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Post by elljay on Feb 22, 2015 16:03:53 GMT
I received several "All owed funds should now be transferred into your account." emails from FS during the week. Looking at my Investment History I now discover that "owed funds" is not the same as "expected funds", so I'm a just a tad disappointed that FS didn't alert me that one of my loans had defaulted and I've received less capital than I invested and no interest. I always thought if an item didn't hit the reserve and was unsold you were free to take it back and try again, somewhere else if need be. If that isn't the case I'd like to put myself forward as the primary outlet of unsold goods. 25% of initial valuation should cover it. The Ts&Cs say that FS must try to auction first (7.3.3.x), then "if the asset is not sold at auction" (7.4) - FS settle the auction "at the reserve price" and then either try to find a private buyer or sell at another auction. I can't see anything in the Ts&Cs that says how the reserve price is arrived at or by who. There also appears to be a major difference (from a saver's point of view) in the two stages. If the item sells for more than needed to repay everyone at the first auction, the balance is returned to the borrower (7.3.3.4). If the item isn't sold at the auction then goes on to be sold either privately or at another auction the excess is allocated to savers (7.4.4 - "the balance (if any) will be returned to the Savers (allocated in accordance with the proportion of the loan amount which each Saver Invested)."). Email on the way to FS shortly... |
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mikes1531
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Post by mikes1531 on Feb 23, 2015 1:14:50 GMT
I received several "All owed funds should now be transferred into your account." emails from FS during the week. Looking at my Investment History I now discover that "owed funds" is not the same as "expected funds", so I'm a just a tad disappointed that FS didn't alert me that one of my loans had defaulted and I've received less capital than I invested and no interest. : That is rather disappointing, to say the least. fundingsecure aren't going to win any prizes for transparency or clarity here. Which loan was it? (Item lent against & loan number, please, if it wasn't 572782847.) If my similar experience is typical, it probably won't be obvious from the loan page that there was a shortfall of any sort. In my case, FS added a note saying... From that, there's no indication that lenders received less back than they were owed. In my case, the capital was returned in full, but no interest was received. I did, however, receive an email from FS at the time indicating what had happened. So perhaps FS failed to do similarly this time, or maybe your email went astray. But even that doesn't excuse FS from setting the record straight on the loan info page. I expect that the emails you have received are 'form' letters, possibly even generated automatically by the system when a loan repayment is processed. FS clearly need to have two separate versions of that message -- the one they're using now is fine for when everything goes according to plan, but a different one is needed for the other cases, and it should indicate the percentage of capital returned and/or the percentage of accrued interest returned. And it would be helpful, in the cases where reduced interest is received, if the actual interest rate achieved were to be indicated. There also appears to be a major difference (from a saver's point of view) in the two stages. If the item sells for more than needed to repay everyone at the first auction, the balance is returned to the borrower (7.3.3.4). If the item isn't sold at the auction then goes on to be sold either privately or at another auction the excess is allocated to savers (7.4.4 - "the balance (if any) will be returned to the Savers (allocated in accordance with the proportion of the loan amount which each Saver Invested)."). Email on the way to FS shortly... Interesting, but probably of little consequence, as I'd be surprised if a sale subsequent to a failed auction actually would result in a higher price than the reserve price. And for the net proceeds to investors to be higher, it would have to be even higher still, since there are bound to be additional selling expenses, and the fees accruing to FS would have increased during the time elapsed between the auction and the subsequent sale. If FS don't respond here, do please let us know what they say in reply to your email.
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Post by elljay on Feb 23, 2015 7:32:59 GMT
Hmm, maybe my email went astray - it is 572784847. From the My Investment History page it's clear as it shows in red as Defaulted, the Investment Repaid is in red and the Interest Paid is zero.
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spockie
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Post by spockie on Feb 23, 2015 7:41:07 GMT
Hmm, maybe my email went astray - it is 572784847. From the My Investment History page it's clear as it shows in red as Defaulted, the Investment Repaid is in red and the Interest Paid is zero. My email went astray too...
