baz657
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Post by baz657 on Nov 20, 2014 19:14:57 GMT
I've never heard them called fees......... assuming they're male of course.........  Ohhhhhhhhhhhhh - you really meant fees! I thought...................... nvm. |
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mikes1531
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Post by mikes1531 on Nov 20, 2014 22:36:51 GMT
Just wondering out loud - given Assetz have publicly (and privately beforehand?) stated this, and the introducer appears to continue to act as a key intermediary even when discussing repayment of the loans, what incentive is there for the introducer to provide any assistance whatsoever to Assetz in obtaining repayment? The fact that AC is holding the payment of their fees. I'm afraid andrewholgate is being a bit disingenuous here. Either that, or AC have more leverage over the introducer than we've been told about. The Ts&Cs say the introducer's fees will be paid before lender capital is repaid. Therefore, it would require literally a give-away sale for there to be insufficient funds to pay the introducer's fees. As a result, the introducer is going to get paid their full amount whether or not the security sale results in a good price or a bad one. And from that I'd have to repeat sl75's question -- What incentive does the introducer have to be helpful? Unless AC are proposing to abrogate the introducer's contract and not pay the agreed fees, the fact that the payment of the fees won't happen until the property is sold is of little consequence to the introducer's bottom line. AC may think they have some leverage over the introducer, but I don't see it. For that matter, AC's fees rank alongside the introducer's fees, so they'll similarly be paid as long as the property is sold at practically any price above zero. Actually, AC may have even less direct incentive to facilitate the resolution of the default because their monitoring fee will continue to accrue during the resolution process, so they actually will be paid more the longer the process takes. This would seem to produce a conflict of interest for AC. The good news, from the lenders' perspective, is that AC would suffer indirectly if the resolution of the default is unsatisfactory, in that poor lender experiences or complaints would affect AC's ability to continue to grow their business, so they should be keen to do their best to produce good results for lenders.
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Post by Ton ⓉⓞⓃ on Nov 20, 2014 22:45:22 GMT
I think it might be useful if we could see some generic contracts in this regard. (many papers I sure)
But the Introducer so far hasn't done his job, he can't be paid if he never does do it, the deal has to successfully complete for him/her to get it's fees.
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Post by Ton ⓉⓞⓃ on Nov 20, 2014 22:48:00 GMT
IF he/she gets paid after this I'm gonna become an introducer.
I'll take my fee in milk.
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mikes1531
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Post by mikes1531 on Nov 20, 2014 23:39:22 GMT
Here are 5 reasons why I feel insecure about BL's in default. 1. Pre-October the BL's displayed the total payments due, not just the repayments owed to lenders. From that I calculated the interest rate paid by the borrower to be substantial. This means the LTV is being eroded faster than expected. 2. Lender capital repayments and default interest come behind the Introducer's fees & interest and AC's fees and interest. That presents a potential conflict of interest in the case of the Introducer, who keeps getting default interest with "no skin in the game". 3. I've been nervous of property valuations ever since the B***** BL went into default. Property prices are stable or rising, but the residential property in this loan was sold at a massive discount, and I haven't seen any explanation. 1 - In most cases on the BLs we hold the interest owed from drawdown so the final repayment should be just the outstanding capital. You are correct that accruing interest would cause the LTV to erode therefore we would not allow forbearance if the interest owing wasn't being covered. 2 - This is the issue over short-termism vs long term sustainable businesses. the fat cat bankers remain fat, whilst the rest of the world struggles out of the mess created. We are looking at new systems around this and the new Green Account we have launched is one way of doing this. AC is placing its profits into the account to cover potential losses after the recovery via security. Therefore, if we get it wrong our profit is used to repay some or all of the losses incurred. 3 - These loans came from one introducer and I have already stated we will not be dealing with them again. 1. The retention of the 'normal' interest means the LTV deterioration doesn't start until the loan matures, so that's good. But the fact that AC's fees now are invisible -- and IIRC the change to hide them predated October and the new AC system -- does mean that when the deterioration starts it does progress faster than the figures available to lenders would seem to indicate. Introducers' fees have been invisible for a long time but they also mean LTVs are higher than they might appear. 2. I don't understand the references to short-termism vs sustainabiity or fat cats. I do accept that AC have seeded the PF with their own capital, and that's a positive thing. But as soon as the spread between the 9.5+% interest received on the underlying loans and the 7% paid on the GEIA produces the funds to replace AC's seed money, AC can withdraw their seed money. (So the seed money really is just a loan from AC to the PF.) After that, the PF is funded by the spread. Once the PF has built up to the 5% level, any surplus of spread-generated funds over funds needed to cover defaults can flow straight to AC's bottom line. And if AC then get it wrong, it won't be their profit that's used to repay the losses, it'll simply be the case that the PF will be insufficient and lenders' losses will not be 100% covered by the PF. (I accept that this could be considered to be such a disaster that AC might voluntarily shore up the PF with another loan to allow it to provide 100% cover, but AC have not made a commitment to do that. RS have suggested that if their PF proved to be insufficient it probably would be fatal to their business.) 3. The point raised was that the B***** property was sold for 75% of its valuation, and that made sqh uncomfortable. What has that got to do with the introducer? Is andrewholgate suggesting that the introducers control the valuations? Surely the valuers are independent. Isn't that a fundamental principle of the business? If the introducers are somehow influencing the valuers to produce the values they would like to see then there's a major problem here!
