foolsgold
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Post by foolsgold on Jan 18, 2020 15:17:45 GMT
Had a look at this one second legal charge by FS
312K loan at 68.5 LTV
First charge has 441K loaned to the borrower so in total 753K borrowed
Its been valued at 1.1 Million by valuer
This one sold a few doors along last year for 785K its in good order
If this would go to auction it would achieve 30 percent less than standard price and achieve about 550K.
First charge holders would get all there cash back plus interest which would take it up to price achieved at auction so its not in there interest to push a sale as they are accruing interest and all the losses are on us 2nd charge holders.
Again an ambitious valuation by the surveyor which should wipe out most of our capital
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iRobot
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Post by iRobot on Jan 18, 2020 15:48:08 GMT
...
This one sold a few doors along last year for 785K its in good order
...
I think we have very different views on what 'good order' is  OK, it may not have been falling down, but there an awful lot of modernising required there - even the cut down description states " huge potential to update". Would it require £300k? Probably not - although you could spend that if you were so minded - but there's a degree of 'ready to move in / doesn't need a thing doing to it' that commands a premium, so you might only need to spend £100k on it to raise it the extra 10-15%. There's another house at the same postcode currently on at £975k. Very slightly larger and one I would say is in 'good order'. (Although a bit cluttered for viewings, ideally, but if you've got to carry on living life, not much you can do. Could have pared it back for the pics, though.)
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iRobot
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Post by iRobot on Jan 18, 2020 16:18:10 GMT
First charge holders would get all there cash back plus interest which would take it up to price achieved at auction so its not in there interest to push a sale as they are accruing interest and all the losses are on us 2nd charge holders.
Again an ambitious valuation by the surveyor which should wipe out most of our capital
The following bears some checking, but as I understand it, the 2nd charge holder could still call in the loan and push for a disposal, but wouldn't be able to necessarily control that disposal. Also, the first charge holder may be being paid interest with none outstanding / accrued. So the senior debt may be 'just' the £441k. If it were the case, the FS Admins might chose to negotiate on the 1st charge so as to control disposal. Some or all of this may be way off, I'm not in the loan - being second charge - so have no access to the details, such as they might be. But even when commenting from a position of relative ignorance, I still think it worth mentioning on the basis that the situation may not be as black as first glance may suggest. P2P loans which are second charges are rarely '100% sound' though, that's for sure.
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foolsgold
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Post by foolsgold on Jan 18, 2020 16:53:18 GMT
975k Guide price and looks decent enough and would sell well although it could be better presented . So based on this re sale value and it needing a upgrading to it then it would probably sell for in the region of 682K at auction
So if 682K achieved less administrators fees plus auction fees and look at the debt owed to 1st charge holders 312K and FS 2nd charge total 753K owed on property excluding interest from 1st and 2nd charge holders.
First charge holders debt of 441k discharged plus interest and with FS debt being 701 days alone the 1st charge will be looking at 60K interest minimum but probably a lot more so best part of 520K to be paid to first charge holders which leaves 160K for 2nd charge holders who hold a debt of 312K so straight away not including fees FS investors have lost 152K which equates to a 50 percent loss on capital and thats before administrators cost and other fees.
It doesnt look good and might be indicative of future disposals
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foolsgold
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Post by foolsgold on Jan 18, 2020 17:06:03 GMT
As per previous post it might be indicative of future 2ND charge disposals.
If we were 1St charge holders then we would receive full investment including interest accrued but 2nd charge holders in any loans look grim
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Godanubis
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Post by Godanubis on Jan 19, 2020 1:05:28 GMT
As per previous post it might be indicative of future 2ND charge disposals.
If we were 1St charge holders then we would receive full investment including interest accrued but 2nd charge holders in any loans look grim
It is only grim if the Borrower can’t raise the cash. The total amount is less than a conventional mortgage requires so they should be able to refinance. As their preferred exit is sale if insufficient is recovered then I note the borrower has other properties and would imagine any shortfall would be sought from the borrower’s other assets. Fortunately this is not USA where foreclosure eliminates the debt. The debt remains until repaid or bankruptcy declared. Even with poor London property price rises this was last sold at just under £600000 in 2004 I would expect a substantial uplift in 16 years even after crash over a decade ago. Even a 3% rise average per year should more than cover debt link
There were some big drops and big rises the average rise is still reasonable even with current negative rise.
