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Post by mrclondon on May 14, 2015 15:34:00 GMT
Following update posted on the Noah Lubin loan this afternoon, and a further part payment made to lenders by the sounds of it from FS working capital at present:
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alison
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Sanctuary!!
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Post by alison on May 14, 2015 15:42:38 GMT
Following update posted on the Noah Lubin loan this afternoon, and a further part payment made to lenders by the sounds of it from FS working capital at present: OUCH!! Fortunately I was only in it for a £100.
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coop
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Post by coop on May 14, 2015 15:43:59 GMT
Good of them to return some funds early off their own backs.
Another loan which appears to show their inexperience in dealing with auction houses/fine art though...
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Post by mrclondon on May 14, 2015 16:30:26 GMT
Quite. That 30% capital loss (assuming no additional recoveries) represents roughly half my FS interest received in the 2014-15 tax year. So an effective return of about 6.5% last year. As I've said on a number of threads over the last year, including a current one on the SS board, my expectation is to lose roughly half all inetrest earnt on lending at 12-13%. Still a disappointment when it happens though.
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mikes1531
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Post by mikes1531 on May 14, 2015 18:42:41 GMT
That 30% capital loss (assuming no additional recoveries) represents roughly half my FS interest received in the 2014-15 tax year. So an effective return of about 6.5% last year. : Does that include an adjustment for the unfavourable tax treatment of bad debt losses? If not, then the impact on your actual return would be even greater.
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sqh
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Post by sqh on May 14, 2015 20:54:54 GMT
Quite. That 30% capital loss (assuming no additional recoveries) represents roughly half my FS interest received in the 2014-15 tax year. So an effective return of about 6.5% last year. As I've said on a number of threads over the last year, including a current one on the SS board, my expectation is to lose roughly half all inetrest earnt on lending at 12-13%. Still a disappointment when it happens though. Big OUCH!! This was my first big loan so the impact has been greater, over 90% loss of last year's interest (now 95% in total). I thought a 40% LTV would be safe, but with no valuer accountability I have a whole new view of P2P lending.
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mikes1531
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Post by mikes1531 on May 14, 2015 21:45:02 GMT
Quite. That 30% capital loss (assuming no additional recoveries) represents roughly half my FS interest received in the 2014-15 tax year. So an effective return of about 6.5% last year. As I've said on a number of threads over the last year, including a current one on the SS board, my expectation is to lose roughly half all inetrest earnt on lending at 12-13%. Still a disappointment when it happens though. Big OUCH!! This was my first big loan so the impact has been greater, over 90% loss of last year's interest (now 95% in total). I thought a 40% LTV would be safe, but with no valuer accountability I have a whole new view of P2P lending. It will have a big impact even for a lender who has a portfolio of equal-sized loans. A 30% capital loss will wipe out the return on a six-loan portfolio (five successes and one failure) completely and cut the return in half for a 12-loan portfolio (11 successes and one failure). And that's what it looks like before tax -- or for a non-taxpayer. For a basic-rate taxpayer, the required portfolio sizes would be 7.25 loans and 14.5 loans, and for a higher-rate taxpayer, the required portfolio sizes would be 9.33 loans and 18.67 loans. We can hope that future sales of the Lubins will be more successful, but the indications so far are not promising. Rather sobering, actually. 
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bugs4me
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Post by bugs4me on May 14, 2015 21:48:13 GMT
Quite. That 30% capital loss (assuming no additional recoveries) represents roughly half my FS interest received in the 2014-15 tax year. So an effective return of about 6.5% last year. As I've said on a number of threads over the last year, including a current one on the SS board, my expectation is to lose roughly half all inetrest earnt on lending at 12-13%. Still a disappointment when it happens though. Big OUCH!! This was my first big loan so the impact has been greater, over 90% loss of last year's interest (now 95% in total). I thought a 40% LTV would be safe, but with no valuer accountability I have a whole new view of P2P lending. It is a big OUCH without a doubt and I'm now limiting my investing in FS unless it is a 'dead cert' or there is some kind of professional valuation attached which IIRC used to be the case in the early days of FS. Don't mind the odd £25 or £50 punt but that's about it. I, or is it we, were lucky to get out of the Aboriginal artwork but it could easily have gone the other way.
