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Post by batchoy on Feb 9, 2014 20:47:28 GMT
Badger - I think you've misunderstood the Wellesley system. It's not like Ratesetter - much simpler. You commit funds for a fixed term at a fixed rate. Wellesley do the matching and your money is lent to them. How this works with defaults I don't know - whether a default is shared across all investors or whether your money is nominally linked to a loan - I suspect the former but this needs to be clarified. You earn interest from the day you commit funds. As I understand Wellesley has already lent their money to the borrowers in asset/security backed loans. When you invest money in one of the bonds your funds are then assigned against the Loans in this pool so there is no point in attempting to stagger bids to get different loans as Wellesley handle the assignment and at the moment there are only 23 active loans (though the number is steadily growing). If a borrower defaults the assets/securities are realised and used to settle the loan, should there then be a shortfall in funds this is then picked up by the provision fund.
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Post by chielamangus on Feb 10, 2014 13:13:53 GMT
Batchoy - Well, I have been through the website and it is still unclear what happens in the event of a default. If you look at the Provision Fund you will see that only half of the investors' money qualifies for support from the Fund. Nor is it clear who has priority access to this Fund - Wellesley itself or its outside investors. Rum.
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Post by bengilbert on Feb 10, 2014 13:38:37 GMT
I hope Wellesley will come in to confirm this or not, but from what they've written before:
-If there's a default, the asset is sold to cover the outstanding loan. -If the sale proceeds don't cover the loan, the losses will first come out of whatever part of loan Wellesley are still holding (at present, about 20% of total loans, though I don't know what their target is for this figure to settle at). -If there are still losses to p2p lenders after Wellesley have been wiped out on the loan, the provision fund will cover them if it can.
If all works the way they describe it, that sounds like strong security to me.
I also don't know why some p2p lender funds aren't covered by the provision fund, I hope they'll explain this soon.
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Post by wellesleyco on Feb 10, 2014 14:08:45 GMT
Good Afternoon all, chielamangus I shall clarify for you what happens in the event of a default, where the Wellesley & Co retained loan parts stand, and why not all the P2P lenders Funds are eligible for the Provision Fund. batchoy and bengilbert you are correct that in the event of a default, the underlying asset upon which the loan is secured is taken charge of and then sold in order to recover the debt. If the sale proceeds don't cover the loan, the Provision fund would step in. This is unlikely to happen as the average Loan-to-Value is 66% therefore allowing us some margin in order to achieve a sale without losing what we have lent. The portion of each loan that Wellesley retain is sub-ordinated below our platform lenders. Therefore if the sale did not cover the losses, the platform lenders would be paid back first and Wellesley does not get any money back until all lenders have been repaid in full. The reason that not all of the lent funds are eligible for the provision fund is because we have some lenders who are institutional users and as such do not have a call on the provision fund in the case of default. These are a separate class of investor who do not use our website to make investments and instead it is done by individual agreement. I can confirm that every client who uses our website for lending is eligible for the provision fund and that will not change. The reason we do this is to ensure that our provision fund has the greatest amount of money available to serve our customers without dilution. Please do keep the discussion going with any more questions and speak up if anything is still unclear!
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Post by badger on Feb 10, 2014 16:39:16 GMT
chielamangus - no, I do understand the Wellesley system! I'm looking under the bonnet and I understand the matching process, but I didn't know how 'dynamic' it is. The answer is in batchoy's post - they've been going about 3 months I think, so 23 loans averages at 2 per week. I see they also have a Credit Committee which approves loans, I don't know how often this meets - once a week? Anyway, my toe-dipping funds are still 0% loaned so presumably they are waiting for borrowers, though I'm happy to be getting interest.
As to how defaults are handled, they are clearly not shared across all investors - your money isn't 'nominally linked to a loan', it is actually lent! If a borrower defaults, then only those investors who are matched to that loan share the default and have to apply to the Provision Fund.
I think Wellesley's promises and intentions look good, however if I were to invest a large sum I would still want to diversify across multiple loans, rather than have the whole amount hanging on a discretionary fund. You can't be too careful.
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Post by batchoy on Feb 10, 2014 17:04:34 GMT
Anyway, my toe-dipping funds are still 0% loaned so presumably they are waiting for borrowers, though I'm happy to be getting interest.
Interesting, so it would appear that Wellesley have reach the point where they have more lender funds than loans, which is potentially not a good place to be for any length of time, but with their model it is always going to be a three way balancing act between having borrowers wanting loans, enough internal funds to lend to those borrowers and lenders with funds invest and release the internals funds for more loans. Hopefully there are more loans in the pipeline.
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oldgrumpy
Member of DD Central
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Post by oldgrumpy on Feb 10, 2014 17:18:43 GMT
"Anyway, my toe-dipping funds are still 0% loaned so presumably they are waiting for borrowers"
How do we find that out? My little toe went in last week, and all I can see is the fact that the money is there for 18 months and matures on 29.1.2015 . The rest of my left foot might be getting wet later this week.
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Post by batchoy on Feb 10, 2014 17:32:18 GMT
"Anyway, my toe-dipping funds are still 0% loaned so presumably they are waiting for borrowers"
How do we find that out? My little toe went in last week, and all I can see is the fact that the money is there for 18 months and matures on 29.1.2015 . The rest of my left foot might be getting wet later this week.
Account summary > Portfolio Breakdown> On Loan (third column from the right) shows the amount and percentage lent. In my case they all went immediately to the amount and 100%
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Post by batchoy on Feb 10, 2014 17:39:54 GMT
I'm curious to know if anyone that has subscribed has a variation to "£0.00 (0.00%)" displayed under their Dashboard "On Loan" column? Yup, I have three investments all showing the full amount and 100%
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oldgrumpy
Member of DD Central
Posts: 5,087
Likes: 3,233
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Post by oldgrumpy on Feb 10, 2014 17:52:01 GMT
batchoy
Oh yes. Thank you. It's gone straight to 100% too.
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Post by batchoy on Feb 10, 2014 18:18:51 GMT
So if investments aren't going out on loan, it looks like Wellesley are retaining about 22.5% of loans, which is comforting since they will have an incentive above and beyond fees to ensure payments are made on time and debts collected.
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Post by chielamangus on Feb 10, 2014 19:35:22 GMT
Beg pardon, Badger! My understanding is obviously incomplete. However, Wellesley are filling me in. Because my money was immediately "loaned" I assumed all monies were loaned immediately - but to Wellesley. Which they are as well! I understand that our money is or will be linked to/invested in all loans, so we will all have a share in any default though Wellesley take first hit (if hit there is) and the Provision Fund is there to provide back up for us. So Wellesley undertake the risk-spreading for us which is fine by me.
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Post by bracknellboy on Feb 10, 2014 20:23:24 GMT
talking about toe dipping (someone was: though I think a Silver Back's toe might be a it larger than the norm), is the only way to transfer money in via standard BACS transfer, and is W setup for faster payments do we know ?
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Post by batchoy on Feb 10, 2014 20:35:16 GMT
Yes and Yes
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Post by bracknellboy on Feb 10, 2014 20:54:57 GMT
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