mikes1531
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Post by mikes1531 on Jan 12, 2015 19:13:24 GMT
I'm not worried about the small loans defaulting and taking 3 months to auction providing FS continue their track record of making up the difference. : Can you explain what you mean by "making up the difference"? I have suspected that, on occasion, FS have dug into their share of sale proceeds in order to pay lenders all the interest they have accrued even though the actual sale proceeds might not have been enough to do that if FS had taken the full share they're entitled by the Ts&Cs to take first. (The bassoon loan is a good example of this.) If they have done that, then I'm very grateful, but I feel they should let us know they've done that so we aren't lulled into a false sense of security/success since they might not be able to afford to continue to do that if a large loan were to default.
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sqh
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Post by sqh on Jan 12, 2015 19:37:48 GMT
I'm not worried about the small loans defaulting and taking 3 months to auction providing FS continue their track record of making up the difference. : Can you explain what you mean by "making up the difference"? I have suspected that, on occasion, FS have dug into their share of sale proceeds in order to pay lenders all the interest they have accrued even though the actual sale proceeds might not have been enough to do that if FS had taken the full share they're entitled by the Ts&Cs to take first. (The bassoon loan is a good example of this.) If they have done that, then I'm very grateful, but I feel they should let us know they've done that so we aren't lulled into a false sense of security/success since they might not be able to afford to continue to do that if a large loan were to default. You have answered your own question. I agree that this policy wouldn't work with very large loans, but it could apply to medium sized loans as the platform grows.
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ramblin rose
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Post by ramblin rose on Jan 12, 2015 19:39:47 GMT
I'm not worried about the small loans defaulting and taking 3 months to auction providing FS continue their track record of making up the difference. Except we've already had at least one instance where an item did not make enough when sold to give us any interest at all, so they haven't always made up the difference. If we have to wait 3 months, that would be money tied up for 9 months with no interest if that were to happen again. I agree, these are small loans, but once a precedent is set who's to say it wouldn't happen on larger ones? I'd be more than happy with the excess interest, but the more the excess racks up, the less likely it is to make enough at sale to cover it, especially with LTVs as high as they are. Don't forget, with FS Ts&Cs, our interest comes way down the pecking order in what is due to be paid out.
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sqh
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Post by sqh on Jan 12, 2015 21:07:36 GMT
I'm not worried about the small loans defaulting and taking 3 months to auction providing FS continue their track record of making up the difference. Except we've already had at least one instance where an item did not make enough when sold to give us any interest at all, so they haven't always made up the difference. If we have to wait 3 months, that would be money tied up for 9 months with no interest if that were to happen again. I agree, these are small loans, but once a precedent is set who's to say it wouldn't happen on larger ones? I'd be more than happy with the excess interest, but the more the excess racks up, the less likely it is to make enough at sale to cover it, especially with LTVs as high as they are. Don't forget, with FS Ts&Cs, our interest comes way down the pecking order in what is due to be paid out. I fully understand your concerns about larger loans and I'm also concerned that some LTV's are quite high. I even think that the unwritten policy of "making up the difference" from default interest may encourage FS to allow the borrower higher LTV's than they should. It makes it easy for a borrower to default on an item that they don't really care about. What was the item that didn't pay any interest ? I joined in April 2014 and wouldn't have known about the bassoon, bike and MJ memorabilia if it wasn't for this forum. In fact, it was a thread on this forum suggesting that SS was "FS for Yachts" that got me started with P2P lending.
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mikes1531
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Post by mikes1531 on Jan 12, 2015 21:42:22 GMT
What was the item that didn't pay any interest ? : It was loan 1845919867, the £1400 loan secured on a 1998 Yamaha Thundercat motorbike valued at £2200. Considering that the LTV was below 65%, that loan might have been considered to be one of the least likely to fail to generate enough proceeds from the security sale to repay lenders in full. But apparently the bike market is firmer in the spring than it is in the autumn when the bike was auctioned. Perhaps fundingsecure need to take this into account when making bike loans in the spring. And this wasn't a case where the auction was long after the default -- the loan was due to repay on 27/Sep and the proceeds were distributed after the auction on 16/Oct. Or perhaps I should say we were told this is what happened. One of the areas where I think FS could be a lot more open and transparent would be if they would tell us who the auctioneer was and when the auction was being held so that we could go to the relevant website and see the result for ourselves. It also would be reassuring if FS could provide us with some sort of settlement statement that would show the sale price and all the relevant expense deductions so that we'd know exactly what happened. I have no reason to think FS are inventing transactions, but they're really supplying very little info we can use to verify what's going on. It's all a matter of trust on our part -- and we know what happened to investors who trusted Bernie Madoff!
