olof
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Post by olof on Jan 13, 2019 12:48:50 GMT
Virtually all loans on the Lendy platform has some kind of physical asset to secure the loan. In many cases, the asset is supposed to be worth 30-60% more than the outstanding loan.
Why does it take so much time and seem so incredibly difficult for Lendy to force the borrower to sell this asset to repay the loan when they default? Many loans have been defaulted for 100, 200 or 300 days (or more) and the comments on the loans from Lendy often make it look like theres no substantial progress.
Is there something within brittish civil law that makes it so hard to make the borrower repay?
As an example, I recently had a loan that went to default on the EU EstateGuru platform. The loan was turned into default status after about 14 days and they are now proceeding with forcing the borrower to sell the asset they provided.
Is it Lendy that doesnt act quickly or are incompetent? Or is it inherently very hard to force borrowers to sell the assets they provide as loan guarantees because of UK law?
Furthermore, should we have serious concerns that Lendy might be going bankrupt? The company doesnt publish annual reports, only sales reports that cherry pick certain numbers that could be seen as strong. If they had nothing to hide they would be more transparent with their financials.
Also, recent figures form P2P-Banking (https://www.p2p-banking.com/) show large decreases in new loans on Lendy. Between november and december, new loan origination was reduced by almost 50%, an 87% reduction compared to december 2017. In december 18 they only had 1.5 million EUR invested. Which probably is too low to finance the companys operational costs.
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Post by GSV3MIaC on Jan 13, 2019 13:47:11 GMT
The problem is that the assets are rarely easy to sell, and if they are half-finished building projects that goes double. Even bridging finance against a regular residential property implies that the borrower was not able to sell it 'right now', which is why they needed a bridge in the first place.
So it is not hard to force the borrower to sell, but it IS impossible to force someone to buy (especially at a price you'd like).
Fwiw very few P2P companies are anything like transparent with financials. Apparently a lot of peple would like to talk Lendy out of business .. you have to wonder how many of them are borrowers, or ambulance chasers.
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Post by p2plender on Jan 13, 2019 13:48:43 GMT
All fine and dandy when the LTV doesn't exceed 70%. Just that Lendy and co aren't very good at valuing the asset, in fact they appear woeful. So when the asset gets dragged to market (like the proverbial kicking and screaming pig) the value isn't there. Maybe that's why the pig isn't often seen being dragged to market..  I'm astonished they're not generating new business as there are still many on TP waxing lyrical about Lendy so perhaps Lendy could round these up from TP and get them to invest...  |
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mj
Posts: 37
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Post by mj on Jan 13, 2019 13:49:50 GMT
Virtually all loans on the Lendy platform has some kind of physical asset to secure the loan. In many cases, the asset is supposed to be worth 30-60% more than the outstanding loan. "Supposed to be" are the operative words there. One of the main problems is that the security has often been over-valued. As to LY going bankrupt, the signs are not good. In particular the fact that it is writing so little new business is worrying. This is a company no longer engaged in its key activity. When a retail outlet stops bringing in new stock because it can't afford the bills there's only one way it's going to go.
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Post by captainconfident on Jan 13, 2019 14:39:50 GMT
Lendy were not the valuers of these projects, and overvaluation turns out to be almost omnipresent in P2P property lending. Sanctus Funding have recently gone into action against the valuer of one of Funding Knights few property loan valuers and good luck to them. In their way, Lendy are also victims of the loss of the confidence brought about by over optimistic valuations.
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dApps
Posts: 91
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Post by dApps on Jan 13, 2019 14:50:35 GMT
Is there something within brittish civil law that makes it so hard to make the borrower repay? Yes. In this country it is illegal to pin the borrower against a wall and 'squeeze' with just the right amount of pressure to induce payment.  'Officially', many of your questions are answered on the Lendy FAQ / Support website. As an observation, recovering development loans is tricky. Far trickier, it would seem, than plain bridging loans. Is it as tricky as Lendy make out? I can guess, but I don't know, so any reply would be opinion. What I would say is that trying to effect recoveries when the starting position is ensuring a (marketing) history of 'no lost capital', isn't going to make recoveries any easier. By the way, as a professional Fund Manager, are you / your fund invested in Lendy?
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adrianc
Member of DD Central
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Post by adrianc on Jan 13, 2019 18:07:50 GMT
As an example, I recently had a loan that went to default on the EU EstateGuru platform. The loan was turned into default status after about 14 days and they are now proceeding with forcing the borrower to sell the asset they provided. Can they "force the borrower to sell the asset"? I don't believe they can here. All they can do is to take possession of the asset - via the courts. That takes time. Then Lendy themselves sell the asset. Or they put the borrower company into administration, and the administrator sells the asset. If there's a shortfall, then they need to take any personal guarantor to court for the money they owe. And that's assuming the borrower or guarantor doesn't take legal action to slow it all down.