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mikes1531
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Post by mikes1531 on Nov 21, 2014 1:57:39 GMT
I think it might be useful if we could see some generic contracts in this regard. (many papers I sure) But the Introducer so far hasn't done his job, he can't be paid if he never does do it, the deal has to successfully complete for him/her to get it's fees. IF he/she gets paid after this I'm gonna become an introducer. What exactly is the introducer's job? Isn't it to introduce a borrower and a lender to each other? Haven't they done that? Is their fee dependent on whether the loan is fully repaid? (However 'fully' might be defined.) Or is it payable just because the loan is made? I would have thought that the introducer is merely an intermediary or broker, similar to an estate agent, stockbroker, or dating agency. Their job is to bring both sides of a 'deal' together and help facilitate it. Whether the transaction has a successful conclusion months or years later might have nothing to do with whether they're considered to have done their job and earned their fees.
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Mike
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Post by Mike on Nov 21, 2014 9:12:19 GMT
What DD does AC do when it comes to an introducer?
Seems to me that the fault lies with AC for not checking up on them sufficiently in the first place - it's no good passing the buck to someone else if the choice to deal with them was your own.
I dislike the excuse we hear time-and-again: `the introducer was a badun and we won't be using him again' - that isn't a valid excuse; it should be a warning that they weren't vetted accurately in the first place by AC...
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Post by Ton ⓉⓞⓃ on Nov 21, 2014 16:13:04 GMT
I think it might be useful if we could see some generic contracts in this regard. (many papers I sure) But the Introducer so far hasn't done his job, he can't be paid if he never does do it, the deal has to successfully complete for him/her to get it's fees. IF he/she gets paid after this I'm gonna become an introducer. What exactly is the introducer's job? Isn't it to introduce a borrower and a lender to each other? Haven't they done that? Is their fee dependent on whether the loan is fully repaid? (However 'fully' might be defined.) Or is it payable just because the loan is made? I would have thought that the introducer is merely an intermediary or broker, similar to an estate agent, stockbroker, or dating agency. Their job is to bring both sides of a 'deal' together and help facilitate it. Whether the transaction has a successful conclusion months or years later might have nothing to do with whether they're considered to have done their job and earned their fees. No one really knows what the contract between the introducer and AC says. I'd guess there was a small initial thank you payment for each bridge deal that AC went for, perhaps a hundred pounds but less than 1k. After that I'd expect the real money would only pay out when the deal is satisfactorily completed i.e. the bridge would've moved to someone else's books or be term loan, this additional pay out to the introducer maybe fairly standard in contract terms (a %age), perhaps it's part of the exit payment or even more. It would be nice if AC could give us a pointer.
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Post by Ton ⓉⓞⓃ on Nov 21, 2014 16:19:10 GMT
What DD does AC do when it comes to an introducer? Seems to me that the fault lies with AC for not checking up on them sufficiently in the first place - it's no good passing the buck to someone else if the choice to deal with them was your own. I dislike the excuse we hear time-and-again: `the introducer was a badun and we won't be using him again' - that isn't a valid excuse; it should be a warning that they weren't vetted accurately in the first place by AC... Don't know, but AC took on Ken Purcha*se towards the end of last year. Though he doesn't seem to be in the TEAM at the moment, can I ask if Ken has moved on to greener pastures @andrewholdgate? And what direction is AC taking with regard to future bridges?