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foolsgold
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Post by foolsgold on Jan 19, 2020 10:33:10 GMT
As per previous post it might be indicative of future 2ND charge disposals.
If we were 1St charge holders then we would receive full investment including interest accrued but 2nd charge holders in any loans look grim
It is only grim if the Borrower can’t raise the cash. The total amount is less than a conventional mortgage requires so they should be able to refinance. As their preferred exit is sale if insufficient is recovered then I note the borrower has other properties and would imagine any shortfall would be sought from the borrower’s other assets. Fortunately this is not USA where foreclosure eliminates the debt. The debt remains until repaid or bankruptcy declared. Even with poor London property price rises this was last sold at just under £600000 in 2004 I would expect a substantial uplift in 16 years even after crash over a decade ago. Even a 3% rise average per year should more than cover debt link
There were some big drops and big rises the average rise is still reasonable even with current negative rise. House prices have fallen by about 5 percent since the valuation BUT remember THIS property was valued by a qualified surveyor for 1.1 Million and its a 3 BEDROOM DETACHED.....WHY when a 5 BEDROOM DETACHED fully refurbished (Im not going to post link ) in the same stret sold just ONE year after the valuation for £1084700 and this is a less than the loan valuation....WHY?....it doesnt make sense......Either the surveyor is completely incompetent or the valuation has been manipulated by someone to achieve a lending figure that suited the borrower.If this is the case then it is FRAUDULENT scheme.
This is only one loan that I have looked at and I have found this irregularity there could be many more throughout the FS loan book.
I would ask the Creditor committee who are members of this forum to raise this issue with the administrators as this highlights a potential fraudulent transaction.
Hopefully the borrower can raise the funds through other linked properties and wont declare bankruptcy although it wouldnt be a first and would be an option for a fraudster.
The figures Ive used are fairly current and once you go back as you refer to 2004 the figures are skewed too much and are not reliable for comparso. .All you can do is use street by street similar comparison of properties in the same area with similar footprint size and have the same level of fixtures and fittings hence comparing like for like.
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iRobot
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Post by iRobot on Jan 19, 2020 14:43:38 GMT
975k Guide price and looks decent enough and would sell well although it could be better presented . So based on this re sale value and it needing a upgrading to it then it would probably sell for in the region of 682K at auction
So if 682K achieved less administrators fees plus auction fees and look at the debt owed to 1st charge holders 312K and FS 2nd charge total 753K owed on property excluding interest from 1st and 2nd charge holders. First charge holders debt of 441k discharged plus interest and with FS debt being 701 days alone the 1st charge will be looking at 60K interest minimum but probably a lot more so best part of 520K to be paid to first charge holders which leaves 160K for 2nd charge holders who hold a debt of 312K so straight away not including fees FS investors have lost 152K which equates to a 50 percent loss on capital and thats before administrators cost and other fees. I don't understand your rationale for much of this. Why would it need an upgrade? (I'm now assuming it is the one for sale at £975k which is why the link was removed? Feel free to PM me the property number if I have this wrong, please.) Why would it necessarily go to auction? The market is moving again (even rising again in some areas) following the ending of the general election / Brexit uncertainty (to an certain extent, anyway). Why £60k interest on 1st charge loan? (Or the £80k added to get to £520k??) I'm not in this loan so maybe that's been disclosed to those that are, but I'm presuming not otherwise you wouldn't be guesstimating. Why can't the 1st charge be to a high-street bank as a regular interest-only mortgage that is up to date? Or even better a fully amortising loan that is up to date, so outstanding amount may now be a something under £441k? Even if it were an FS-esque lender, given the 1st charge loan would have been a much lower risk it's unlikely the interest rate would have been as high as FS' so, again, I don't think your figure for £80k (or even £60k) holds up. (It's not impossible the 1st charge holder is FS-esque, I just find it unlikely.) Looking at three bed properties in area and there's a real mixed bunch including some real dogs (£900k buys you 'huge potential', apparently!) and some outlandish asking prices (£1.4m, dream on!) but I don't think £800k or higher is at all impossible on this one (again, I'm now assuming it's the one with the redacted link). And looking at three bed semi's sold in the last two years within 1/4 mile gives a range of £800k to £1.0m. (Yep, 1/4mile in London can make a significant difference, but it is indicative.) Even £800k could, IMHO, cover all capital and fees. Based on what I know, I'd say: 'This doesn't look too bad and may be a lot better than other disposals.' Actually, make that 'an awful lot better' ...
