unmadem
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Post by unmadem on Apr 12, 2014 19:22:54 GMT
What about shadow bids being extended to everyone without restriction. That way we would not have the dead period or rather it would only be a day or 2 before drawdown. It would also be in ACs interest to keep us informed. As we were achieving better rates of return it would also help ACs marketing.
If there was a move to only offering loans to us when they are drawndown this would presumable need a significant amount of working capital or full underwriting by AC. This wouldn't be necessary if instead we all had shadow bidding rights. There would obviously be a fear that the money would not be made available when called on but these administrative errors could be covered by a small amount of underwriting. Any repeat offenders could have the valuable shadow bidding right suspended.
I suppose a halfway house might be to allow everybody shadow bidding rights on all loans for 12 months or less where the most damage if done to the actual rate of return.
Of course, since I have no experience of shadow bidding I might be missing something obvious.
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Post by Ton ⓉⓞⓃ on Apr 12, 2014 19:35:00 GMT
Am I being thick (I usually am), but why not simply get the loans to the point when they could draw down immediately, *then* auction them. Most loans get fully funded so there's little chance of the work being wasted. One of the benefits to AC of the present set up is that we are relatively cheap underwriters, if we're taken out of the equation completely then the interest rates for us would drop. But I must agree that having this procedure for bridging loans this would be a way to proceed. j1 - Common thought. ;As I said in my email a few weeks ago, wouldn't it be nice to be able to rid ourselves of the auction process and go straight for performing loan units? ;Would that make a big difference to you? ;Seems to work for LI (or Montello Bridging). LI stands for LendInvest the child of Montello. I didn't receive the email, but I infer that it reiterated Andrew's idea. The above comment started a similar discussion in Epping/IpswichIf all loans were underwritten and we Lenders could only take part in the AM, I'm not completely clear what else would change but the interest rate to us is likely if not certain to drop. Almost all loans fly and if all loans were underwritten I suggest that there still be an auction stage but as all loans are underwritten all our bidding would be to drive down the U/Wers proportion and that Lenders who bid in the auction get a beneficial interest rate while those who buy it in the AM get the face value interest rate which would be 0.1 to 0.25 lower. So bridging loans would still be about 1% in the AM but if you partook in the auction with it's uncertainty of when drawdown you would get 1.1% or 1.25%. (I've not done any maths on these figures, you may suggest your own ) For loans intended to last several years this sort of thing would not be necessary. This would be a small step in evolution for AC.
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mikes1531
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Post by mikes1531 on Apr 12, 2014 21:44:59 GMT
Almost all loans fly and if all loans were underwritten I suggest that there still be an auction stage but as all loans are underwritten all our bidding would be to drive down the U/Wers proportion and that Lenders who bid in the auction get a beneficial interest rate while those who buy it in the AM get the face value interest rate which would be 0.1 to 0.25 lower. So bridging loans would still be about 1% in the AM but if you partook in the auction with it's uncertainty of when drawdown you would get 1.1% or 1.25%. (I've not done any maths on these figures, you may suggest your own ) I'm not absolutely sure about what I'm about to say, so I'd appreciate it if someone who know more would say something... AIUI the underwriters earn a fee just for committing to provide funds if necessary. So if AC start with fully underwritten loans there are fees incurred that don't go away when some lenders then bid out some of the underwriting. So if having those lenders commit early wouldn't save any fees, then there'd be no savings to pass on to those lenders in terms of higher rates. That could explain why large loans that pretty obviously look like they're going to need underwriting aren't underwritten as soon as the auction goes live -- if £XXX,000 can be raised before the U/Ws are brought in then some fees are saved. As I said above, if this isn't the way things work, please set me straight!
