices to risk rather than liquidity I would also have hoped that the rates on offer also indicate the level of risk as being greater than our standard loans. On the new system the second any scheduled payment is missed the aftermarket for that loan is disabled. If there is a refinancing then the same warnings and notices and ability to reset Auto Invest are available to the admin team but it is a manual decision as to which are applied. If there's a material change then they will use all of those tools, as they do now. In other cases such as an overpayment being made and thus either the monthly repayment being reduced or the term being shortened then these will no longer result in a refinance and I'd imagine that the admin team wouldn't reset existing AI instructions. Loan units are only tradable on both old and new systems as long as the scheduled payments are up to date. The only difference being with the new loan model we no longer need to refinance a loan in order to change that schedule in the system.
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mikes1531
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Post by mikes1531 on Sept 30, 2014 15:41:34 GMT
Loan units are only tradable on both old and new systems as long as the scheduled payments are up to date. The only difference being with the new loan model we no longer need to refinance a loan in order to change that schedule in the system. : Thanks for the further info. However, I still feel that the above statement applies only to the monthly interest payments scheduled at the time the loan was drawn down. To continue using Ha***ey as an example, there were six monthly interest payments scheduled from the beginning, plus a bullet payment due on 14/Aug. The monthly interest payments have been made (using funds retained at drawdown), but the bullet payment was missed -- and still is overdue. In the old system, the loan had to be 'refinanced' and now shows to be having one payment due -- on 14/Feb/2015 -- so of course it has no missed payments. In the new system, in a situation like this I presume the bullet payment would be moved from its original Aug.'14 date to Feb.'15 which might make the loan look like there were no missed payments, but we'll all know better. An alternative would be to treat the loan the way it had to be done this time (because of the system limitations) which is to show it as having been paid off on 14/Aug and re-lent the same day. But that's just an accounting exercise. In a genuine refinancing/rollover, lenders would have a choice whether to take their money elsewhere or to leave it in the loan and take their chance that the recovery will be successful and that they'll earn the default interest rate. Perhaps at some point in the future AC will have the resources to be able to offer lenders a optional rollover into the defaulted loan, effectively funding the extension loan from lenders willing to continue, new investors willing to take their chances, and underwriters willing to fill any funding gap, and giving those lenders who aren't interested in the higher-risk defaulted loans an option to get out.
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Post by chris on Sept 30, 2014 15:46:49 GMT
I understand the point that Chris is making. However, two issues strike me. 1. If this was a completely new borrower rather than a rolled over loan, would AC put it on the primary market? It's already been stated that the introducer is no longer welcome so... 2. There might be perceived pressure on AC to roll it over to pretend there's no issue and the loan book looks good. Hopefully, if we ever get the new system, the risk averse will be able to avoid rolled over loans according to some simple criteria should they wish. 1. It has big risk warnings all over it saying that there's been a missed payment. We need to trust our lenders that they read and understand these and the implications, as well as trusting that they can deduce an increase in risk from the interest rate being offered. 2. I don't see how this can be the case when we have large notices on the new loans. For the case of the risk averse the alternative to being rolled into the new loan is legal recovery, which is rarely the best option in these circumstances. By allowing these loans to trade we're allowing the risk averse an opportunity to exit that wouldn't be possible otherwise.
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