Property Loan 20 - Repaid in full after Default

Followup to the request from Orca Money - and to follow up the question from charliebrown over valuations.


My major concern here is also the valuations - and in respect of loan PBL056 also. In a thread centred on PBL 056 I made the following comments: these relate to valuations and also the information about the borrowers that is surely relevant and should be disclosed to some degree. P2P platforms rely on trust - investors must trust the information they are given since most of them do not have the time or resources or skill set to investigate every nook and cranny of Companies House (etc) in respect of every loan.

"Leaving aside for the moment what investors and potential investors were or were not told and when, and what they arguably should have been told, (see previous posts)no-one seems to have questioned the validity of the valuation - which was for £650k in August 2015. Now the site is for sale at £450k (and open to offers??). Lendy might well be funding the interest on the loan for 2 to 3 months (so it looked a reasonable short term investment at a time when the SM was very thin) but if these interest payments are ultimately to be taken from capital - and if the NET sales proceeds are significantly below the £450k figure (as they seem certain to be), where does that leave SS investors?


How can we rely on valuations if these are so far off the mark? Are they worth the paper they are written on? Granted values can change, key personnel may die and a business or building project can lose its way - these are risks investors must accept - but I would question £650k down to £450k or less within a year or so unless maybe all farmland has been similarly affected? It does not give confidence in other farm valuations?


The other general point is that if a borrower has a string of failed companies behind him, then we might be told. In other loan details we are told that (I paraphrase here) the borrower is 'a wealthy man, an highly experienced and successful property developer, a building surveyor with a 27 year history of developing similar sites', etc etc - so as to give prospective investors some extra degree of reassurance. If these 'positive' comments about borrowers are considered relevant to be included by SS in their information to lenders, maybe it could be argued that 'highly negative' characteristics of borrowers should be included by SS also - as an equally valid point of additional information upon which an investment decision could be based?"

The key point here is that if a borrower is decidedly dodgy, then the valuation should be based more on what the property or asset could be sold for in a very short time as a distressed sale, given that this is far more likely than for a borrower who has a proven and good track record.

Having scrutinised page after page of this thread (no mean feat..believe me), it appears that this is the most contentious point. Having checked the General Update message sent out by SS, with regard to the Ts&Cs change last year it looks like they may have covered themselves, read: 'Most existing loans will be transferred to the new structure after a period of consultation and consideration. We may not transfer those loans ending soon as it may not be worthwhile/commercial to do so.'


savingstream.co.uk/documents/newstructure.pdf

If Lendy/SS were negligent in obtaining and/or using valuations, does the question arise as to whether it is possible to contract out of negligence? The position on commercial contracts may be different to that in H&S legislation, for example. Do they owe lenders any duty of care?

From the selling agents............'full and final offers to be in our office by 5.00pm on Thursday the 3rd November 2016'.

Looks like they have taken it off again as the on offer amount has dropped back down.

I agree with the comments above, but suspect that SS are waiting to see what size of gap (if any!) before they plan the rules for dispensing cash.

Remind me of the comments from an election candidate on accepting the election results... 'if I win'

"Full and final offers by Thursday 3 November."

UPDATE a week ago:

Buyer pulled out; seeking other buyers. Offers being received between £1.2m and £1.5m. A tenant is looking to take over the site and will pay rent over the Xmas period with a view to purchase in the new year. All options are still on the table.

Original Valuation (Security Value) = £2,430,000

It will be interesting to see how much the pf covers.