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foolsgold
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Post by foolsgold on Jan 19, 2020 15:22:25 GMT
975k Guide price and looks decent enough and would sell well although it could be better presented . So based on this re sale value and it needing a upgrading to it then it would probably sell for in the region of 682K at auction
So if 682K achieved less administrators fees plus auction fees and look at the debt owed to 1st charge holders 312K and FS 2nd charge total 753K owed on property excluding interest from 1st and 2nd charge holders. First charge holders debt of 441k discharged plus interest and with FS debt being 701 days alone the 1st charge will be looking at 60K interest minimum but probably a lot more so best part of 520K to be paid to first charge holders which leaves 160K for 2nd charge holders who hold a debt of 312K so straight away not including fees FS investors have lost 152K which equates to a 50 percent loss on capital and thats before administrators cost and other fees. I don't understand your rationale for much of this. Why would it need an upgrade? (I'm now assuming it is the one for sale at £975k which is why the link was removed? Feel free to PM me the property number if I have this wrong, please.) Why would it necessarily go to auction? The market is moving again (even rising again in some areas) following the ending of the general election / Brexit uncertainty (to an certain extent, anyway). Why £60k interest on 1st charge loan? (Or the £80k added to get to £520k??) I'm not in this loan so maybe that's been disclosed to those that are, but I'm presuming not otherwise you wouldn't be guesstimating. Why can't the 1st charge be to a high-street bank as a regular interest-only mortgage that is up to date? Or even better a fully amortising loan that is up to date, so outstanding amount may now be a something under £441k? Even if it were an FS-esque lender, given the 1st charge loan would have been a much lower risk it's unlikely the interest rate would have been as high as FS' so, again, I don't think your figure for £80k (or even £60k) holds up. (It's not impossible the 1st charge holder is FS-esque, I just find it unlikely.) Looking at three bed properties in area and there's a real mixed bunch including some real dogs (£900k buys you 'huge potential', apparently!) and some outlandish asking prices (£1.4m, dream on!) but I don't think £800k or higher is at all impossible on this one (again, I'm now assuming it's the one with the redacted link). And looking at three bed semi's sold in the last two years within 1/4 mile gives a range of £800k to £1.0m. (Yep, 1/4mile in London can make a significant difference, but it is indicative.) Even £800k could, IMHO, cover all capital and fees. Based on what I know, I'd say: 'This doesn't look too bad and may be a lot better than other disposals.' Actually, make that 'an awful lot better' ... Have a read at the last post I made...the one that sold for just under 1.1 Million was a fully refurbished 5 Bedroom house in the same street also with a conservatory and the FS loan is only a 3 Bedroom property...the surveyor valued ours at 1.1 Million ....WHY....its not worth that given the 5 Bedroom sold for less.
If it goes to auction properties tend to sell for 30 percent less than the value...why would someone buy at auction if they can walk into an estate agent and buy one their.
Ifthe administrators have a fire sale type disposal then this is a realistic value that it would achieve as most developers would like to achieve a 20 percent upside profit after refurbishment or whats the point in putting in the effort.
Reason Im assuming 60K interest is an estimation if they have sought funding through a lender such as FS as it has been 2 years something since the valuation done by FS ...the original lender may have it over an even longer period so your right im just guessing the interests rate.
