loan updates

I think I remember seeing this info before, but there's a chance that FS are doing it more often now.  In any case, it's most welcome, and will no doubt reduce the number of 'What's going on?' questions that FS customer service have to answer.

fundingsecure:  One thing that would make these updates even more useful would be for there to be a flag on my list of loans indicating that an update had been put on that loan.  That would save me having to check each of my loans regularly to see if there's any new info.  And better still would be if the flag showed the date of the most recent update, so that I could tell whether I had already seen it or not.

A couple of small opportunities -- £25 maximum -- are available at the moment.

I don't think so.  I certainly didn't get one.  I just happened to go to the website to check on the progress of the yacht loan and noticed there were a couple of new additions to the list.

AIUI, FS don't announce loans that are this small -- both were under £800.  There's not a lot of point -- they'd fill up instantly if the start time was announced in advance, and that would end up upsetting more people than they'd make happy, especially those who make deposits in anticipation of the opportunity and then don't manage to make an investment.  I expect most people wouldn't be too concerned if they missed out on an opportunity for a £25 investment.

Welcome aboard merlin.Good to have you here.Happy Christmas

Actually, the LTVs are, in my opinion, often a bit high, and this has been proved to be the case on a number of defaults.  One default did not manage to realise enough value to pay us any interest after 6.5 months (we don't know what value was realised, so have no idea whether we would have lost capital without any generosity from FS).  In several other cases FS generously chose to pay us capital and interest after defaults, even though we would otherwise have realised losses, and we cannot rely on that.  Small items at 70% LTV (in some cases slightly more) are at particular risk, so I would take care there.  All that said, many of the larger loans have much better LTVs, and as sqh says, it's easy enough to do your own evaluation.

I would add to that the problem that you are locked in to a defaulted loan until the item is sold off.  With the typical items that might only be a month or two and not such a problem, but there are now property bridges on this platform.  merlin already knows how long they take to sort out after their 6 month term is up, even when the borrower isn't intending to default.  It is yet to be seen how FS will handle the mess that might ensue when these property loans are supposed to mature.  On other platforms offering property bridges you typically have a SM via which you can get your money out after the time you intended to tie it up AND/OR a considerably higher default rate of interest which helps the SM function.  FS haven't offered anything along these lines yet, so you are potentially taking on your risk here for a considerably longer time than the headline dates - and usually for a lower interest rate.  I'm still a huge supporter of FS, but I'm not going near their property loans until such time as there is an SM and we see how they handle the redemption process.

The problem is that we only know what FS tell us, and there's no way to verify that.

With the MJ items, we're pretty sure a loss would have been sustained, and FS decided that would have been bad news for the platform, so they didn't sell the items and repaid the lenders out of their own pocket.

With items sold at auction, FS ought to be able to direct us to the auction house's website where we could see for ourselves what happened, but they've chosen not to do that, so we're left guessing.  Even when FS tell us that the sale brought in enough to cover all capital and accrued interest, we don't know if they've also recovered all they were owed, or whether they sacrificed some of that in order to prevent their investors from losing out.  If they did that, I'm most grateful, but I feel they ought to admit that's what happened, so we aren't deluded into thinking the picture is rosier than it really is.

The musical instrument is an odd one.  FS told us where it was for sale, and we could see it on the seller's list of available items.  After a while, FS told us that it hadn't sold through that channel but that they had arranged a private sale at a lower price than the dealer was asking and that was enough to repay lenders all that they were owed.  That should have been the end of it, but the numbers don't add up as, based on FS's published rates for borrowers, it would have taken a sale that netted the dealer's asking price to cover the costs.  Questions have been raised here in the forum, but FS have chosen not to respond.  And to top it all off, the dealer still is showing the instrument for sale.

I personally think FS are using their own resources to keep losses from affecting their investors and damaging the platform's reputation/track record, but I have no real evidence of that.  If FS can continue to do that, then that's great.  But if they can't, and it all ends in tears...

One thing we can hope is that the experience that FS are gaining from the sales of items the borrowers have abandoned will guide their valuations and the LTVs they're willing to allow.  To the extent that helps prevent future losses, the long-term result could be positive.

I'd be most curious to know how the valuations are done for the small loans -- like the two this week -- sourced via FS's jeweller network.  It would be really nice if those values were related to agreed purchase prices by the jewellers.  (Do those jewellers hold the security during the loan period?)  Then if the borrower were to fail to redeem FS would have an automatic sale arrangement, it would happen reasonably promptly, and there'd be minimal risk of loss.  But that's probably wishful thinking on my part.