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Post by aidanw on Nov 29, 2020 8:49:51 GMT
My payout was over 5% of outstanding loans. Looks like I've got a right bunch of delinquents on my books. Brace-brace-brace.
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Dec 1, 2020 13:06:29 GMT
45p in my case. Not sure what that equates to in percentage terms. I've been running down for three years and less than 100 quid left, some of which is lingering unlent awaiting withdrawal. Looks like about 0.5%. They said that the funds will be allocated according to their estimation of risk of the loans in individual portfolios. So presumably your 100 quid are not very risky. Following my regular monthly log in, I have worked it out now. It equates to approx. 0.6% of my current amount lent.
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jane
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Post by jane on Dec 30, 2020 16:52:04 GMT
We received our final Safeguard payout in November which i guess has now run the fund dry and nothing was left for Zopa to take for themselves.
From Zopa's Safeguard policy:
So does this mean that on all outstanding loans the borrower will be paying (as part of their interest rate) a loan servicing fee that was designed to go to the Safeguard fund. And as we have now had our Final payment, this will now instead be going straight to Zopa coffers? Or have i got this wrong?
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aju
Member of DD Central
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Post by aju on Dec 31, 2020 10:22:00 GMT
We received our final Safeguard payout in November which i guess has now run the fund dry and nothing was left for Zopa to take for themselves. From Zopa's Safeguard policy: So does this mean that on all outstanding loans the borrower will be paying (as part of their interest rate) a loan servicing fee that was designed to go to the Safeguard fund. And as we have now had our Final payment, this will now instead be going straight to Zopa coffers? Or have i got this wrong? I'm guessing not as, unlike RS, Zopa does not show the borrower fees to us as lenders only Zopa knows this. Have you asked Zopa for a comment on this aspect as yet?. I'm not sure anyone here will be able to answer directly unless they have asked Zopa themselves. It's an interesting slant though and I suspect that Zopa might suggest that most loans are complete and the amounts involved were not that great. Ultimately for those SG loans that subsequently fail then we will bear the brunt, who knows Zopa's slant at the time was that any loans left will be a long way through their cycle and the returns make up for the loss!. We still have quite a few active loans originally covered by SG so I guess time will tell from a loss standpoint. Apparently the fund we were paid from the outstanding SG was designed to cover that too but I'm not sure that would be the case for our loans who knows!
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Greenwood2
Member of DD Central
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Post by Greenwood2 on Dec 31, 2020 15:22:17 GMT
We received our final Safeguard payout in November which i guess has now run the fund dry and nothing was left for Zopa to take for themselves. From Zopa's Safeguard policy: So does this mean that on all outstanding loans the borrower will be paying (as part of their interest rate) a loan servicing fee that was designed to go to the Safeguard fund. And as we have now had our Final payment, this will now instead be going straight to Zopa coffers? Or have i got this wrong? Only a proportion of the fees were destined for the SG, amount to be determined by Zopa (see below). Section 5 (below) also gives all the caveats, including the current scenario. I guess the answer is yes there may be small amounts that might have been destined for the SG, but since it was no longer able to cover future losses they decided to wind it down. As Aju said might be worth asking Zopa. ......
Origination and loan servicing fees
When a borrower is approved for a Zopa loan they pay an origination fee which covers the cost of originating the loan including operational, technology, direct acquisition and credit bureau costs. They also pay an ongoing loan servicing fee as part of their interest rate. This covers the ongoing maintenance of the technology platform and servicing the loans. For eligible loans, these fees will also include a contribution to the Safeguard Fund.
In order to fund the Safeguard Fund (where applicable to a Loan Contract), Zopa will pay to a proportion of the origination and servicing fee estimated by Zopa to reflect:
the potential for a default under each relevant Loan Contract, based on the credit risk assessment applicable to the Borrower under the Loan Contract; andthe potential for a default under each relevant Loan Contract, based on the credit risk assessment applicable to the Borrower under the Loan Contract; and
an assessment of whether there are sufficient funds in the Zopa Safeguard Trust.
The proportion of the origination and servicing fee due to the Zopa Safeguard Trust is then paid from Zopa’s own funds to the segregated bank account maintained by P2PS Limited with a UK bank for the sole purpose of holding funds to which Investors are beneficially entitled under the provisions of the Zopa Safeguard Trust.
At the beginning of each month, the above contributions are made to the Safeguard Fund to cover future expected net losses. The contributions are made as a combination of one large up-front payment (origination fees) and smaller monthly payments (loan servicing fees). The funding amount for each loan vintage is based upon the current coverage ratio of the Safeguard Fund as well as the expected net losses of the originated loans.
...... 5. Deciding when to exercise discretion to pay-out from the fund.
The Trustee has absolute discretion whether to approve or decline a claim against the Safeguard Fund, in whole or in part, for any reason so long as it acts as reasonably as a prudent trustee in its position acting reasonably would act.
The Trustee intends to approve each claim against the Safeguard Fund. However, in exceptional circumstances it may choose not to approve a case or may only approve part of it in order to protect the fund.
Safeguard may not be able to approve a claim in full where the fund drops below 100% coverage. Non-exhaustive example scenarios of when this may happen:
Where historical losses being higher than expected at origination and there are insufficient funds committed to cover future expected losses
Where recoveries against defaulted loans have been lower than expected for a significant time period e.g. due to credit worsening of the portfolio
Where future losses are expected to be higher than intended for a significant period of time e.g. due to a sustained worsening in the macroeconomic environment, such as a financial crisis
Where Zopa enters into insolvency and future committed cash into the fund is no longer possible
In each of these scenarios, the Trustee will consider whether coverage can be returned to 100% within a reasonable timeframe through Management action (e.g. commitment of additional funds). Based on this assessment, the Trustee will make one of the following decisions:
Safeguard should continue to pay out in full in the meantime
All future claims on the Safeguard Fund should be partially reimbursed
All future claims on the Safeguard Fund should be frozen until Management action has been taken to improve the coverage ratio
The Safeguard Fund should be fully liquidated and wound down with all covered investors partially reimbursed for future expected losses against their portfolio.
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