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Post by geoffrey on Oct 22, 2014 13:54:41 GMT
As mentioned elsewhere (probably buried in the middle of one of the long threads), I cannot see how Assetz have any legal authority to purchase additional exposure to loans on behalf of users who never enabled auto-invest on the old site, and never explicitly set an investment target on the new site. As a relative newbie with Assetz, and someone who never used AI on the old system as I didn't feel confident enough to set it, I thoroughly agree with sl75's point. There is no way such users who essentially bought a fixed amount in an amortizing loan should find themselves topping up the principal each month without their realizing that they are, effectively, buying more of the loan. What if the credit situation of the borrower has changed? The system can't assume I would want to buy more. Whatever solution is adopted, the default *must* be for this behaviour not to happen unless the user specifically asks for it. The first thing I did when I looked at the new site was to set the option to withdraw all repayments and interest to the cash account, as this gave me an immediate sense of control, although it doesn't solve the issue directly for each amortizing loan. Therefore it seems clear to me that the default must be that when the target set is equal to the principal remaining (i.e., when a purchase order has been fully filled), the target should reduce as and when any principal amount is paid off. A user-selectable option could then allow the target to remain constant. But its default should be "off".
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mikes1531
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Post by mikes1531 on Oct 22, 2014 15:13:07 GMT
I'd also say that the option to simply turn off AI by loan would be the simplest solution. That way you could leave the current logic (no amortisation of target) in place without the need for configurable options. This is my preference, too. In addition, there are other reasons why I might want to turn off AI, so it would be useful to have that control for that reason as well. And a global On/Off switch would be useful on occasion, as I expect that most users will have a long list of AI instructions and really not want to have to turn them off one at a time if they want to stop AI completely.
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Post by planetx on Oct 22, 2014 15:53:10 GMT
In addition, there are other reasons why I might want to turn off AI, so it would be useful to have that control for that reason as well. And a global On/Off switch would be useful on occasion, as I expect that most users will have a long list of AI instructions and really not want to have to turn them off one at a time if they want to stop AI completely. I also prefer it from the point of view that amortising the target value feels like an inelegant solution with potential for extra risks; it seems safest to me that the target should be a parameter set only by the user. Amortising it means you have an automated system changing a parameter in an automated system, and it would have to be done at the same time as the amortisation of the loan parts is processed or trades will still occur anyway.
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mikes1531
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Post by mikes1531 on Oct 22, 2014 16:17:46 GMT
Amortising it means you have an automated system changing a parameter in an automated system, and it would have to be done at the same time as the amortisation of the loan parts is processed or trades will still occur anyway. Isn't this an issue only with loans where there's availability in the Aftermarket? Where that's not the case, the loan repayments would be credited and all lenders' capital positions would reduce a bit. That would trigger a seeming demand to buy parts to restore lenders' capital outstanding positions, but there'd be no parts available so nothing would happen. When the update to investment targets is made a little while later the newly created demand would go away, but nothing would have happened in the interim, so the non-simultaneous updating wouldn't have caused a problem.
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oldgrumpy
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Post by oldgrumpy on Oct 22, 2014 16:24:07 GMT
Availability on the market can occur with no notice at any time.
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ilmoro
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Post by ilmoro on Oct 22, 2014 16:42:11 GMT
While I would prefer an amortizing target to match the amortizing loan value, what the AC platform really needs is a big fat "TURN EVERYTHING OFF" button so that any settled cash from amortizations, loan prepayments or whatever goes straight into my cash account and absolutely nowhere near the MAI system. At that point, I want to be able to individually turn on the MAI system for a handful of loans where I might want to change my exposure. For the other 95% of the portfolio, nothing changes. From my understanding that already exists . If you sent your 'on repayment' to withdraw capital & interest any money coming into the account instantly transfers into your cash account so there is nothing for MAI to buy loans with. Amendments to loan targets can then be made & any necesary cash transferred into the MAI. The issue for many is this would be a very hands on, even daily process, which defeats the object of an AI. What is desired is a way of turning MAI off permanently on individual loans.