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sqh
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Post by sqh on May 14, 2015 23:05:38 GMT
Big OUCH!! This was my first big loan so the impact has been greater, over 90% loss of last year's interest (now 95% in total). I thought a 40% LTV would be safe, but with no valuer accountability I have a whole new view of P2P lending. It is a big OUCH without a doubt and I'm now limiting my investing in FS unless it is a 'dead cert' or there is some kind of professional valuation attached which IIRC used to be the case in the early days of FS. Don't mind the odd £25 or £50 punt but that's about it. I, or is it we, were lucky to get out of the Aboriginal artwork but it could easily have gone the other way. I think FS should have valuation guarantees. When a valuation is obtained the valuer should be committed to buy the item at half price (or some other agreed percentage) in 6 months time, if required. If the valuer is not prepared to that undertaking then their valuation is not credible. I also think, if a borrower defaults and FS sell the item at a profit, then a default charge should be applied before returning any surplus to the borrower. The default charges would then go towards a provision fund.
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ramblin rose
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Post by ramblin rose on May 15, 2015 9:48:03 GMT
It is a big OUCH without a doubt and I'm now limiting my investing in FS unless it is a 'dead cert' or there is some kind of professional valuation attached which IIRC used to be the case in the early days of FS. Don't mind the odd £25 or £50 punt but that's about it. I, or is it we, were lucky to get out of the Aboriginal artwork but it could easily have gone the other way. I think FS should have valuation guarantees. When a valuation is obtained the valuer should be committed to buy the item at half price (or some other agreed percentage) in 6 months time, if required. If the valuer is not prepared to that undertaking then their valuation is not credible. I also think, if a borrower defaults and FS sell the item at a profit, then a default charge should be applied before returning any surplus to the borrower. The default charges would then go towards a provision fund. Understandable sentiments, but if lenders want a higher level of certainty over returns (i.e. lower risk) then they'd be looking at lower headline rates of return as a result. Overall, those lenders who've been in these markets a long time report that it all works out about the same in the end, but if every platform becomes 'safer' where would that leave those lenders who want to operate at the higher risk end of the spectrum? Maybe the answer is that there won't be any platforms offering that eventually and they will have to return to the stock markets to take their risks. Platform after platform goes lower risk over time as new lenders, less prepared to take the risks, join them and demand more saftety - it seems to be the way of things if a platform wants to grow. Interesting to ponder.
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bugs4me
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Post by bugs4me on May 15, 2015 10:19:37 GMT
I think FS should have valuation guarantees. When a valuation is obtained the valuer should be committed to buy the item at half price (or some other agreed percentage) in 6 months time, if required. If the valuer is not prepared to that undertaking then their valuation is not credible. I also think, if a borrower defaults and FS sell the item at a profit, then a default charge should be applied before returning any surplus to the borrower. The default charges would then go towards a provision fund. Understandable sentiments, but if lenders want a higher level of certainty over returns (i.e. lower risk) then they'd be looking at lower headline rates of return as a result. Overall, those lenders who've been in these markets a long time report that it all works out about the same in the end, but if every platform becomes 'safer' where would that leave those lenders who want to operate at the higher risk end of the spectrum? Maybe the answer is that there won't be any platforms offering that eventually and they will have to return to the stock markets to take their risks. Platform after platform goes lower risk over time as new lenders, less prepared to take the risks, join them and demand more saftety - it seems to be the way of things if a platform wants to grow. Interesting to ponder. The 'problem' is IIRC - in the early days of FS there was more available documentation being presented when a loan went live. Appreciate it was only a page here and there but nonetheless it was more of a professional valuation than is currently being presented. I do not have a problem with the odd watch or piece of jewellery but once you move into for example the Persian carpets being valued in excess of 100k with the only 'documentation' being a picture then it would be reassuring to know just where did that valuation come from. Obviously the risk is still there but at least we are aware of the valuation source. It is after all FS that are quoting the value but the source of same is not being supplied.
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ramblin rose
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Post by ramblin rose on May 15, 2015 10:42:30 GMT
Understandable sentiments, but if lenders want a higher level of certainty over returns (i.e. lower risk) then they'd be looking at lower headline rates of return as a result. Overall, those lenders who've been in these markets a long time report that it all works out about the same in the end, but if every platform becomes 'safer' where would that leave those lenders who want to operate at the higher risk end of the spectrum? Maybe the answer is that there won't be any platforms offering that eventually and they will have to return to the stock markets to take their risks. Platform after platform goes lower risk over time as new lenders, less prepared to take the risks, join them and demand more saftety - it seems to be the way of things if a platform wants to grow. Interesting to ponder. The 'problem' is IIRC - in the early days of FS there was more available documentation being presented when a loan went live. Appreciate it was only a page here and there but nonetheless it was more of a professional valuation than is currently being presented. I do not have a problem with the odd watch or piece of jewellery but once you move into for example the Persian carpets being valued in excess of 100k with the only 'documentation' being a picture then it would be reassuring to know just where did that valuation come from. Obviously the risk is still there but at least we are aware of the valuation source. It is after all FS that are quoting the value but the source of same is not being supplied. I didn't really make the motivation for my post clear enough (clearly  ). I'm not trying to suggest that we shouldn't have better valuation documentation; I agree absolutely that we should. My post was more in response to the idea that we might want a provision fund, which set me off down a train of thought regarding whether or not we want safety nets on all platforms, and where it might ultimately lead p2p.
