rogedavi
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Post by rogedavi on Feb 21, 2020 16:57:52 GMT
Just received a marketing email via unbolted for Onstep Homes. The idea is to finance the purchase of a house (+fees/taxes) via an SPV financed with 3 tranches. - 70% 7yr fixed rate 3.25% interest only mortgage
- 20% investor equity, which pays a 3% coupon linked to inflation and any increase/decrease of the property price paid at redemption (7yr).
- 10% borrower equity (presumably subordinated to the above), no coupon (use of the house, maintenance costs) and any increase/decrease of the property price paid at redemption (7yr); option to buy after 5yrs at market price.
So you can either be the banker, or the bank of mum & dad type property speculator. Lots of stuff going on there but the idea seems interesting enough that it was worth half an hour of thought on a Friday afternoon. First thoughts - The fees/taxes (and renovations in there transaction example) are included in the financing so as equity investor your MtM day 1 would be negative.
- The mortgage part might as well just be securitized.
- Lots of questions raised in my mind about what happens at the end of 7yrs, defaults, diversification & secondary markets.
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benaj
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Post by benaj on Feb 21, 2020 17:18:32 GMT
Absolutely creative. Stepping on the ladder without a mortgage and rent it. If house prices increase after 5 years, it will cost more to buy it.
On the other hand, if the houses price decrease, it will be cheaper to own it later. May be it's a safe bet as a lender in this case.
The difficult scenarios -
I. The tenant can't pay
a) loss of interest if forbearance options exhausted
b) not sure how easy it is for tenant to sell their equity to cover rent in arrears
II. Ownership
a) who owns the property during the tenancy
b) The tenant has the right to buy after 5 years. Can the owner refuse to sell the property after 5 years if property market crashes?
III Platform risk
A third party back-up servicer would take over and would everything same as normal when onstep cease to trade in the process of liquidation.?
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greatmarko
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Post by greatmarko on Feb 27, 2020 16:31:23 GMT
Just before Lendy collapsed, they launched a "Lendy Wealth" product... Just before Funding Secure collapsed, they launched a "30 day access account" product... It kinda set alarm bells ringing (for me at least) when an existing platform launches a "new venture under the same umbrella", given the current P2P climate...  |
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benaj
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Post by benaj on Feb 27, 2020 16:34:52 GMT
Just before Lendy collapsed, they launched a "Lendy Wealth" product... Just before Funding Secure collapsed, they launched a "30 day access account" product... It kinda set alarm bells ringing (for me at least) when an existing platform launches a "new venture under the same umbrella", given the current P2P climate... But this is a completely different name? Unlike Lendy Wealth, a different type of customer looking to step on the ladder without owning the property.
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Mousey
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Post by Mousey on Feb 27, 2020 19:35:17 GMT
Just before Lendy collapsed, they launched a "Lendy Wealth" product... Just before Funding Secure collapsed, they launched a "30 day access account" product... It kinda set alarm bells ringing (for me at least) when an existing platform launches a "new venture under the same umbrella", given the current P2P climate... There's nothing actually wrong with a 'black box' style product - take a look at the popular Assetz access accounts.
Of course OnStep isn't anything like that style of product.
I take the opposite view that it's reassuring it has been launched under the same Open Access Finance Ltd vehicle as unbolted as it shows a commitment to the platform - unlike Liam Brooks and Rob Kelly's departure into Copious Capital/Pay Me Today a few months before Lendy went into administration.
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