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ianb
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Post by ianb on Oct 22, 2014 16:45:33 GMT
While I would prefer an amortizing target to match the amortizing loan value, what the AC platform really needs is a big fat "TURN EVERYTHING OFF" button so that any settled cash from amortizations, loan prepayments or whatever goes straight into my cash account and absolutely nowhere near the MAI system. At that point, I want to be able to individually turn on the MAI system for a handful of loans where I might want to change my exposure. For the other 95% of the portfolio, nothing changes. On the dashboard theres a 'on repayments' button, which s set (for me) to reinvest,but allows other settings of withdraw interest/withdraw interest and repayments - presumably to the cash account. I dunno if this is functional but may be what you are after ?
EDIT Oops - didn't see the same post from il moro.....
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mikes1531
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Post by mikes1531 on Oct 22, 2014 17:01:42 GMT
On the dashboard theres a 'on repayments' button, which s set (for me) to reinvest,but allows other settings of withdraw interest/withdraw interest and repayments - presumably to the cash account. We really shouldn't have to presume! Have we been told exactly what happens if we select one of the 'Withdraw' options? Some people no doubt will expect it to do what it says -- which would be to initiate a withdrawal. If they're really not going to do that, perhaps they should be relabelled to say what they are going to do, such as "Transfer interest -- or interest and repaid capital -- into my cash account".
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Post by badger on Oct 22, 2014 18:31:00 GMT
I agree with mikes1531 - amortising the target won't make much difference, because everybody's loan amount will reduce on each monthly payment - units will only come on the AM if someone reduces the target below their current investment (ie. sells).
Also, ramblingrose made a good point on the other thread that the risk doesn't increase even if you do end up taking a bigger slice of the loan. In fact, I think the risk goes down. Everyone seems to be assuming that an amortised loan which keeps topping back up equates to a bullet payment loan. But the risk profile is very different. With an interest-only loan, the borrower has to pay the full amount at the end and is very likely to struggle (as we've seen recently with numerous loans). With an amortised loan, assuming the borrower has already had a good record of payments, it gets more and more likely that he will get to the final payment without struggling.
I for one would be happy to hold 100% of a 60-month loan which has already paid 59 months, in fact it would probably be one of the lowest risk loans you could hope for.
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ramblin rose
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Post by ramblin rose on Oct 22, 2014 18:43:54 GMT
I agree with mikes1531 - amortising the target won't make much difference, because everybody's loan amount will reduce on each monthly payment - units will only come on the AM if someone reduces the target below their current investment (ie. sells).
Also, ramblingrose made a good point on the other thread that the risk doesn't increase even if you do end up taking a bigger slice of the loan. In fact, I think the risk goes down. Everyone seems to be assuming that an amortised loan which keeps topping back up equates to a bullet payment loan. But the risk profile is very different. With an interest-only loan, the borrower has to pay the full amount at the end and is very likely to struggle (as we've seen recently with numerous loans). With an amortised loan, assuming the borrower has already had a good record of payments, it gets more and more likely that he will get to the final payment without struggling.
I for one would be happy to hold 100% of a 60-month loan which has already paid 59 months, in fact it would probably be one of the lowest risk loans you could hope for.
Thank you so much for thinking I've made a good point! I hate to take issue with anything you said above, in the circumstances, but my experience with other p2p platforms is that borrowers are in fact more likely to default as they get towards the end of their loan - there's just more time for bad stuff to happen in their lives. However, I agree the risk for a secured loan does become lower, because the ltv is much lower and so it's more likely the security will cover the outstanding loan at the point it does go bad.
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mikeb
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Post by mikeb on Oct 22, 2014 18:51:45 GMT
Further, if Assetz have already made unauthorised purchases on behalf of such users, surely these must be reversed until or unless the users in question change their instruction? Or you could use MAI, adjust the target to whatever you think it should be, sell off the extra bit, and the use the new shiny "turn off MAI for this loan" button. At best, the unauthorised buying has held a few loans "stationary" for a month, at most. Turning off MAI for those loans will restore business as usual.