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bugs4me
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Post by bugs4me on May 15, 2015 10:56:17 GMT
The 'problem' is IIRC - in the early days of FS there was more available documentation being presented when a loan went live. Appreciate it was only a page here and there but nonetheless it was more of a professional valuation than is currently being presented. I do not have a problem with the odd watch or piece of jewellery but once you move into for example the Persian carpets being valued in excess of 100k with the only 'documentation' being a picture then it would be reassuring to know just where did that valuation come from. Obviously the risk is still there but at least we are aware of the valuation source. It is after all FS that are quoting the value but the source of same is not being supplied. I didn't really make the motivation for my post clear enough (clearly ). I'm not trying to suggest that we shouldn't have better valuation documentation; I agree absolutely that we should. My post was more in response to the idea that we might want a provision fund, which set me off down a train of thought regarding whether or not we want safety nets on all platforms, and where it might ultimately lead p2p. - okay now understood. I agree that at this level - 12% or whatever, you cannot have a PF without it being funded by way of lower returns. If lenders only feel comfortable with that safety net then clearly IMO they shouldn't invest. There are plenty of other P2P opportunities available with some form of added security albeit with those lower returns. But if that helps you sleep at night then that's where your hard earned cash should be. Now pub time as it is POETS day 
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sqh
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Post by sqh on May 15, 2015 11:29:10 GMT
The 'problem' is IIRC - in the early days of FS there was more available documentation being presented when a loan went live. Appreciate it was only a page here and there but nonetheless it was more of a professional valuation than is currently being presented. I do not have a problem with the odd watch or piece of jewellery but once you move into for example the Persian carpets being valued in excess of 100k with the only 'documentation' being a picture then it would be reassuring to know just where did that valuation come from. Obviously the risk is still there but at least we are aware of the valuation source. It is after all FS that are quoting the value but the source of same is not being supplied. I didn't really make the motivation for my post clear enough (clearly ). I'm not trying to suggest that we shouldn't have better valuation documentation; I agree absolutely that we should. My post was more in response to the idea that we might want a provision fund, which set me off down a train of thought regarding whether or not we want safety nets on all platforms, and where it might ultimately lead p2p. I'm not saying create a provision fund based on a percentage of every loan. My understanding is that traditional Pawnbrokers would sell your item in their shop window if you defaulted. They would lose money on some items, but would make a tidy profit on others. They would not be obliged to hand any of that profit back to the original borrower. With FS lenders don't get to keep the profits to make up for the losses. If there was a charge applied to defaulted loans, say 5%, then we would have some profits to offset losses.
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ramblin rose
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Post by ramblin rose on May 15, 2015 11:37:10 GMT
I didn't really make the motivation for my post clear enough (clearly ). I'm not trying to suggest that we shouldn't have better valuation documentation; I agree absolutely that we should. My post was more in response to the idea that we might want a provision fund, which set me off down a train of thought regarding whether or not we want safety nets on all platforms, and where it might ultimately lead p2p. I'm not saying create a provision fund based on a percentage of every loan. My understanding is that traditional Pawnbrokers would sell your item in their shop window if you defaulted. They would lose money on some items, but would make a tidy profit on others. They would not be obliged to hand any of that profit back to the original borrower. With FS lenders don't get to keep the profits to make up for the losses. If there was a charge applied to defaulted loans, say 5%, then we would have some profits to offset losses. Actually that's not true - it's a legal requirement for pawnbrokers to return the excess to the borrower (I quoted the govt website about it for someone else on a thread a while back, who was making a similar sort of point to yourself) - it's not just FS. It MAY be possible for them to make a charge and hide it under some sort of 'costs and charges' headline, but it may not. Not saying your idea is a bad one, just musing.
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). I'm not trying to suggest that we shouldn't have better valuation documentation; I agree absolutely that we should. My post was more in response to the idea that we might want a provision fund, which set me off down a train of thought regarding whether or not we want safety nets on all platforms, and where it might ultimately lead p2p.