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Post by valueinvestor123 on Sept 12, 2019 19:57:59 GMT
Love these forums. Lets talk about gardening  How about them blueberries and why do they wilt? |
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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 12, 2019 20:23:44 GMT
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garfield
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Post by garfield on Sept 12, 2019 21:31:42 GMT
unless the knotweed is 1m from your boundary and growing in a SSSI. Even worse if it's growing in an SSSH!
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travolta
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Post by travolta on Sept 13, 2019 7:51:13 GMT
Just climb the wall and spray it . Think like a P2P borrower and disregard all rules and principles. I'm just off to murder 2 wasp nests when the sun goes down.(F**K M*! They run courses on how to do it for £245! I just read your link!  ) |
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zlb
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Post by zlb on Sept 13, 2019 10:02:01 GMT
Just climb the wall and spray it . Think like a P2P borrower and disregard all rules and principles. I'm just off to murder 2 wasp nests when the sun goes down.(F**K M*! They run courses on how to do it for £245! I just read your link! ) My equipment: mosquito netting from ebay, over a sun hat, gloves and winter coat, spray from wilko. I let a wasps nest exist all summer until they got bored ...
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micky
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Post by micky on Sept 13, 2019 10:04:08 GMT
Then they don't return to an old nest.
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travolta
Member of DD Central
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Post by travolta on Sept 13, 2019 15:15:56 GMT
I cant leave them,they have destroyed nearly all my soft fruit. Huge number of wasps this year. Badgers have cleared some of nests and eaten the grubs. Good boys(and girls,inclusively). Now about my money.....
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brianlom1
Member of DD Central
He's not the Messiah, he's a very naughty boy!
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Post by brianlom1 on Sept 13, 2019 22:30:40 GMT
Lurvely. Has this happened much? (with property/development loans). Where the realised value ended up 0 or negative after disposal? I can see this being a freak occurrence on occasion but if it happens frequently, surely there's something very wrong with the whole sector? (mainly the valuation agencies). As yet, my fictious example is a relatively rare occurence. For a real life case study of this genre see the final administrators report of the FS Lytham St Annes Land owner (whilst not spelt out the assumption is its oil/heavy metal contamination that is the issue) where by they abandoned trying to sell the land due to it having an assumed negative value. (Its a complicated loan, but the recovery prospects are bleak).
I was deliberately being provocative in how I phrased my earlier post, but I hope it illustrates that very low percentage recoveries are entirely plausible. MT lenders have (hopefully) dodged a bullet with the Paisley loan by virtue of other assets have been discovered, but the primary asset is "contaminated" by a listed building making the sale of the land for the land value near mpossible ... legal costs to achieve delisting can be extremly high with the need for specialist consultancy reports.
Due to extensive can kicking many distressed p2p loans have not yet reached the end game, and I suspect many of the p2p loans secured on land via residual value valuations will eventually result in very low percentage recoveries.
In truth, the majority of the zero recovery loans seen thus far have fallen into 2 categories, either 2nd/3rd/4th/nth ranking/charge where the earlier charge(s) have only managed a partial recovery, or they have been secured primarily against the balance sheet of a company (and of course if the company fails, the balance sheet will itself have been decimated). Plus a few random cases of fraud by the borrower.
I think your analysis is spot on. I have historic investments with FC, ReBS, FS, MT (as well as Collateral and Lendy) - I'm getting quite used to the process whereby platforms kick the can down the road before eventually declaring there will be a zero dividend for investors. It's quite depressing really - there's a big difference between my understanding of 'your capital is at risk' and the multitude of tricks that are regularly being played on investors looking for a decent return on their hard-earned cash.
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Post by mrclondon on Sept 13, 2019 23:40:08 GMT
Lets take a fictious example
A £700k loan on a plot of land "valued" at £1m (so 70% LTV) on a residual value basis but sat on that land are some derelict buildings with asbestos and the land has japanese knotweed growing on it.
The actual land value may be as little as £150k as cleared land, so the buyer would offer say £50k on the basis that demolition and decontamination of the land will cost him £100k. Then the administrator will deduct the cost of the sale (marketing costs, insurance etc) and their own fees which could easily reach £50k.
Recovery back to lenders - nil.
All of that spotted by the valuer, or clearly not. Isn't any of that recoverable through RICS insurance, even if a development loan, can an insurer call it speculative, and therefore claim it's not covered? I've seen talk of DFLs not being easily claimable against, but really? In the case of asbestos and knotweed? (Apologies for this late follow up, I've been a bit busy the last 24hrs.)
Ah, yes, lets submit a claim against the RICS surveyor who compiled our fictious valuation. I think though, we will quickly be disappointed ... because the residual value valuation of £1m already allowed for the cost of demolition and decontamination ... it would have been valued at £1.1m otherwise.
Providing the surveyor has used a reasonable sample of comparables on which to base GDV, has used sensible build cost figures, and hasn't made any mathematical errors, the valuation of £1m would be deemed to be fine, and any insurance claim would probably be quickly dismissed.