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Post by fundingsecure on Feb 23, 2015 8:58:13 GMT
Although the email has been responded to directly, a quick note to clarify a couple of specific points that may be of more general interest:
Firstly, apologies - the email that was sent on completion of any loan incorrectly used the term "owed". This will be changed to better reflect the real position. In addition it is planned to add the loan ID reference to the email in a forthcoming site-update. However the details of the actual return are posted on the loan.
We are legally bound to offer the items for sale at "A fair market price" The reserve price is determined by discussion with the auctioneer/valuer at the time of the auction. If we already have a private buyer for the asset we can increase the reserve to that figure.
The question about overage or shortage on sale of defaulted items has already been mentioned, but just to be clear:
This is a legal requirement. Thus, if a high selling price is achieved on a default, the surplus over the debt (after payment of accrued interest and costs) must be returned to the borrower. However, where a low selling price is achieved, the shortfall cannot be recovered from the borrower.
Regards
FundingSecure
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sqh
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Post by sqh on Feb 23, 2015 12:00:42 GMT
Although the email has been responded to directly, a quick note to clarify a couple of specific points that may be of more general interest: Firstly, apologies - the email that was sent on completion of any loan incorrectly used the term "owed". This will be changed to better reflect the real position. In addition it is planned to add the loan ID reference to the email in a forthcoming site-update. However the details of the actual return are posted on the loan. We are legally bound to offer the items for sale at "A fair market price" The reserve price is determined by discussion with the auctioneer/valuer at the time of the auction. If we already have a private buyer for the asset we can increase the reserve to that figure. The question about overage or shortage on sale of defaulted items has already been mentioned, but just to be clear: This is a legal requirement. Thus, if a high selling price is achieved on a default, the surplus over the debt (after payment of accrued interest and costs) must be returned to the borrower. However, where a low selling price is achieved, the shortfall cannot be recovered from the borrower. Regards FundingSecure If an item fails to make the reserve at auction, and you don't have a private buyer, what happens next ?
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coop
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Post by coop on Feb 23, 2015 12:31:54 GMT
IMHO it would be sensible to relist at auction, possibly at a different auction house. Obviously this takes time though. Potentially the reserve price could be lowered to try and stimulate some bidding? However I would only be comfortable with this if FS were prepared to cough up the difference to at least ensure no capital loss - this only seems fair to investors as it is FS and their advisors' valuation we are at the mercy of.
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Post by davee39 on Feb 23, 2015 14:20:25 GMT
Potentially the reserve price could be lowered to try and stimulate some bidding? However I would only be comfortable with this if FS were prepared to cough up the difference to at least ensure no capital loss - this only seems fair to investors as it is FS and their advisors' valuation we are at the mercy of. An odd suggestion for a risk investment. The valuations clearly cannot be guaranteed, if they were the risk would be eliminated. This is, however, an unusual business model. A high street pawnbroker would value pledged items on the basis that a profit could still be made if at item was not redeemed. In the case of pawnbroking 'default' does not have negative connotations since it is a legal entitlement within the loan contract. Since the lender alone is responsible for all the valuations he would expect them to be correct more often than not, or the business would fail. With FS is is difficult for an individual lender to diversify risk across several loans due to the limited number of opportunities and the scramble which occurs whenever a new loan lists. I suspect that the valuations may be a little more generous than elsewhere to try to attract business. I do not think the rates are sufficient to cover the risks, despite the asset backing, and am not currently lending here.