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Godanubis
Member of DD Central
Anubis is known as the god of death and is the oldest and most popular of ancient Egyptian deities.
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Post by Godanubis on Jan 13, 2019 22:41:31 GMT
As an example, I recently had a loan that went to default on the EU EstateGuru platform. The loan was turned into default status after about 14 days and they are now proceeding with forcing the borrower to sell the asset they provided. Can they "force the borrower to sell the asset"? I don't believe they can here. All they can do is to take possession of the asset - via the courts. That takes time. Then Lendy themselves sell the asset. Or they put the borrower company into administration, and the administrator sells the asset. If there's a shortfall, then they need to take any personal guarantor to court for the money they owe. And that's assuming the borrower or guarantor doesn't take legal action to slow it all down. Even trickier in Scoctland there are no Baliffs to enforce court judgements for any balance due.
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Post by robberbaron on Jan 14, 2019 9:01:43 GMT
Another reason to keep the worst loans in purgatory indefinitely:
You can continue to claim that "no investor has ever lost any money!"
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dandy
Posts: 427
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Post by dandy on Jan 14, 2019 10:33:12 GMT
Can they "force the borrower to sell the asset"? I don't believe they can here. All they can do is to take possession of the asset - via the courts. That takes time. Then Lendy themselves sell the asset. Or they put the borrower company into administration, and the administrator sells the asset. If there's a shortfall, then they need to take any personal guarantor to court for the money they owe. And that's assuming the borrower or guarantor doesn't take legal action to slow it all down. Lendy can immediately take legal possession of any property where the loan is in default by a) appointing LPA receivers over a fixed asset(s) or b) take over as mortgagee in possession themselves (rarely done to avoid any liability). Then they/LPA can sell the property subject to any leases/tenants if any. Of course there can be a dispute over whether a "default" has actually occurred which seems to be Lendy borrowers' main line of defence (or attack in one case). Court proceedings are only necessary if you wish to evict residential tenants. A totally separate course of action would be to put a company borrower into administrative receivership (much longer process and always involves court proceedings). This is typically only done where a shortfall is likely and the company has other assets too. So in short, Lendy ought to be able to appoint LPA Receiver over any loan in default "immediately". I am sure there are loan-specific reasons where they have not done so such as working with the borrower to get a better result all around.
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Post by cashmax on Jan 14, 2019 11:24:33 GMT
The issue is that these assets have often been overvalued. So selling the asset isn't going to return the capital, let alone the interest owing.
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Post by martin44 on Jan 14, 2019 11:42:02 GMT
The issue is that these assets have often been overvalued. So selling the asset isn't going to return the capital, let alone the interest owing. Agree, and added to that the (lets say) character of some of the borrowers over the last few years, making any repossession/selling process a hell of a lot harder and more complicated.
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Post by alphareturn on Jan 15, 2019 2:22:42 GMT
Brexit is not helping with Lendy and other property backed loans. There is a double impact. One is the general property market stalling in London and tempering country wide. Properties that were overvalued are even harder to sell. The uncertainty of what will happen in March means that buying a property is quite a gamble. I have noticed loans that have offers but the completion is taking forever and is being dragged out. Why complete now on something that could drop 10% in value post hard Brexit.
In UK law the courts and well as Lendy prefer for the feuding parties to agree a settlement so while the debtor is offering alternatives they are willing to listen. It is the lowest cost option after all. Only once they have exhausted this process so they take possession.
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rocky1
Member of DD Central
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Post by rocky1 on Jan 15, 2019 5:34:28 GMT
The difference here is that most of lendys borrowers do not want to pay anything back and have run them round in circles for over 2years in some cases.lendy have given our money on schemes that are easily overvalued by a massive amount and have took their share accordingly.happy borrower happy lendy.soon they can blame brexit for their pie in the sky valuations.
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Post by charliebrown on Jan 15, 2019 7:44:55 GMT
Lendy seems very inconsistent. For example, look at “the castle” and “borrower in receivership” loans. From memory, these loans were dealt with relatively swiftly, the assets were taken over and were sent to auction, a sale was achieved and investors had an end. This course of action delivered substantial losses to investors but it’s the course Lendy chose to execute (they still don’t call a loss a loss as they call it claims underway). Conversely, look at “Gloucester” loans, these loans are 852 days in default and Lendy has just perpetually kicked the can down the road and taken no action. My question is, why are Lendy so inconsistent in their approach.
Is Lendy going bankrupt? I’d say so and it seems like they are actually trying to put themselves out of business. Why are they not issuing any new loans? Yes, investor sentiment is about as low as it can get but look at Funding Secure, they’ve got lots of defaulted loans and lots of absolute horror stories but they’re stilling issuing loans and those loans still fill.
I just don’t understand Lendy. The last batch of cut-paste updates about a “new recoveries team” were an absolute disgrace.
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