The issue is more fundamental in so far as the standard RICS red book survey is answering the wrong question. The vast majority of the valuations I've looked at over the last 6 years are fair representations, but they are not addressing what is the likely price achieved in an auction / firesale. In the vast majority of cases, the plots of land we have as security will only resell at auction to someone engaging in land banking, and hence will only pay around the value of the land for that locality ... which is where the government published pdf of typical land values comes in as it is based on pricing and typical build densities in each local authorty area.
The MT Q&A on the recently withdrawn Oxfordshire hotel loan was interesting in so far as one answer was (paraphrasing) "residual value valuations are the industry wide method of valuing developments". Yes, it might be the industry wide method, but that doesn't in itself mean it should be used in isolation when determining an appropriate max LTV of a prospective loan.
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zlb
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Post by zlb on Sept 14, 2019 9:03:38 GMT
Thanks mrclondon. So legal claims are more likely against the borrower who didn't use the funds for what they were intended in the first place? Hence RSM specialism in recovery including from overseas being appropriate, and claw back is the only thing that can be applied here? |
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Post by billy169 on Sept 14, 2019 9:40:22 GMT
If it's true that borrowers didn't use the money on the projects we were told..and lendy knew this ,,then surely that's a strong case for fscs via fca to be triggered.?!
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Post by mrclondon on Sept 14, 2019 10:22:42 GMT
Thanks mrclondon . So legal claims are more likely against the borrower who didn't use the funds for what they were intended in the first place? Hence RSM specialism in recovery including from overseas being appropriate, and claw back is the only thing that can be applied here? If it's true that borrowers didn't use the money on the projects we were told..and lendy knew this ,,then surely that's a strong case for fscs via fca to be triggered.?! In the vast majority of cases there is no conditionality on what a borrower can do with money received as a loan. The obvious exception is a development loan which mandates that the subsequent tranches are dependent on IMS sign off, and that very large invoices (e.g. utility connections at 6 figures normally) are settled directly by the finance provider.
A loan against a land bank site is by its very nature a means of the borrower raising money for some other random project that should result in value add, but as pointed out recently (may have been on another thread) may simply be to fund school fees, cruises, BMWs, loss making business interests etc etc.
Claims against a borrower would likely only be for gross misrepresentation on the loan application, or in info provided to a surveyor. But this is dependent on the loan application form asking the right questions - e.g. most banks ask about unspent criminal convictions, most other finance providers don't. There is a whole sector of the legal industry geared towards challenging PG claims ... more normally it is the borrower who launches legal action against the finance provider to fight PG claims.
Turning back to the subject of claims against RICS surveyors, those that stand the best chance of success IMO are those where the surveyor has vastly underestimated the work (and hence costs) to complete a project. I'm thinking here of MT Birkenhead and MT Newcastle under Lyme.
Another failing of the system is the role of an IMS is to monitor progress (build and external matters such as planning) against cost and time budgets. What he is not is a structural surveyor who can shout "Hey, what about fire compartmentalisation ?"
When the self select p2p platforms launched in 2013-14 we were told the banks aren't keen on development loans, so there is a gap in the market ... I think we now understand why !
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Post by billy169 on Sept 14, 2019 11:07:08 GMT
But in its most basic form..the platform states that this loan is for this project etc etc,,lies,mis selling, fraud !!?,,are the contracts just rubbish.?
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Post by mrclondon on Sept 14, 2019 11:38:15 GMT
are the contracts just rubbish.? In my rather long post on the general board 2 years ago I said [...] The expectations of the average forumite regarding business ethics is, I suspect, WAY above what is the norm in UK business, and given that many p2p borrowers (the platform's actual customers) are sub-prime operating on the boundaries of legality never mind ethics and morality it is hard (perhaps impossible ?) for p2p platforms to live up to the expectations of forumites. [...] A platform rep simply can't square the circle between how lenders expect the platform to operate, and how the platform has to operate in the shady world of sub-prime loans. [...]
The loan contracts will assume that both parties are "honourable" and "ethical" (take your pick of similiar adjectives), when in reality sub-prime borrowers are often the exact opposite. Many of the issues with loans could have been avoided (or at least mitigated) if platforms were less trusting in everything that a borrower claims.
Arguably the loan contracts could be tightened up, but I got into deep water at work one time for suggesting that a contract (for IT systems development) should be tightened up as by implication I was accusing the client (i.e. the buyer) of not being "honourable". (Yes I smelt a rat, but my intervention saw us booted off the clients short list, some other systems house ended up with the short straw, and me in trouble.)
Personally one aspect of the contracts that I would like to see improved is for a mandatory requrement for the loans to be included in the borrowing company accounts as a creditor, and a corresponding debtor entry to where the funds have actually gone. The practise of SPVs filing dormant company accounts is a hindrence to future refinance of the debt.
The lack of monitoring once the loan has drawn down is for me the major weakness with the model. Even AC's relationship managers are not being utilised as well as they could be in this regard - they often seem to tag along to the IMS site visits, but we rarely hear of them visiting borrowers otherwise.
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travolta
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Post by travolta on Sept 14, 2019 19:48:37 GMT
Having read this depressing account of the scrofulus bunch we have been exposed to, I feel a slush fund to facilitate bounty hunters with pliers and blowtorches is the way forward,if only to discourage other opportunists.
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