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Post by batchoy on Oct 22, 2014 19:10:43 GMT
So here is a scenario for the doubters, there is an amortising loan that is backed by PGs and Stock, you have set your MAI to £5000 but over time your holding has decreased down to a few hundred pounds due to amortising and because there is little by way of sales. Come Easter you go off on holiday and have no internet access. On Good Friday morning rumors surface on the forum that this company has done a moonlight flit and before AC are able to block transactions a large number lenders zero their MAI targets and but your's has a field day due to various payments that came in on Thursday afternoon. Come Tuesday you return to find that AC have got people out trying to locate non-existent stock, the provider of the PG has declared himself bankrupt and you are the proud owner of not a few hundred pounds of now worthless loan units but £5000 worth for which you might get a few pence in the pound if the stock can be located and the forensic accountant's fees don't take up all the funds when the stock is recovered and sold.
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Post by mrclondon on Oct 22, 2014 19:21:40 GMT
So here is a scenario for the doubters, there is an amortising loan that is backed by PGs and Stock, you have set your MAI to £5000 but over time your holding has decreased down to a few hundred pounds due to amortising and because there is little by way of sales. Come Easter you go off on holiday and have no internet access. On Good Friday morning rumors surface on the forum that this company has done a moonlight flit and before AC are able to block transactions a large number lenders zero their MAI targets and but your's has a field day due to various payments that came in on Thursday afternoon. Come Tuesday you return to find that AC have got people out trying to locate non-existent stock, the provider of the PG has declared himself bankrupt and you are the proud owner of not a few hundred pounds of now worthless loan units but £5000 worth for which you might get a few pence in the pound if the stock can be located and the forensic accountant's fees don't take up all the funds when the stock is recovered and sold. I agree with your sentiments, but that is really an argument for not being in that loan at all (my dislike of the handbags loan is well known, and I've really no idea why I ended up with a smallish chunk of FF). As FF showed, your scenario can happen 2 months into a 5 year loan.
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Post by pepperpot on Oct 22, 2014 19:25:11 GMT
So here is a scenario for the doubters, there is an amortising loan that is backed by PGs and Stock, you have set your MAI to £5000 but over time your holding has decreased down to a few hundred pounds due to amortising and because there is little by way of sales. Come Easter you go off on holiday and have no internet access. On Good Friday morning rumors surface on the forum that this company has done a moonlight flit and before AC are able to block transactions a large number lenders zero their MAI targets and but your's has a field day due to various payments that came in on Thursday afternoon. Come Tuesday you return to find that AC have got people out trying to locate non-existent stock, the provider of the PG has declared himself bankrupt and you are the proud owner of not a few hundred pounds of now worthless loan units but £5000 worth for which you might get a few pence in the pound if the stock can be located and the forensic accountant's fees don't take up all the funds when the stock is recovered and sold. Agree with that, but generally, I now stay away from stock security. 1st legal charge on property on the other hand and I'd be quite happy with that scenario.
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Post by batchoy on Oct 22, 2014 19:27:14 GMT
So here is a scenario for the doubters, there is an amortising loan that is backed by PGs and Stock, you have set your MAI to £5000 but over time your holding has decreased down to a few hundred pounds due to amortising and because there is little by way of sales. Come Easter you go off on holiday and have no internet access. On Good Friday morning rumors surface on the forum that this company has done a moonlight flit and before AC are able to block transactions a large number lenders zero their MAI targets and but your's has a field day due to various payments that came in on Thursday afternoon. Come Tuesday you return to find that AC have got people out trying to locate non-existent stock, the provider of the PG has declared himself bankrupt and you are the proud owner of not a few hundred pounds of now worthless loan units but £5000 worth for which you might get a few pence in the pound if the stock can be located and the forensic accountant's fees don't take up all the funds when the stock is recovered and sold. I agree with your sentiments, but that is really an argument for not being in that loan at all (my dislike of the handbags loan is well known, and I've really no idea why I ended up with a smallish chunk of FF). As FF showed, your scenario can happen 2 months into a 5 year loan. I only have a little in the original Handbags and none in the second tranche which is why I am so pi**ed off about MIA acquiring more when I explicitly to the AI not to automatically increase my holding, and similarly I only had a little in FF but there are those that seem to believe that all security is equal when it comes to risk.
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