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 Apr 29, 2020 12:59:50 GMT
However due to the rule change the burden falls on the AA lenders while the MLA lenders get a free ride.
By the way, your suggestion that "MLA lenders get a free ride" on Access Account lenders is ludicrous. There is no opportunity for MLA lenders to fund new tranches prior to draw-down (see my previous post) and MLA lenders will typically buy units of new loans (funded initially by the Access Accounts) within minutes of draw-down, assuming full capital risk immediately but at a significantly lower interest rate than the borrowers are paying AC. The enormous popularity of the Access Accounts has driven new loan rates available to MLA lenders down by at least 2-3% over the last 3 years, and pushed underwriters largely out of the picture altogether. My suspicion has always been that many (most?) Access Account lenders paid little or no attention to the loans their money was being invested into, ignoring all AC's risk warnings and lender appropriateness test questions in a blind rush to earn 4% "instant access" without questioning the risks they were taking. There's a reason why the typical rate on an FSCS-protected instant access bank deposit account is less than 0.1% !! AIUI MLA investors will also be paying the fee from their interest whereas access accounts will continue to receive the target rate as the fee will come from the margin between target rate and borrower rate.
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jlend
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Post by jlend on Apr 29, 2020 13:00:06 GMT
In normal conditions, my MLA strategy for development loans was - lend an initial amount (assuming the project looked OK), then add to it whenever the Credit Report and Monitoring Surveyor reports (that are issued at tranche drawdown) showed good progress. Hence as an MLA investment, I did buy into tranche draw-downs, though as SteveT says, could only do that in retrospect. I'm not following this strategy at the moment primarily due to a lot of developments having halted - hence there are no tranche draw-downs for those loans - not because of money dribbling out of access accounts. Thank you cb25 that is interesting, I am learning a lot. So am I correct in saying at the moment as a manual investor you would not buy into a tranche drawdown if offered it? Would you if offered the same terms as underwriters usually are? I am just curious to see what a few regular posters would do, of course you are free not to answer.
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jlend
Member of DD Central
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Post by jlend on Apr 29, 2020 13:07:14 GMT
By the way, your suggestion that "MLA lenders get a free ride" on Access Account lenders is ludicrous. There is no opportunity for MLA lenders to fund new tranches prior to draw-down (see my previous post) and MLA lenders will typically buy units of new loans (funded initially by the Access Accounts) within minutes of draw-down, assuming full capital risk immediately but at a significantly lower interest rate than the borrowers are paying AC. The enormous popularity of the Access Accounts has driven new loan rates available to MLA lenders down by at least 2-3% over the last 3 years, and pushed underwriters largely out of the picture altogether. My suspicion has always been that many (most?) Access Account lenders paid little or no attention to the loans their money was being invested into, ignoring all AC's risk warnings and lender appropriateness test questions in a blind rush to earn 4% "instant access" without questioning the risks they were taking. There's a reason why the typical rate on an FSCS-protected instant access bank deposit account is less than 0.1% !! AIUI MLA investors will also be paying the fee from their interest whereas access accounts will continue to receive the target rate as the fee will come from the margin between target rate and borrower rate. Thanks ilmoro. I assume you mean the new 0.9% lender fee? Sorry if not. So as far as you know the access account holders won't see a reduction in interest paid to them, there will just be a little bit less interest feeding into the PFs?
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cb25
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Post by cb25 on Apr 29, 2020 13:11:23 GMT
In normal conditions, my MLA strategy for development loans was - lend an initial amount (assuming the project looked OK), then add to it whenever the Credit Report and Monitoring Surveyor reports (that are issued at tranche drawdown) showed good progress. Hence as an MLA investment, I did buy into tranche draw-downs, though as SteveT says, could only do that in retrospect. I'm not following this strategy at the moment primarily due to a lot of developments having halted - hence there are no tranche draw-downs for those loans - not because of money dribbling out of access accounts. Thank you cb25 that is interesting, I am learning a lot. So am I correct in saying at the moment as a manual investor you would not buy into a tranche drawdown if offered it? Would you if offered the same terms as underwriters usually are? I am just curious to see what a few regular posters would do, of course you are free not to answer. If the development project was still being worked and the work and finances looked good then, yes, I might buy into a drawdown. I have no idea what terms underwriters get, but doubt MLA lenders get the same because I'd guess the underwriters are probably under an obligation to buy a certain amount of the loan whereas MLA investors aren't. All lenders can see the rate a loan offers in the MLA market.