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j
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Post by j on Apr 13, 2014 7:48:08 GMT
I'm not absolutely sure about what I'm about to say, so I'd appreciate it if someone who know more would say something... AIUI the underwriters earn a fee just for committing to provide funds if necessary. So if AC start with fully underwritten loans there are fees incurred that don't go away when some lenders then bid out some of the underwriting. So if having those lenders commit early wouldn't save any fees, then there'd be no savings to pass on to those lenders in terms of higher rates. That could explain why large loans that pretty obviously look like they're going to need underwriting aren't underwritten as soon as the auction goes live -- if £XXX,000 can be raised before the U/Ws are brought in then some fees are saved. As I said above, if this isn't the way things work, please set me straight! If the above is what actually happens, it begs the question why we cannot be passed even half the fees paid to u/ws to incentivise us NOT to wait till units come up on AM but, bid when the auctions are live? It would be interesting to know if AC have looked at this strategy & why they didn't think it suitable. Surely if they did they would have adopted it buy now.
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Post by Ton ⓉⓞⓃ on Apr 13, 2014 12:16:08 GMT
Almost all loans fly and if all loans were underwritten I suggest that there still be an auction stage but as all loans are underwritten all our bidding would be to drive down the U/Wers proportion and that Lenders who bid in the auction get a beneficial interest rate while those who buy it in the AM get the face value interest rate which would be 0.1 to 0.25 lower. So bridging loans would still be about 1% in the AM but if you partook in the auction with it's uncertainty of when drawdown you would get 1.1% or 1.25%. (I've not done any maths on these figures, you may suggest your own ) I'm not absolutely sure about what I'm about to say, so I'd appreciate it if someone who know more would say something... AIUI the underwriters earn a fee just for committing to provide funds if necessary. So if AC start with fully underwritten loans there are fees incurred that don't go away when some lenders then bid out some of the underwriting. So if having those lenders commit early wouldn't save any fees, then there'd be no savings to pass on to those lenders in terms of higher rates. That could explain why large loans that pretty obviously look like they're going to need underwriting aren't underwritten as soon as the auction goes live -- if £XXX,000 can be raised before the U/Ws are brought in then some fees are saved. As I said above, if this isn't the way things work, please set me straight! I'm not sure where to start either. andrewholgate seems to have said, j1 - Common thought. ;As I said in my email a few weeks ago, wouldn't it be nice to be able to rid ourselves of the auction process and go straight for performing loan units? ;Would that make a big difference to you? ;Seems to work for LI (or Montello Bridging). or something similar three times now, I doubt he's starting to suffer from alzheimer's. He seems to be giving us the option to discuss it or he's giving us a heavy hint this is where AC is going. Perhaps I've misunderstood LI's model. It seems to me that Mr A. is clearing AC's decks, as five times the number of loans we've had so far are about to go through the system. So that we can hit £100 (or more) next year. You could look upon my suggestion (a few posts above) as a half-way house between where we are now and LI's all loans are pre-filled. mikes1531 I think what you say is right about u/wers capital; but AC would notionally pre-fill the loans and then see what is actually need at the end and call upon the u/wers.
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Post by Ton ⓉⓞⓃ on Apr 13, 2014 12:17:31 GMT
Well that's how I wasthinking; I now think that Mr A ( andrewholgate) is saying that deals generated from the others parts of AC will start to appear on the AM (or possibly pre-filled on the auction page). This I think is fairly close to the LI model. But not being a Lender there I don't know.
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mikes1531
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Post by mikes1531 on Apr 13, 2014 20:25:46 GMT
mikes1531 I think what you say is right about u/wers capital; but AC would notionally pre-fill the loans and then see what is actually need at the end and call upon the u/wers. I suppose it all depends on whether AC have built up a catalogue of enough underwriters that they could engage them the day before an auction is due to end. (That presumes the UWs don't need/want a lot of time for duedil.) If that's the case, then AC would need to pay only for the minimum necessary underwriting and might be able to pass some of the fee savings on to the AC lenders that made the early commitments. And if AC are confident that they could find UWs for absolutely every loan proposal that reaches the live auction stage, then AC could leave auctions open for an extended period and wait practically until drawdown is imminent before calling in the UWs and closing the auction. Also, they could effectively guarantee to borrowers that reached the live auction stage that the loan would materialise, which would mean that borrowers could start proceeding on their purchase at an earlier step of the process (when the auction goes live rather than when the auction is fully funded). This would, however, require an awful lot of confidence from AC, as a failure to secure the necessary underwriting would be a major disaster.
