paulg
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Post by paulg on Mar 22, 2015 12:13:00 GMT
But still, does it matter to an SS lender if they are in this particular loan or not? Well actually it does. It may make no difference to SS investors in which loans they’re invested in the event of platform insolvency, but (as I understand it) it still does make a difference in the event of individual loan defaults. The provision fund states that “Payments to lenders will be at the discretion of the Directors of Provision Fund Limited” and that “Your capital is at risk and interest payments are not guaranteed if a borrower defaults. Please be aware that in the event of there being default in excess of the published balance of the Provision Fund then there may be insufficient funds to cover all claims made by investors of Lendy Ltd.” More immediately, if an individual’s investment strategy requires them to maximise investment fluidity (as far as that’s possible within this type of investment), then they may wish to avoid loans where the likelihood of default appears greater, so that they are not locked into it whilst the default is resolved. Clearly this does not apply to those individuals who are still investing in PBL-007 via the SM now, but the SM for this loan is understandably very slow now for those trying to extricate themselves from it. Personally, if I had been aware of certain information which was prominently in the public domain within a few days of this loan going live, (I don’t know when it was drawn down), I would not have invested in it. But the responsibility for assessing the risks associated with each investment opportunity – as related to my investment strategy – lies with me, and the lesson I have learned from this is that I must read between the lines of the “Bridging loan particulars” and “Valuations” more carefully.
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shimself
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Post by shimself on Mar 22, 2015 15:30:33 GMT
But still, does it matter to an SS lender if they are in this particular loan or not? Well actually it does. It may make no difference to SS investors in which loans they’re invested in the event of platform insolvency, but (as I understand it) it still does make a difference in the event of individual loan defaults. The provision fund states that “Payments to lenders will be at the discretion of the Directors of Provision Fund Limited” and that “Your capital is at risk and interest payments are not guaranteed if a borrower defaults. Please be aware that in the event of there being default in excess of the published balance of the Provision Fund then there may be insufficient funds to cover all claims made by investors of Lendy Ltd.” Taking your point about liquidity, but after that, either the provision fund can cope, or if it can't Lendy are liable, and if they can't cope then all lenders are in trouble. I think.
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david42
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Post by david42 on Mar 23, 2015 19:56:37 GMT
Taking your point about liquidity, but after that, either the provision fund can cope, or if it can't Lendy are liable, and if they can't cope then all lenders are in trouble. I think. My reading of the terms is that Lendy Ltd are not liable to lenders if a loan defaults. Only those lending to the particular loan are impacted by a default: 5.2.4 an additional administration fee of 5% of the loan value will be deducted from the net proceeds of sale of the Asset at auction (after deduction of selling expenses such as commissions). Net proceeds of sale of Assets shall be used to settle amounts due in the following order:
5.2.4.1 principal amount of loan which was funded by, and is repayable to the Investors (allocated in proportion to the loan amounts funded);
5.2.4.2 fees due to Saving Stream in accordance with Lendy Ltd's Terms and Conditions;
5.2.4.3 interest due to the Investors (allocated in proportion to the loan amounts funded); and
5.2.4.4 the balance (if any) will be returned to the Borrower to their Nominated Account.
Other lenders are put at risk if the peripheral damage of a large troubled loan causes Lendy Ltd to go bust, putting all lenders into a single pool of creditors. And the depletion of the single shared provision fund disadvantages all lenders.
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shimself
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Post by shimself on Mar 23, 2015 22:23:08 GMT
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Mar 23, 2015 22:52:12 GMT
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mikes1531
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Post by mikes1531 on Mar 24, 2015 0:28:10 GMT
My reading of the terms is that Lendy Ltd are not liable to lenders if a loan defaults. Only those lending to the particular loan are impacted by a default: The Ts&Cs have said this from the beginning. SS have said here in the forum, however, that they would make good any shortfalls, but that was at a time when all SS loans were relatively small. Ever since then, the question has been whether we could rely on those statements. The existence of the PF should reduce the need for any additional help from SS, and AFAIK they've never actually said that they withdrew their previous promises. Then again, a lot of people here don't feel those promises are enforceable -- and may have a similar value to some of the PGs lenders have had -- so their value is uncertain. That's part of the reason people want to see the trust option implemented.
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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 24, 2015 1:12:31 GMT
My reading of the terms is that Lendy Ltd are not liable to lenders if a loan defaults. Only those lending to the particular loan are impacted by a default: The Ts&Cs have said this from the beginning. SS have said here in the forum, however, that they would make good any shortfalls, but that was at a time when all SS loans were relatively small. Ever since then, the question has been whether we could rely on those statements. The existence of the PF should reduce the need for any additional help from SS, and AFAIK they've never actually said that they withdrew their previous promises. Then again, a lot of people here don't feel those promises are enforceable -- and may have a similar value to some of the PGs lenders have had -- so their value is uncertain. That's part of the reason people want to see the trust option implemented. The trust option is fundamental in case Lendy get into financial problems, but an individual loan default is down to the lenders of that loan. I feel a lot happier today after the bonus rates for loan PBL027 were published. If Lendy are prepare to pay 15% to the largest investors, then they must be charging at least that much to borrowers. I think Lendy are doing extremely good business and there is no chance of the business failing.