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sqh
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Post by sqh on Jan 12, 2015 22:35:35 GMT
What was the item that didn't pay any interest ? : It was loan 1845919867, the £1400 loan secured on a 1998 Yamaha Thundercat motorbike valued at £2200. Considering that the LTV was below 65%, that loan might have been considered to be one of the least likely to fail to generate enough proceeds from the security sale to repay lenders in full. But apparently the bike market is firmer in the spring than it is in the autumn when the bike was auctioned. Perhaps fundingsecure need to take this into account when making bike loans in the spring. And this wasn't a case where the auction was long after the default -- the loan was due to repay on 27/Sep and the proceeds were distributed after the auction on 16/Oct. Or perhaps I should say we were told this is what happened. One of the areas where I think FS could be a lot more open and transparent would be if they would tell us who the auctioneer was and when the auction was being held so that we could go to the relevant website and see the result for ourselves. It also would be reassuring if FS could provide us with some sort of settlement statement that would show the sale price and all the relevant expense deductions so that we'd know exactly what happened. I have no reason to think FS are inventing transactions, but they're really supplying very little info we can use to verify what's going on. It's all a matter of trust on our part -- and we know what happened to investors who trusted Bernie Madoff! I thought the bike was repaid with interest. see p2pindependentforum.com/post/16320.
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ramblin rose
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Post by ramblin rose on Jan 13, 2015 6:36:41 GMT
sqh: It was loan 1845919867, the £1400 loan secured on a 1998 Yamaha Thundercat motorbike valued at £2200. Considering that the LTV was below 65%, that loan might have been considered to be one of the least likely to fail to generate enough proceeds from the security sale to repay lenders in full. But apparently the bike market is firmer in the spring than it is in the autumn when the bike was auctioned. Perhaps fundingsecure need to take this into account when making bike loans in the spring. And this wasn't a case where the auction was long after the default -- the loan was due to repay on 27/Sep and the proceeds were distributed after the auction on 16/Oct. Or perhaps I should say we were told this is what happened. One of the areas where I think FS could be a lot more open and transparent would be if they would tell us who the auctioneer was and when the auction was being held so that we could go to the relevant website and see the result for ourselves. It also would be reassuring if FS could provide us with some sort of settlement statement that would show the sale price and all the relevant expense deductions so that we'd know exactly what happened. I have no reason to think FS are inventing transactions, but they're really supplying very little info we can use to verify what's going on. It's all a matter of trust on our part -- and we know what happened to investors who trusted Bernie Madoff! I thought the bike was repaid with interest. see p2pindependentforum.com/post/16320. Different bike. See posts from here: p2pindependentforum.com/post/23888/thread. As mikes1531 says, it was October.
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mikes1531
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Post by mikes1531 on Jan 14, 2015 0:00:31 GMT
Thanks for that link, ramblin rose. Re-reading that thread reminded me of other questions I asked of fundingsecure that they never responded to, namely... My questions for fundingsecure are... - Can you confirm the bike was sold at auction?
- What was the selling price?
- What were the net proceeds from the auction after paying the selling and directly related fees?
- What would the 'hammer' price have had to be in order for FS to recover all its costs, and for everyone to have received all the interest and fees that they had accrued?
I ask these questions so that I can understand better what to expect from a security sale when a borrower defaults, and to be better able to judge whether or not a given LTV is likely to be appropriate for a given loan, and whether or not the proposed interest rate is commensurate with the default shortfall risks.
...and... The secondary market situation is more of a concern, most particularly because FS suggested months ago that they were working on that but have said nothing at all since. They have been asked here for an update more than once, but have failed to respond every time. How about it FS? A bit of info -- positive or negative -- is a lot better than being silent and letting everyone speculate. I do wish FS would be a bit more transparent. Their failure to address concerns raised here does not help build confidence in them at all. Meanwhile, I've made a mental note to avoid motorbike loans made in the spring unless they have a low LTV.
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sqh
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Post by sqh on Jan 14, 2015 3:39:03 GMT
Thank you for explaining that, I have been confused about this for quite a while. It is not surprising that the borrower defaulted, with 6 months interest of £310.80, winter approaching and an item that depreciates. Like Mike1531 says autumn is a bad time of year to sell a bike. Auction fees are about 10% and there would be a cost in getting the item to auction. It would be very useful to know what the breakdown of costs were. If you make an email request to Richard Luxmore at customer services, you should get an explanation.
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jlend
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Post by jlend on Jan 19, 2015 11:07:38 GMT
This was the email response I just got from FS:
In regards to Loan 341992004 - Solitaire Diamond Ring. We have given the borrower till tomorrow to make full payment or the loan will be defaulted. If the item was to default, we are confident we could sell the ring quickly and recoup sufficient funds to pay interest and capital back to investors.
In regards to loan 1095726259 - Rolex watch. The loan is in its 7 day window for the borrower to make payment. If funds have not been received after 7 days and there is no responses from the borrower we will default the loan.
The Solitaire ring was originally due on 7th December - but they were given a 30 day extension by FS.
A couple of quick questions for regular lenders with Funding Secure in case anyone knows.
I did drop an email to Funding Secure but they didn't reply.
30 Day extension I see some borrowers are given a "30 day extension".
Is there a specific clause in the T&Cs that covers this or is this just something that we have given funding secure permission to do as part of a general clause in the T&Cs?