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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 Apr 29, 2020 13:48:01 GMT
AIUI MLA investors will also be paying the fee from their interest whereas access accounts will continue to receive the target rate as the fee will come from the margin between target rate and borrower rate. Thanks ilmoro . I assume you mean the new 0.9% lender fee? Sorry if not. So as far as you know the access account holders won't see a reduction in interest paid to them, there will just be a little bit less interest feeding into the PFs? Yes, the new lender fee. The FAQ seems to imply target rates will be paid as normal and the original comms from Stuart also seem to indicate that. Im sure Ive read somewhere a more specific statement to that effect but I cant find it currently. Guess we'll find out Friday, (or is it applied from Friday so wont impact access accounts until 1/6)
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Post by honda2ner on Apr 29, 2020 14:06:47 GMT
In normal conditions, my MLA strategy for development loans was - lend an initial amount (assuming the project looked OK), then add to it whenever the Credit Report and Monitoring Surveyor reports (that are issued at tranche drawdown) showed good progress. Hence as an MLA investment, I did buy into tranche draw-downs, though as SteveT says, could only do that in retrospect. I'm not following this strategy at the moment primarily due to a lot of developments having halted - hence there are no tranche draw-downs for those loans - not because of money dribbling out of access accounts. Thank you cb25 that is interesting, I am learning a lot. So am I correct in saying at the moment as a manual investor you would not buy into a tranche drawdown if offered it? Would you if offered the same terms as underwriters usually are? I am just curious to see what a few regular posters would do, of course you are free not to answer. Curious to know what sort of rates underwriters were offered, any of them about that care to comment? As already mentioned the lender and borrower interest rates are shown in the MLA and I'm guessing from the often substantial discounts that underwriters used to offer that AC used them as a loss leader to get the bigger loans out the door, possibly higher than the borrower pays as it's only for a very short time. Suspect underwriters might not be keen to buy back in, partly because AC took the decision to ride the AA gravy train (which is now a smoking wreck) instead of them and, ahem, risks have changed somewhat. If I were an underwriter swinging a million or two about I would want some eye watering discounts or a massive reduction in risk. CBIL anyone... How is the CBIL accreditation going? Perhaps AC could comment with a few milestones achieved, yet to achieve and some very rough gut feeling on how long each one takes? Perhaps this is worthy of a new thread as we are a very long way off topic now!
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dead-money
Rocket to the Moon
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Post by dead-money on Apr 29, 2020 14:08:11 GMT
"Right now I obviously can't even see what I would be investing in without investing... which always seemed strange to me. I have no idea what the current breakdown of loans is now I have left. Somewhat ironic for potential new lenders looking at the accounts. "
It didn't use to be that way. Now even when you have several access account holdings, unless your cumulative holding is above a pound you are disenfranchised.
But yeah how can you perform due diligence and put a value on distressed debt if you aren't able to see how AC have handled previous defaults ? My MLA loans have been filtered on specific criteria and to date have suffered no defaults. The Black box accounts, including the Access accounts by the nature of things just seem to gravitate towards the junk end of the market and accumulate increasing numbers of zombie loans.
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alender
Member of DD Central
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Post by alender on Apr 29, 2020 14:09:11 GMT
AIUI MLA investors will also be paying the fee from their interest whereas access accounts will continue to receive the target rate as the fee will come from the margin between target rate and borrower rate. Thanks ilmoro . I assume you mean the new 0.9% lender fee? Sorry if not. So as far as you know the access account holders won't see a reduction in interest paid to them, there will just be a little bit less interest feeding into the PFs? I thought the 0.9% would be added to AAs, however if it comes out of the PF (which I suspect will be overwhelmed by this crises) the AA lenders will pay this fee but in a different way.
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Post by investor01010101 on Apr 30, 2020 19:26:07 GMT
In the midst of a social and financial crisis affecting every single institution and business, do you not feel that your self-absorbed vendetta and your repetitive attacks on the company are unhelpful and unwarranted at this time It seems that your narrow minded approach has blinkered you from seeing and understanding what is happening in the real world. Maybe have some patience and understanding and give the company some grace to sort this mess out then take a view in a few months time. In your personal vendetta, I believe that you may have lost sight of what ALL investors want which is Assetz Capital management being able to dedicate all their efforts in difficult times to resolving the current problems and bring about a return to normality as soon as can be achieved for all of us. With respect, your approach is a distraction. FYI I am, and intend on remaining, an investor with near to £300k invested. I am wondering why you think AC management will sort out anything other than to their own benefit. You only have to look at how they "manage" bad borrowers to see that investors are way at the bottom of any considerations they have. They really don't care, one loan for example has paid no payments in over two years with a month on month extension because AC are too dumb to admit they have been had over by someone who already failed to pay back the previous lender and then borrowed our money from AC to cover it and started the rinse cycle all over again. If somebody feels they have a legitimate complaint and want to raise it it that's up to them and lets face it AC are not exactly the most transparent organisation. They are using this crisis to their own ends not for your benefit in any way. It could be equally argued that your blinkered approach to your upcoming 300k loss is clouding your judgement about what others believe is unfair. And not all investors want AC management to sort this out, I would prefer they left, today, and let someone else in to clear up this mess. Perhaps someone who knows what they are doing.
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