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Post by reeknralf on Oct 1, 2014 18:08:53 GMT
If I buy parts in one of the overdue bridging loans on the AM, assuming it is subsequently repaid, who gets the interest for the period between it going overdue and my purchase?
Apologies for asking this here, but Assetz haven't been able to find the time to reply to my query of 3 days ago.
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baz657
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Post by baz657 on Oct 1, 2014 18:17:45 GMT
The person you are buying it from will get any interest until the day you buy it. The system will hold that figure and pay out to both if/when the final payment is made. chris should be able to confirm but I guess he's been more than a bit busy today. |
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Post by chris on Oct 1, 2014 18:48:28 GMT
If I buy parts in one of the overdue bridging loans on the AM, assuming it is subsequently repaid, who gets the interest for the period between it going overdue and my purchase? Apologies for asking this here, but Assetz haven't been able to find the time to reply to my query of 3 days ago. Sorry didn't notice your query 3 days ago - was it made on this board? If you mention me by name (with an @ symbol in front) then I get an email telling me that I've been summoned. As baz657 says any interest accrued whilst the seller is holding the loan part is deferred until that interest is paid by the borrower. You will start accruing interest from the day you buy the loan unit. In the event of a partial recovery then both buy and seller are paid proportionately. In the event of the principal being recovered but no the interest then the buyer gets the principal back but both lose the interest. The important difference to all the other platforms (so far as I'm aware, happy to be corrected as it's been a while since I checked) is that the buyer doesn't take on the risk of having to pay the sellers accrued interest. We felt that deferring that interest until it is paid / recovered was the fairest solution.
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Post by mrclondon on Oct 1, 2014 19:14:33 GMT
The important difference to all the other platforms (so far as I'm aware, happy to be corrected as it's been a while since I checked) is that the buyer doesn't take on the risk of having to pay the sellers accrued interest. We felt that deferring that interest until it is paid / recovered was the fairest solution. Absolutely its the fairest solution, which has been copied with just one minor difference by SavingStream.
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Post by chris on Oct 1, 2014 19:26:37 GMT
The important difference to all the other platforms (so far as I'm aware, happy to be corrected as it's been a while since I checked) is that the buyer doesn't take on the risk of having to pay the sellers accrued interest. We felt that deferring that interest until it is paid / recovered was the fairest solution. Absolutely its the fairest solution, which has been copied with just one minor difference by SavingStream. I'll put my surprised face on  Is that minor difference worth us considering?
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kermie
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Post by kermie on Oct 1, 2014 19:33:40 GMT
Absolutely its the fairest solution, which has been copied with just one minor difference by SavingStream. I'll put my surprised face on Is that minor difference worth us considering? Nope; when you sell a loan part on the AM on SS, then SS don't pay the interest until it's fully sold, which could take days, although in practise can be done within the day if you sell suitably small enough parts. (Loans can be broken into parts of almost arbitrary size for the AM, although there's probably a minimum). This effectively means SS can keep the interest for themselves. It's minor, but always a slight concern that you could get caught by a slow AM.
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mikes1531
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Post by mikes1531 on Oct 1, 2014 20:50:49 GMT
I'll put my surprised face on Is that minor difference worth us considering? Nope; when you sell a loan part on the AM on SS, then SS don't pay the interest until it's fully sold, which could take days, although in practise can be done within the day if you sell suitably small enough parts. (Loans can be broken into parts of almost arbitrary size for the AM, although there's probably a minimum). This effectively means SS can keep the interest for themselves. It's minor, but always a slight concern that you could get caught by a slow AM. To clarify the words in blue above... The seller stops accruing interest as soon as they put the part up for sale. The buyer starts accruing interest from the day they buy. So if the loan part isn't bought the same day it is offered for sale then the interest that accrues while the part is for sale goes to SS.
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andy2001
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Post by andy2001 on Oct 1, 2014 21:00:33 GMT
A related question is who get interest on a defaulted loan where all capital but only part of the interest is recovered.
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mikes1531
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Post by mikes1531 on Oct 1, 2014 21:01:43 GMT
In the event of the principal being recovered but no the interest then the buyer gets the principal back but both lose the interest. : It's hopefully a pretty unlikely scenario, but can you confirm what happens if not all the principal is repaid? Inasmuch as the seller already has received their principal when they sell their unit, is it fair to presume it's the buyer who would suffer the principal loss? To do otherwise -- to try to share the loss between seller and buyer -- would require making a debit to the seller some time after they sold the unit and it does seem to be a pretty awkward thing to do. And here's a related question... Some bridging loans have a minimum term. What happens if a loan is repaid before that term has elapsed? Does the 'unearned' interest go to the last holder of the unit? Or does it go to AC? Or...?
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mikes1531
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Post by mikes1531 on Oct 1, 2014 21:05:17 GMT
A related question is who get interest on a defaulted loan where all capital but only part of the interest is recovered. I thought chris already answered that... In the event of a partial recovery then both buy and seller are paid proportionately.
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andy2001
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Post by andy2001 on Oct 1, 2014 21:24:17 GMT
A related question is who get interest on a defaulted loan where all capital but only part of the interest is recovered. I thought chris already answered that... In the event of a partial recovery then both buy and seller are paid proportionately. Indeed, I guess I didn't read it very carefully.
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Post by chris on Oct 2, 2014 6:00:27 GMT
Nope; when you sell a loan part on the AM on SS, then SS don't pay the interest until it's fully sold, which could take days, although in practise can be done within the day if you sell suitably small enough parts. (Loans can be broken into parts of almost arbitrary size for the AM, although there's probably a minimum). This effectively means SS can keep the interest for themselves. It's minor, but always a slight concern that you could get caught by a slow AM. To clarify the words in blue above... The seller stops accruing interest as soon as they put the part up for sale. The buyer starts accruing interest from the day they buy. So if the loan part isn't bought the same day it is offered for sale then the interest that accrues while the part is for sale goes to SS. Ewww, okay won't be copying that!
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Post by chris on Oct 2, 2014 6:02:28 GMT
In the event of the principal being recovered but no the interest then the buyer gets the principal back but both lose the interest. : It's hopefully a pretty unlikely scenario, but can you confirm what happens if not all the principal is repaid? Inasmuch as the seller already has received their principal when they sell their unit, is it fair to presume it's the buyer who would suffer the principal loss? To do otherwise -- to try to share the loss between seller and buyer -- would require making a debit to the seller some time after they sold the unit and it does seem to be a pretty awkward thing to do. And here's a related question... Some bridging loans have a minimum term. What happens if a loan is repaid before that term has elapsed? Does the 'unearned' interest go to the last holder of the unit? Or does it go to AC? Or...? The buyer assumes all capital risk so they would receive proportionately however much was recovered of the principal, the seller's capital is no longer at risk. With a minimum term loan it would be the current holder of the loan unit that receives the interest. It's their capital at risk after all.
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