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markr
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Post by markr on Apr 14, 2014 10:20:14 GMT
I wasn't suggesting that all loans should be underwritten and we only have access to the secondary market. In my proposal, nothing would change as far as the lender was concerned. At the moment, I assume the sequence is something like
Some work is done -> Loan is offered for auction -> Some more work is done -> Loan draws down.
I was asking, why can't it be
Some work is done -> Some more work is done -> Loan is offered for auction -> Loan draws down.
The only reason I can think is because "Some more work" costs money and AC don't want to do it if the loan doesn't fill. But a loan not filling is very rare, so "Some more work" is going to have to be done almost every time anyway.
I can't see that it can be because the funds need to be in place before "Some more work" can happen, because shadow bids (and possibly UW bids) aren't called in so all the funds aren't there anyway.
It will be interesting to see how quickly FC's secured loan(s) draw down.
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Post by Ton ⓉⓞⓃ on Apr 14, 2014 11:05:12 GMT
I wasn't suggesting that all loans should be underwritten and we only have access to the secondary market. In my proposal, nothing would change as far as the lender was concerned. At the moment, I assume the sequence is something like Some work is done -> Loan is offered for auction -> Some more work is done -> Loan draws down. I was asking, why can't it be Some work is done -> Some more work is done -> Loan is offered for auction -> Loan draws down. The only reason I can think is because "Some more work" costs money and AC don't want to do it if the loan doesn't fill. But a loan not filling is very rare, so "Some more work" is going to have to be done almost every time anyway. I can't see that it can be because the funds need to be in place before "Some more work" can happen, because shadow bids (and possibly UW bids) aren't called in so all the funds aren't there anyway. It will be interesting to see how quickly FC's secured loan(s) draw down. By and large I think AC believes all the work that can be done has and is, markr I think jackpease gave an interesting perspective when he said, >>>>but why not simply get the loans to the point when they could draw down immediately, *then* auction them. If we like Assetz because we are lending against asset-based loans ie property, then presumably the loan has to be raised before the lawyers can tie it into the property, then presumably contracts are exchanged etc before the loan is released. I imagine this just like housebuying ie a series of frustrating delays seemingly caused by problems you imagined would have been dealt with before. So good security, long drawdowns. Other platforms do instant drawdowns and rely on director's guarantees. So  security short drawdowns. But yeh, i am really fed up with half a dozen bids all sitting there too Jack In one sense what your asking for is already on AC it's called the Aftermarket. But I know what you mean, and I agree with your feelings.
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mikes1531
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Post by mikes1531 on Apr 14, 2014 15:43:09 GMT
I was asking, why can't it be Some work is done -> Some more work is done -> Loan is offered for auction -> Loan draws down. By and large I think AC believes all the work that can be done has and is... This is only a guess, but I suspect that some of the 'more work' that isn't happening before the auction starts is in the borrower's court, and they may not be sufficiently confident about AC's ability to fund their request. So they may not be willing to do the work before they have a confirmed loan offer. AC could solve that making the confirmed offer before raising the money, but they'd be sticking their neck out and that could turn into a disaster that put the whole business at risk, so I can understand why they'd be reluctant to do that. An alternative would be for AC to insist that borrowers do all that work before they'd make the auction live, but I expect that would put off some borrowers, so it might not be a good move. AC seem to have a choice... Do they want to upset their lenders? Or their borrowers? An awkward situation, to say the least.