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mikes1531
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Post by mikes1531 on Feb 23, 2015 16:57:25 GMT
Potentially the reserve price could be lowered to try and stimulate some bidding? I don't think this would have the desired effect because AFAIK the fact that an auction item has a reserve price is not revealed to bidders. AIUI, the reserve price is treated like a proxy bid submitted in advance, and every time a bid is made the auctioneer will act as if an unseen bidder has made a higher bid. As long as other bids are made the price will continue rise until either the reserve price is met or the bidding stops and the item appears to have been bought by the 'reserve' bidder. In the latter case, it will be revealed at some subsequent time when the auction results are published that the item did not reach the reserve price and therefore was unsold, but even then the reserve price would not be revealed. The above is just my understanding, and I'd be pleased to learn whether or not it's right from someone more familiar with auctions. One thing that eBay do slightly differently from the above is that they indicate when an item has a reserve price -- though not the amount -- and they also indicate when bidding has reached the reserve price
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alison
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Post by alison on Feb 23, 2015 17:31:19 GMT
Potentially the reserve price could be lowered to try and stimulate some bidding? I don't think this would have the desired effect because AFAIK the fact that an auction item has a reserve price is not revealed to bidders. AIUI, the reserve price is treated like a proxy bid submitted in advance, and every time a bid is made the auctioneer will act as if an unseen bidder has made a higher bid. As long as other bids are made the price will continue rise until either the reserve price is met or the bidding stops and the item appears to have been bought by the 'reserve' bidder. In the latter case, it will be revealed at some subsequent time when the auction results are published that the item did not reach the reserve price and therefore was unsold, but even then the reserve price would not be revealed. The above is just my understanding, and I'd be pleased to learn whether or not it's right from someone more familiar with auctions. One thing that eBay do slightly differently from the above is that they indicate when an item has a reserve price -- though not the amount -- and they also indicate when bidding has reached the reserve price Don't you watch the 57 auction programmes on the telly every week? I'm an addict!!
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Post by elljay on Feb 23, 2015 18:09:28 GMT
We are legally bound to offer the items for sale at "A fair market price" The reserve price is determined by discussion with the auctioneer/valuer at the time of the auction. If we already have a private buyer for the asset we can increase the reserve to that figure. The question about overage or shortage on sale of defaulted items has already been mentioned, but just to be clear: This is a legal requirement. Thus, if a high selling price is achieved on a default, the surplus over the debt (after payment of accrued interest and costs) must be returned to the borrower. However, where a low selling price is achieved, the shortfall cannot be recovered from the borrower. Thanks for the response by email and here and thanks for recognising that the systems can be improved. The Ts&Cs agree with what you say on return of any excess to the borrower if the item sells at the first auction. If the item isn't sold there and is subsequently sold the Ts&Cs say the opposite: 7.4.4 - " the balance (if any) will be returned to the Savers (allocated in accordance with the proportion of the loan amount which each Saver Invested).". Is that incorrect?
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Post by davee39 on Feb 23, 2015 19:23:46 GMT
I don't think this would have the desired effect because AFAIK the fact that an auction item has a reserve price is not revealed to bidders. AIUI, the reserve price is treated like a proxy bid submitted in advance, and every time a bid is made the auctioneer will act as if an unseen bidder has made a higher bid. As long as other bids are made the price will continue rise until either the reserve price is met or the bidding stops and the item appears to have been bought by the 'reserve' bidder. In the latter case, it will be revealed at some subsequent time when the auction results are published that the item did not reach the reserve price and therefore was unsold, but even then the reserve price would not be revealed. The above is just my understanding, and I'd be pleased to learn whether or not it's right from someone more familiar with auctions. One thing that eBay do slightly differently from the above is that they indicate when an item has a reserve price -- though not the amount -- and they also indicate when bidding has reached the reserve price Don't you watch the 57 auction programmes on the telly every week? I'm an addict!! The auctioneer is acting as an agent for the seller, and is duty bound to try to get the best price. He will attempt to start the bidding at a fair price based on the valuation placed by the auction house, but even if there is a reserve he will drop the start price until bidding gets going. The bids made by by the auctioneer will be bids made on behalf of buyers who cannot attend the auction. The existance of a reserve will be revealed if bidding stops short of the required price. In many cases the person who had made the highest bid at the time will be able to then agree a private sale - possibly a little closer to the reserve price.
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baz657
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Post by baz657 on Feb 23, 2015 19:41:22 GMT
I do not think the rates are sufficient to cover the risks..... I'd tend to agree now after reading a few of the comments...
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mikes1531
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Post by mikes1531 on Feb 23, 2015 21:03:27 GMT
Don't you watch the 57 auction programmes on the telly every week? Nope, sorry. There's a collection of electronic gizmos sitting in the corner of the sitting room, but I'm not even sure the big lump works as a TV any more because the last time I looked at the Freeview box attached to it there was a red light showing rather than the blue light it's supposed to display. 
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I always thought if an item didn't hit the reserve and was unsold you were free to take it back and try again, somewhere else if need be. If that isn't the case I'd like to put myself forward as the primary outlet of unsold goods. 25% of initial valuation should cover it.