The whole point Im making is that in this example I dont understand a valuer valuing this at 1.1 Million and looks very ambitious and with other loans and action being taken by the administrators against similar under valuations their could be a pettern...thats the point Im making
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iRobot
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Post by iRobot on Jan 19, 2020 20:57:45 GMT
Have a read at the last post I made...the one that sold for just under 1.1 Million was a fully refurbished 5 Bedroom house in the same street also with a conservatory and the FS loan is only a 3 Bedroom property...the surveyor valued ours at 1.1 Million ....WHY....its not worth that given the 5 Bedroom sold for less. If it goes to auction properties tend to sell for 30 percent less than the value...why would someone buy at auction if they can walk into an estate agent and buy one their. Ifthe administrators have a fire sale type disposal then this is a realistic value that it would achieve as most developers would like to achieve a 20 percent upside profit after refurbishment or whats the point in putting in the effort. Reason Im assuming 60K interest is an estimation if they have sought funding through a lender such as FS as it has been 2 years something since the valuation done by FS ...the original lender may have it over an even longer period so your right im just guessing the interests rate. The whole point Im making is that in this example I dont understand a valuer valuing this at 1.1 Million and looks very ambitious and with other loans and action being taken by the administrators against similar under valuations their could be a pettern...thats the point Im making
That other post is addressing another potential problem - accuracy of the original Valuation. Not seen the valuation for this loan. What are the comparable properties' addresses? How do they stack up in terms of occupy-able square footage? Do they have a garage? Taking into consideration that the most recent sold prices may not have been available at the time the valuation was generated, are there any obviously comparable properties that have been omitted? (The price didn't meet an agenda, perhaps?) Looking at the £1,084,700 property, as you say, that did sell after the valuation. Also, it was marketed just a few months prior to sale at £1,095k; the timeline and the closeness of the marketing / sale price suggests to me it was listed competitively for a prompt sale. If correct, why? Who knows, but it has been listed on for rent a few times variously as a four or five bed property, so maybe this was another example of a wannabe buy-to-let magnate that got in over their head and had to offload their portfolio pronto. In other words, might a more relaxed sale seen it offered at a higher sum? All speculation on my part and the point is, in my opinion it's unwise to try and justify or disprove a valuation taking just one property as a comparison. Does that make the loan property's valuation correct? Probably not. Don't know. Most valuations in P2P-land are very 'optimistic'. Every borrower - and to an extent, every platform - is going to want the valuation to come out a favourably as possible. The positive is that residential property valuations do tend to be a good deal more accurate than commercial property and especially development projects. This means that the threshold for proving an erroneous valuation on residential properties tends to be lower than for other types of valuation. That all said, none of it answers the more pressing questions of: a) whether this will need to go to auction; I don't think so, it's in good condition and properties are selling in the vicinity b) whether it will reach the required price to see lenders receive what owed to them back; I think it will in terms of capital, even after fees have been deducted.* c) is this the same valuer as borrowers' other loans on FS? (One of which has now repaid in full?) * - on this point, it has been confirmed (kudos to MrC on DD) that the 1st charge holder is a high street bank, and whilst that doesn't mean there isn't any arrears, it does mean the interest rate is likely to be at a much lower level and I'd have expected this to have been dealt with more promptly rather the 1st charge holder waiting two years before doing anything. This looks like a rental to me, so maybe the 1st charge holder has control of the income? Would at least mean there's more in the pot for the 2nd charge holders.) Hope this pans out for those in it, and I think it will - certainly when compared to some real shockers on the platform, both past and waiting to be realised. And no doubting that 'questionable' valuations will play a part in those and other P2P horror stories. (Can't remember the last time I spent so long on a second charge loan!  )
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foolsgold
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Post by foolsgold on Jan 19, 2020 23:20:02 GMT
Have a read at the last post I made...the one that sold for just under 1.1 Million was a fully refurbished 5 Bedroom house in the same street also with a conservatory and the FS loan is only a 3 Bedroom property...the surveyor valued ours at 1.1 Million ....WHY....its not worth that given the 5 Bedroom sold for less. If it goes to auction properties tend to sell for 30 percent less than the value...why would someone buy at auction if they can walk into an estate agent and buy one their. Ifthe administrators have a fire sale type disposal then this is a realistic value that it would achieve as most developers would like to achieve a 20 percent upside profit after refurbishment or whats the point in putting in the effort. Reason Im assuming 60K interest is an estimation if they have sought funding through a lender such as FS as it has been 2 years something since the valuation done by FS ...the original lender may have it over an even longer period so your right im just guessing the interests rate. The whole point Im making is that in this example I dont understand a valuer valuing this at 1.1 Million and looks very ambitious and with other loans and action being taken by the administrators against similar under valuations their could be a pettern...thats the point Im making