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Post by andrewholgate on Nov 24, 2014 10:06:46 GMT
3. The point raised was that the B***** property was sold for 75% of its valuation, and that made sqh uncomfortable. What has that got to do with the introducer? Is andrewholgate suggesting that the introducers control the valuations? Surely the valuers are independent. Isn't that a fundamental principle of the business? If the introducers are somehow influencing the valuers to produce the values they would like to see then there's a major problem here! They have no control over that.
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Post by andrewholgate on Nov 24, 2014 10:10:37 GMT
What DD does AC do when it comes to an introducer? Seems to me that the fault lies with AC for not checking up on them sufficiently in the first place - it's no good passing the buck to someone else if the choice to deal with them was your own. I dislike the excuse we hear time-and-again: `the introducer was a badun and we won't be using him again' - that isn't a valid excuse; it should be a warning that they weren't vetted accurately in the first place by AC... A fair comment. We undertake thorough DD on every party we use. Some people don't make the cut, some make it with reservation, some sail through. It is an on-going review procedure for all parties we use. In this case the initial relationship worked well but has since deteriorated. Whilst the broker has wanted to stay involved in the cases, there has been confusion created. Those that know me will know that if and when AC cocks up, I admit it. In this case, AC is not to blame.
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Post by andrewholgate on Nov 24, 2014 10:11:40 GMT
What DD does AC do when it comes to an introducer? Seems to me that the fault lies with AC for not checking up on them sufficiently in the first place - it's no good passing the buck to someone else if the choice to deal with them was your own. I dislike the excuse we hear time-and-again: `the introducer was a badun and we won't be using him again' - that isn't a valid excuse; it should be a warning that they weren't vetted accurately in the first place by AC... Don't know, but AC took on Ken Purcha*se towards the end of last year. Though he doesn't seem to be in the TEAM at the moment, can I ask if Ken has moved on to greener pastures @andrewholdgate? And what direction is AC taking with regard to future bridges? KP is still with us. We will still undertake bridging loans.
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Post by andrewholgate on Nov 24, 2014 10:13:21 GMT
What exactly is the introducer's job? Isn't it to introduce a borrower and a lender to each other? Haven't they done that? Is their fee dependent on whether the loan is fully repaid? (However 'fully' might be defined.) Or is it payable just because the loan is made? I would have thought that the introducer is merely an intermediary or broker, similar to an estate agent, stockbroker, or dating agency. Their job is to bring both sides of a 'deal' together and help facilitate it. Whether the transaction has a successful conclusion months or years later might have nothing to do with whether they're considered to have done their job and earned their fees. No one really knows what the contract between the introducer and AC says. I'd guess there was a small initial thank you payment for each bridge deal that AC went for, perhaps a hundred pounds but less than 1k. After that I'd expect the real money would only pay out when the deal is satisfactorily completed i.e. the bridge would've moved to someone else's books or be term loan, this additional pay out to the introducer maybe fairly standard in contract terms (a %age), perhaps it's part of the exit payment or even more. It would be nice if AC could give us a pointer. I'm not going to disclose commercial relationships on an open forum. Brokers are paid in line with the prevailing market rates and in some cases have ratchet fees depending on the success of the loan.
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bugs4me
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Post by bugs4me on Nov 24, 2014 12:13:42 GMT
Don't know, but AC took on Ken Purcha*se towards the end of last year. Though he doesn't seem to be in the TEAM at the moment, can I ask if Ken has moved on to greener pastures @andrewholdgate? And what direction is AC taking with regard to future bridges? <snip> We will still undertake bridging loans. Pleased to hear that andrewholgate. I know each case has to be based on it's individual circumstances - would it be more prudent though to look at 9-12 month BL's as the 6 month term does appear to be far too optimistic on the part of the borrower. Now, I appreciate in a perfect world, etc - but that's not how life is (normally).
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Post by andrewholgate on Nov 24, 2014 12:35:48 GMT
We are looking at that sort of solution
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