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Post by solicitorious on Mar 9, 2015 13:31:34 GMT
Quite similar.  Or would you prefer it to go the other way?  |
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Mar 9, 2015 14:09:19 GMT
solicitoriousThese graphs show a best case scenario. If the company stops trading, the first charge leasehold can be cancelled thereby rendering it worthless. Lenders who don't read the CR may not be aware of this. Therefore, I would suggest that the Real LTV should not include the first charge. IMO, this is why the interest rate is higher than would be expected.
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Post by solicitorious on Mar 9, 2015 14:20:39 GMT
sqhYou'll have to explain that with an example. I thought 1st and 2nd Charges (here at least) were over bricks and mortar owned by the borrower?
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jonno
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nil satis nisi optimum
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Post by jonno on Mar 9, 2015 14:25:28 GMT
solicitoriousThese graphs show a best case scenario. If the company stops trading, the first charge leasehold can be cancelled thereby rendering it worthless. Lenders who don't read the CR may not be aware of this. Therefore, I would suggest that the Real LTV should not include the first charge. IMO, this is why the interest rate is higher than would be expected. IIRC didn't AC state that they would put in an operator to prevent breaking the terms of the leases prior to finding a buyer?
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Mar 9, 2015 14:32:14 GMT
sqhYou'll have to explain that with an example. I thought 1st and 2nd Charges (here at least) were over bricks and mortar owned by the borrower? Read page 13 of the full Credit Report of loan #66.
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
Posts: 1,428
Likes: 1,212
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Post by sqh on Mar 9, 2015 14:33:57 GMT
solicitoriousThese graphs show a best case scenario. If the company stops trading, the first charge leasehold can be cancelled thereby rendering it worthless. Lenders who don't read the CR may not be aware of this. Therefore, I would suggest that the Real LTV should not include the first charge. IMO, this is why the interest rate is higher than would be expected. IIRC didn't AC state that they would put in an operator to prevent breaking the terms of the leases prior to finding a buyer? But "Real LTV" is designed to consider a worst case scenario.
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Post by solicitorious on Mar 9, 2015 14:56:00 GMT
sqhYou'll have to explain that with an example. I thought 1st and 2nd Charges (here at least) were over bricks and mortar owned by the borrower? Read page 13 of the full Credit Report of loan #66. OMFG...  Adjusted for this eventuality 
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Post by jevans4949 on Mar 10, 2015 0:29:56 GMT
I stayed clear of #66 before getting to page 13. Pouring money into the same business after they walked away from a previous loan?
Best of luck to all who sail in her.
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Post by mrclondon on Mar 10, 2015 13:08:28 GMT
Does that graph say that if 100% of the value of the "hard" assets were recovered, then that would cover 40% of the capital lent? Thats indeed what the graph shows. Given the mitigation that AC would appoint a third party management company to ensure the leases were not reclaimed by the landlord, that final graph shows a worst case scenario which has a probability of close to zero. Graphs such as this are only analysing one part of the risk matrix (severity of outcome) and miss the other important consideration (probability of outcome). I said on another post yesterday that there is a danger on concentrating too heavily on hard assets, loan #66 is a good example where the 13.5% yield seems to represent a pretty fair risk premium IMO.
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