That other post is addressing another potential problem - accuracy of the original Valuation. Not seen the valuation for this loan. What are the comparable properties' addresses? How do they stack up in terms of occupy-able square footage? Do they have a garage? Taking into consideration that the most recent sold prices may not have been available at the time the valuation was generated, are there any obviously comparable properties that have been omitted? (The price didn't meet an agenda, perhaps?) Looking at the £1,084,700 property, as you say, that did sell after the valuation. Also, it was marketed just a few months prior to sale at £1,095k; the timeline and the closeness of the marketing / sale price suggests to me it was listed competitively for a prompt sale. If correct, why? Who knows, but it has been listed on for rent a few times variously as a four or five bed property, so maybe this was another example of a wannabe buy-to-let magnate that got in over their head and had to offload their portfolio pronto. In other words, might a more relaxed sale seen it offered at a higher sum? All speculation on my part and the point is, in my opinion it's unwise to try and justify or disprove a valuation taking just one property as a comparison. Does that make the loan property's valuation correct? Probably not. Don't know. Most valuations in P2P-land are very 'optimistic'. Every borrower - and to an extent, every platform - is going to want the valuation to come out a favourably as possible. The positive is that residential property valuations do tend to be a good deal more accurate than commercial property and especially development projects. This means that the threshold for proving an erroneous valuation on residential properties tends to be lower than for other types of valuation. That all said, none of it answers the more pressing questions of: a) whether this will need to go to auction; I don't think so, it's in good condition and properties are selling in the vicinity b) whether it will reach the required price to see lenders receive what owed to them back; I think it will in terms of capital, even after fees have been deducted.* c) is this the same valuer as borrowers' other loans on FS? (One of which has now repaid in full?) * - on this point, it has been confirmed (kudos to MrC on DD) that the 1st charge holder is a high street bank, and whilst that doesn't mean there isn't any arrears, it does mean the interest rate is likely to be at a much lower level and I'd have expected this to have been dealt with more promptly rather the 1st charge holder waiting two years before doing anything. This looks like a rental to me, so maybe the 1st charge holder has control of the income? Would at least mean there's more in the pot for the 2nd charge holders.) Hope this pans out for those in it, and I think it will - certainly when compared to some real shockers on the platform, both past and waiting to be realised. And no doubting that 'questionable' valuations will play a part in those and other P2P horror stories. (Can't remember the last time I spent so long on a second charge loan! ) Thanks for your post and its good to know that the first charge loan is a high street Bank at least as you say the interest rate will be lower.
Im about 3 percent exposed to this loan and got the update the other day with many others but I picked this one at random to see where the valuation was in respect to other similar properties given so many under valuations FS have in the loan book to ascertain if its rife.
If its a high street lender and it doesnt go to auction there is a good chance that the 2nd charge holders will be Ok or not lose quite as much but my point was that it seems to be routine that surveyors are being over generous and ask how that is the case if they are meant to stand by a code of practice.Its good that the administrators are pursuing some valuers.
The 5 bedroom that I quoted is a lot bigger and has a conservatory and did sell for less than what the FS 3 bedroom valued at and the 5 bedroom was a nice property certainly by the look of the photographs.It might have been a rental and their might have been a reason that is sold for under or it may have been the home report value but we will never know.
I think certainly I trusted FS to be more responsible or at least expected that the FCA would at least do their job and properly supervise a financial company for what we pay our taxes for but its been a learning curb for me.Certainly wont make the same mistake again taking for granted that a government regulated financial company will do their job and will only trust what I actually have a controlling interest in when developing properties of my own.
Thanks for your contribution and the reassurance that its a high street Bank that holds the 1st charge
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Godanubis
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Post by Godanubis on Jan 20, 2020 9:12:19 GMT
Perhaps this might give some comfort to those of a nervous disposition House prices London link |
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foolsgold
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Post by foolsgold on Jan 20, 2020 10:10:13 GMT
Perhaps this might give some comfort to those of a nervous disposition House prices London linkDont think "nervous disposition" has any relevance to the thread.
The only thing personally I look at is evidence and the acceptance that all is not well with the loan book .That is after all why we are in administration .
Having a defensive and blinkered approach doesnt help.
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Godanubis
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Post by Godanubis on Jan 20, 2020 10:18:29 GMT
Perhaps this might give some comfort to those of a nervous disposition House prices London linkDont think "nervous disposition" has any relevance to the thread.
The only thing personally I look at is evidence and the acceptance that all is not well with the loan book .That is after all why we are in administration .
Having a defensive and blinkered approach doesnt help. Good then you will see London property prices have biggest January rise “EVER” and there is nothing to say this borrower is unable to meet his commitments. In perspective only a couple of loans repaid since administration have made a loss of capital those are the facts.
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Godanubis
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Post by Godanubis on Jan 20, 2020 10:37:48 GMT
I have over £7700 in this plus interest and don’t think it is worth the attention it has been getting it is one of many loans and there are a lot more with greater woes than this.
If the first charge holder is getting paid they will not be in any hurry to force the borrower to do anything to end a profitable relationship and frankly neither should we if in the long run the borrower meets his obligations.
With the market picking up he may have a greater chance of selling all his properties that are currently stuck in the previous slow market.
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