p2pfan
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Post by p2pfan on Feb 20, 2020 15:57:30 GMT
Like many P2p lenders, I focus on lending to borrowers where there is a solid readily-sellable asset and that is usually mainstream residential property.
I've read a few scare stories about how, when properties are eventually sold by the administrators, after the borrower does not repay loans, lenders only get, say, 40% or 50% of the value of the property marketed by the P2P platform.
This is despite the properties having been lent to at, for instance, 70% LTV.
It's often a result of exaggerated valuations by valuers (very few of whom I've come across being held to account or their hyped-up indemnity insurance being received) and astronomical legal, administrative and other fees.
Most the properties I lend on are 70-75% LTV and I'm naturally worried if I may only get perhaps 50% of my money back.
I'm curious to know where, in incidences in which there has been a default in lenders' loan and the properties you've lent on have had to be sold, what ratios have been returned to you?
Obviously it's critical for most of us in the P2P lending field.
By the by, how long has the process taken until you eventually got your money back?
Thank you.
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Post by df on Feb 20, 2020 16:22:28 GMT
Like many P2p lenders, I focus on lending to borrowers where there is a solid readily-sellable asset and that is usually mainstream residential property. I've read a few scare stories about how, when properties are eventually sold by the administrators, after the borrower does not repay loans, lenders only get, say, 40% or 50% of the value of the property marketed by the P2P platform. This is despite the properties having been lent to at, for instance, 70% LTV. It's often a result of exaggerated valuations by valuers (very few of whom I've come across being held to account or their hyped-up indemnity insurance being received) and astronomical legal, administrative and other fees. Most the properties I lend on are 70-75% LTV and I'm naturally worried if I may only get perhaps 50% of my money back. I'm curious to know where, in incidences in which there has been a default in lenders' loan and the properties you've lent on have had to be sold, what ratios have been returned to you? Obviously it's critical for most of us in the P2P lending field. By the by, how long has the process taken until you eventually got your money back? Thank you. I don't think there is a formulae for this. Some sell quicker, but most drag on for ages. I recall my first p2p default (Lendy - Welsh castle) that has been sold returned approximately 50% of capital. I can't remember what advertised LTV was, but I usually doubled the stated LTV to assess the risk I'm taking. So if it is advertised as 70% I read it as 140%. The administration feed vary depending on each individual case.
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benaj
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Post by benaj on Feb 20, 2020 16:43:18 GMT
Like many P2p lenders, I focus on lending to borrowers where there is a solid readily-sellable asset and that is usually mainstream residential property. ...... By the by, how long has the process taken until you eventually got your money back? Thank you. Good question, let's look at real evidence. Kuflink recovery track record is good on bridging loans. Money recovered within 3 - 9 months without losses On the other hand, FS has mixed results. Some loans are recovered with full capital and interest, but money stuck with the administrators. Some loan recoveries (non mainstream residential property) suffered losses > 50%
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copacetic
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Post by copacetic on Feb 20, 2020 17:02:21 GMT
From what I can see RICS valuations aren't worth the paper they're written on in P2P for a number of reasons. 1. Most valuations include so many disclaimers that it would be impossible to hold them liable if you don't recover anywhere near the value in a default situation (e.g. we didn't conduct a structural survey gets them out of what should be obvious structural defects, Brexit around the corner so anything could happen to the market, residual valuations on developments where small changes in assumptions drastically affects value, etc) 2. The P2P platforms interests aren't aligned with yours. They want to lend as much money as possible to get their % fees so surprisingly the valuation comes out to be just enough to lend the borrower as much as they want. If the valuation is inflated a bit so it looks like an amazing LTV at first glance the lenders will lap it up. Reading some of the very helpful DD people do on here and comparing properties for sale nearby can curb this somewhat but I guess the majority of lenders naively trust the platform unfortunately. 3. Potential nefarious dealings between valuers and borrowers. I don't know how often this happens but I've suspected it in one case on FS specifically. What's to stop the borrower slipping the valuer a few quid to get a favourable valuation to defraud the lender? Only reason a platform would care is if they plan to be in business long term where in reality it seems that several platforms are just in it to make money while the going's good then walk away and let admins mop up whatever value is left over.
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p2pfan
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Post by p2pfan on Feb 23, 2020 14:56:22 GMT
From what I can see RICS valuations aren't worth the paper they're written on in P2P for a number of reasons. 1. Most valuations include so many disclaimers that it would be impossible to hold them liable if you don't recover anywhere near the value in a default situation (e.g. we didn't conduct a structural survey gets them out of what should be obvious structural defects, Brexit around the corner so anything could happen to the market, residual valuations on developments where small changes in assumptions drastically affects value, etc) 2. The P2P platforms interests aren't aligned with yours. They want to lend as much money as possible to get their % fees so surprisingly the valuation comes out to be just enough to lend the borrower as much as they want. If the valuation is inflated a bit so it looks like an amazing LTV at first glance the lenders will lap it up. Reading some of the very helpful DD people do on here and comparing properties for sale nearby can curb this somewhat but I guess the majority of lenders naively trust the platform unfortunately. 3. Potential nefarious dealings between valuers and borrowers. I don't know how often this happens but I've suspected it in one case on FS specifically. What's to stop the borrower slipping the valuer a few quid to get a favourable valuation to defraud the lender? Only reason a platform would care is if they plan to be in business long term where in reality it seems that several platforms are just in it to make money while the going's good then walk away and let admins mop up whatever value is left over.
Dynamite. Thank you! I agree that's RICS valuations are not worth the paper they're written on. I've not seen surveyors being held to account for valuations that were very significantly off the mark. I tend to lop off c. 10% from the valulations they give in their reports. The valulations tend to be overly-optimistic on P2P platforms. Any other P2P lenders with an insight into "real world" scenarios, where a borrower has defaulted and their property has had to be sold? I'd be curious to know how many pennies in the pound you got back.
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benaj
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Post by benaj on Feb 23, 2020 15:52:12 GMT
A lavish £13million riverside Swiss chalet was listed on the market in 2016, it has yet to be sold. I believe the asking price a few months ago is 21% of what it was asking in 2016.
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