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Post by Deleted on Mar 24, 2015 3:23:18 GMT
Other lenders are put at risk if the peripheral damage of a large troubled loan causes Lendy Ltd to go bust, putting all lenders into a single pool of creditors. And the depletion of the single shared provision fund disadvantages all lenders. Absolutely right David and logically that's true of every p2p platform. It's just as true of a bank or any other body undertaking loans. The difference between p2p and a bank is that with p2p you have the illusion that you're choosing which loans to support. You're not, you're supporting the platform. The platform's vulnerability to the loans you do not directly support will come back and bite you if they get into trouble as a result of those loans that you're not supporting. In fairness, your action does have the potential to shape the kind of loans the platform will entertain, but as the market grows it's quite likely most platforms will become steadily less discerning not more, and of course it doesn't help you if you happen to find yourself in a minority. Perhaps you might think that real estate is over-priced right now, or you might think that people are moving away from food as entertainment, or any number of other personal preferences that aren't widely shared. A true p2p platform would act only as an arranger of loans, without being involved in any way whatsoever. Such an entity would limit itself to the arrangement of the relevant legal contracts and would most likely charge both borrower and lender a fee for this. I doubt the current market would favour such a 'sound p2p' platform but the vulnerability you identify here is potentially very important indeed if there happens to be any adverse situation arising over the coming years, particularly bearing in mind that it's now a full seven years since the last recession. Of course the entire concept of "a p2p lending platform" is likely to turn out to be transitional, with blockchain technology absorbing the whole thing in due course.
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shimself
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Post by shimself on Mar 24, 2015 14:38:23 GMT
The difference between p2p and a bank is that with p2p you have the illusion that you're choosing which loans to support. You're not, you're supporting the platform. Not so on TC AC REBS Zopa etc, the contract is between the lender and the borrower
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webwiz
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Post by webwiz on Mar 24, 2015 16:10:26 GMT
What has Blockchain got to do with p2p? I thought that was the bitcoin transaction record.
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Post by Deleted on Mar 25, 2015 2:18:07 GMT
The difference between p2p and a bank is that with p2p you have the illusion that you're choosing which loans to support. You're not, you're supporting the platform. Not so on TC AC REBS Zopa etc, the contract is between the lender and the borrower Negative. The continuing existence of the platforms, which hire real people on fixed salaries, depends on the overall profit they make from the loans. They do not exist solely on initial borrower fees. Even if that were the case, those fees would still be jeopardised by multiple fails deterring prospective investors from supporting the platform to the extent required to enable sufficient loan applications to pay the bills.
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Post by Deleted on Mar 25, 2015 2:19:28 GMT
What has Blockchain got to do with p2p? I thought that was the bitcoin transaction record. Blockchain technology, or some other genuinely peer-to-peer solution, could eliminate the need for middleman platforms maintained by full-time staff. As things stand right now, "p2p" is a misnomer: what you're doing as a lender is lending to a borrower via a lending platform. It's not so much "peer to peer" as "peer to platform to peer", and if the platform goes down, so do all your investments.
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Liz
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Post by Liz on Mar 25, 2015 2:23:12 GMT
Not so on TC AC REBS Zopa etc, the contract is between the lender and the borrower Negative. The continuing existence of the platforms, which hire real people on fixed salaries, depends on the overall profit they make from the loans. They do not exist solely on initial borrower fees. Even if that were the case, those fees would still be jeopardised by multiple fails deterring prospective investors from supporting the platform to the extent required to enable sufficient loan applications to pay the bills. That's why the FCA ensure platforms have a certain amount of capital, to run down the loan book. SS has plans in place for such a scenario.
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Post by sammy on Mar 25, 2015 8:46:02 GMT
The difference between p2p and a bank is that with p2p you have the illusion that you're choosing which loans to support. You're not, you're supporting the platform. Not so on TC AC REBS Zopa etc, the contract is between the lender and the borrower Sorry rupaul but you are incorrect in respect of other p2p platforms, it is correct with Saving Stream as you are lending to Lendy, who in turn lend to the borrowers, as you have mentioned similar to a bank, so all your eggs are in the one proverbial basket, if Lendy go bust. Whereas on other p2p's you are actually lending to the borrower, so you will only be exposed if your loan has a problem, or the p2p platform goes bust whatever, you will not be exposed to other loans you are not involved with. Yes you are supporting the platform, as without ourselves and other structures covering these loans they wouldn't exsist, but that has nothing to do with if a loan goes faulty, that is down to the indivduals who have put money into that particular loan. The actual contract is between you and the borrower as you are lending direct, not the p2p platform, unlike Saving Stream where the actual contract is between the lenders and Lendy, not to the borrower! I have brought this subject up several times before on the forum, so investors realise the difference, which is why Lendy have been looking at ways to not expose lenders to their whole book of loans, if something major were to happen, for whatever reason.
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shimself
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Post by shimself on Mar 25, 2015 9:01:51 GMT
What has Blockchain got to do with p2p? I thought that was the bitcoin transaction record. Blockchain technology, or some other genuinely peer-to-peer solution, could eliminate the need for middleman platforms maintained by full-time staff. As things stand right now, "p2p" is a misnomer: what you're doing as a lender is lending to a borrower via a lending platform. It's not so much "peer to peer" as "peer to platform to peer", and if the platform goes down, so do all your investments. It's the properly drafted legal obligation to repay the lender that counts. I could lend a company money tomorrow, directly, in cash, bank transfer, bitcoin or gold ingots it hardly matters. It's getting a sufficient information (through due diligence and discussion) that enables the decision. Don't let technology lead you by the nose.
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