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Post by valerieb on Apr 14, 2014 16:40:44 GMT
.... AC could solve that making the confirmed offer before raising the money, but they'd be sticking their neck out and that could turn into a disaster that put the whole business at risk, so I can understand why they'd be reluctant to do that........ Given that AC believe they carry out thorough research before launching a loan, so no nasty info should come out of the Q&A, and given that smaller loans rarely need underwriting, AC wouldn't be sticking their neck out very far. If at least these loans drew down quickly, the overall picture would look better!
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Post by Ton ⓉⓞⓃ on Apr 14, 2014 17:21:29 GMT
.... AC could solve that making the confirmed offer before raising the money, but they'd be sticking their neck out and that could turn into a disaster that put the whole business at risk, so I can understand why they'd be reluctant to do that........ Given that AC believe they carry out thorough research before launching a loan, so no nasty info should come out of the Q&A, and given that smaller loans rarely need underwriting, AC wouldn't be sticking their neck out very far. If at least these loans drew down quickly, the overall picture would look better! I think that would be true if there were only a few loans but the target AC has set it's self of something like a new loan every day, will make that harder.
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mikes1531
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Post by mikes1531 on Apr 14, 2014 18:40:57 GMT
Given that AC believe they carry out thorough research before launching a loan, so no nasty info should come out of the Q&A, and given that smaller loans rarely need underwriting, AC wouldn't be sticking their neck out very far. If at least these loans drew down quickly, the overall picture would look better! I think that would be true if there were only a few loans but the target AC has set it's self of something like a new loan every day, will make that harder. Well, AC did manage to finish four auctions last week, so they did reasonably well against that target. But they're going to have to get their skates on to repeat that performance this week. At the moment there's just a single auction going, and nothing at the preview stage. That must be a bit embarrassing considering we're in the middle of their cashback offer. There''s not a lot of point in bringing in more money if there's nothing much to invest in other than the three bridging loans that have been on the AM long enough that nearly everyone probably already has all they want of those loans.
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merlin
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Post by merlin on Apr 16, 2014 9:20:45 GMT
I think that would be true if there were only a few loans but the target AC has set it's self of something like a new loan every day, will make that harder. Well, AC did manage to finish four auctions last week, so they did reasonably well against that target. But they're going to have to get their skates on to repeat that performance this week. At the moment there's just a single auction going, and nothing at the preview stage. That must be a bit embarrassing considering we're in the middle of their cashback offer. There''s not a lot of point in bringing in more money if there's nothing much to invest in other than the three bridging loans that have been on the AM long enough that nearly everyone probably already has all they want of those loans. Having been a strong supporter of AC almost since its inception, I am afraid I am now fast running out of patience with AC. Currently I have 11 loans awaiting drawdown (two dating back to February) which in my view is way beyond a joke. When I joined AC I thought they had a great business model a good platform and excellent future potential. Yes I was there to hear all the brave words and promises on the Lenders day but there does not appear to be any follow through. My original plan was to invest a fairly substantial five figure sum in AC but in the spirit of P2B, in individual loans of £500 and £1000. So far I have only managed to invest around £15k plus the 11 loans awaiting drawdown. So I have failed badly to achieve my original plan. Not being one to spend time banging my head against a brick wall just to feel the pain, regrettably it is time for me to do something else with my money.
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oldgrumpy
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Post by oldgrumpy on Apr 16, 2014 9:49:33 GMT
Well, Furniture and Yorkshire are paying full interest or 12% now, so they don't worry me too much. Upton is paying 7.5% while he waits for the seller to shift. Cumbria annoys me following Mar 6th "quick drawdown is expected" followed by continued delays. I paid off my shadow bid when they said that!! I haven't stumped up for Aber yet. The rest are all April auction ends, so I am not quite as grumpy as I might be......except that there are no new loans to ramp up my cashback effort on.  edit: with Easter coming up and no emails for me to pay existing shadowbids, I am beginning to think we can say goodbye to this week for drawdowns; that'll mean another week to next Wednesday by the time many office staff restart. |
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security short drawdowns.