I couldn't see a clause about this and assume we don't get a choice about lending our money for longer.
7 day window for default Clausen 7.3 in the T&Cs talks about defaulting the loan after "three days", but Funding Secure talks about 7 days in their communications. It's only a small difference but I was wondering where in the T&Cs the "7 days" comes from?
Thanks in advance for any information.
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Post by mrclondon on Jan 19, 2015 13:50:08 GMT
A couple of quick questions for regular lenders with Funding Secure in case anyone knows.
I did drop an email to Funding Secure but they didn't reply.
30 Day extension I see some borrowers are given a "30 day extension".
Is there a specific clause in the T&Cs that covers this or is this just something that we have given funding secure permission to do as part of a general clause in the T&Cs?
I couldn't see a clause about this and assume we don't get a choice about lending our money for longer.
7 day window for default Clausen 7.3 in the T&Cs talks about defaulting the loan after "three days", but Funding Secure talks about 7 days in their communications. It's only a small difference but I was wondering where in the T&Cs the "7 days" comes from?
Thanks in advance for any information.
FS are not unique in this regard - as a relatively new business model the p2p platforms need to tweak their business model from that first conceived to match more closely customer requirements (borrowers, lenders, and where applicable loan introducers). But then updating the T&C's to match gets overlooked.
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mikes1531
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Post by mikes1531 on Feb 15, 2015 5:09:05 GMT
Inasmuch as we don't seem to have received any input from fundingsecure here, I've sent them an email asking about 589148050. If I ever reported the response to my email, I can't find it, so here's what FS said on 13/Jan... I'm afraid my memory is rather hazy about exactly what happened next, but I would have said that the mid-Jan update indicated the rings would be auctioned in February. I bring this up now because I've just checked the loan's page and see that there's a note... I think that's a further delay, but I can't prove it because I don't have any record of the previous update. The bottom line is that this six-month loan is going to be approaching three months overdue by the time the security is sold. Since the loan started at a LTV of 71.4%, by the time the selling fees and FS's fees are considered, the sale price will have to be very near the full valuation for lenders to receive all the interest they've accrued. Watch this space!
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Post by mrclondon on Feb 15, 2015 11:28:04 GMT
Its perhaps worth noting that even LTV's substantially less than 70% can be a concern for assets that will take some time to sell.
The 24 lenders on a £13k fne art loan (41% LTV) which matured late November, received an email recently explaining as it would take some considerable time to dispose of the paintings individually (nobody wants the entire collection) there was a risk that the sale proceeds may not cover all the interest that continues to accrue (and indeed FS's fee which in this case they have opted to place behind lenders interest in the repayment order.)
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mikes1531
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Post by mikes1531 on Feb 15, 2015 11:59:04 GMT
Its perhaps worth noting that even LTV's substantially less than 70% can be a concern for assets that will take some time to sell. The 24 lenders on a £13k fne art loan ( 41% LTV) which matured late November, received an email recently explaining as it would take some considerable time to dispose of the paintings individually (nobody wants the entire collection) there was a risk that the sale proceeds may not cover all the interest that continues to accrue (and indeed FS's fee which in this case they have opted to place behind lenders interest in the repayment order.) I wasn't aware of the default mentioned by mrclondon. Can someone please supply the loan number? Yes, marketability is something that definitely needs to be considered. I am, however, really surprised and concerned that there's a risk of a 41% LTV loan not being completely covered by the security. Even if it took a year to sell the artwork, it shouldn't be necessary for it to fetch much more than 60% of the valuation in order to cover all the costs/fees that would have accrued. And if it can't fetch that even when given that much marketing time, then it really does call into question the value of valuations. 
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sqh
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Post by sqh on Feb 15, 2015 12:34:27 GMT
Its perhaps worth noting that even LTV's substantially less than 70% can be a concern for assets that will take some time to sell. The 24 lenders on a £13k fne art loan ( 41% LTV) which matured late November, received an email recently explaining as it would take some considerable time to dispose of the paintings individually (nobody wants the entire collection) there was a risk that the sale proceeds may not cover all the interest that continues to accrue (and indeed FS's fee which in this case they have opted to place behind lenders interest in the repayment order.) I wasn't aware of the default mentioned by mrclondon. Can someone please supply the loan number? Yes, marketability is something that definitely needs to be considered. I am, however, really surprised and concerned that there's a risk of a 41% LTV loan not being completely covered by the security. Even if it took a year to sell the artwork, it shouldn't be necessary for it to fetch much more than 60% of the valuation in order to cover all the costs/fees that would have accrued. And if it can't fetch that even when given that much marketing time, then it really does call into question the value of valuations. It's loan number 654474218. There are 14 paintings by the same artist. They will be sold individually rather than as a collection. Lenders money will be returned in stages. Assuming the valuation is correct then lenders would get capital, interest and default interest. Just to clarify, it's not 13k of fine art, it's modern art, the sort your children do at primary school.
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