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Post by Deleted on Mar 25, 2015 21:32:55 GMT
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. As I said before, it's a difference that makes no difference. If the platform were to become unable to pay its bills, you would have no easy way to access your loan portfolio. If you happened to have the information available, you could try your hand at approaching your debtors and demanding that they pay each and every lender individually but there's a strong case to be made that the additional admin is unreasonable. Chances are, any legal judgement made would tend to favour some form of third party aggregation, leaving you with two choices: - accept an aggregated arrangement on behalf of the receivers (or whatever) of the former p2p platform minus costs - initiate litigation against each and every debtor in order to receive your £10 a month or whatever Sobering thought, isn't it.
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Post by Deleted on Mar 25, 2015 21:36:56 GMT
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. Maybe I wasn't clear enough about what was important here. At the present time, we lend through middlemen. It's conceivable that a fully automated system of truly peer-to-peer lending could come to exist in the future, most probably along the same lines as blockchains, at least in broad design terms. The key difference between that and lending through a p2p platform is the middleman, not the technology. Yes indeed you may well own your loan book on paper but since p2p platforms hire full-time staff, it's reasonable to assume they have some kind of work to do. The difference with a truly peer-to-peer, as opposed to peer-to-middleman-to-peer, model is that no such work would be undertaken: the borrowers would be using some kind of fully automated system to pay each and every lender even if there were thousands. At present they pay a single middleman who then dishes out the pieces of the pie.
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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 25, 2015 21:43:37 GMT
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. Maybe I wasn't clear enough about what was important here. At the present time, we lend through middlemen. It's conceivable that a fully automated system of truly peer-to-peer lending could come to exist in the future, most probably along the same lines as blockchains, at least in broad design terms. The key difference between that and lending through a p2p platform is the middleman, not the technology. Yes indeed you may well own your loan book on paper but since p2p platforms hire full-time staff, it's reasonable to assume they have some kind of work to do. The difference with a truly peer-to-peer, as opposed to peer-to-middleman-to-peer, model is that no such work would be undertaken: the borrowers would be using some kind of fully automated system to pay each and every lender even if there were thousands. At present they pay a single middleman who then dishes out the pieces of the pie. Would the fully automated system go & check on progress, chase late payment, organise pursuit of debt. Got to be someone to do the leg work or are you assuming the system would also vet the borrowers and ensure that none will default. Computer says no. 
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mikes1531
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Post by mikes1531 on Mar 25, 2015 23:11:27 GMT
As I said before, it's a difference that makes no difference. If the platform were to become unable to pay its bills, you would have no easy way to access your loan portfolio. If you happened to have the information available, you could try your hand at approaching your debtors and demanding that they pay each and every lender individually but there's a strong case to be made that the additional admin is unreasonable. Chances are, any legal judgement made would tend to favour some form of third party aggregation, leaving you with two choices: - accept an aggregated arrangement on behalf of the receivers (or whatever) of the former p2p platform minus costs - initiate litigation against each and every debtor in order to receive your £10 a month or whatever Sobering thought, isn't it. AIUI, one of the requirements for being authorised and regulated by the FCA is that the platform must have a plan for its business to be passed to a third party administrator for winding down its loan portfolio and paying its investors/lenders in the event of the platform's failure, and for money to cover the cost of such administration to be provided for in advance. In most cases, the interest due from borrowers is greater than that paid to lenders, and the difference could be used to pay for the administration.
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Post by Deleted on Mar 26, 2015 1:20:11 GMT
AIUI, one of the requirements for being authorised and regulated by the FCA is that the platform must have a plan for its business to be passed to a third party administrator for winding down its loan portfolio and paying its investors/lenders in the event of the platform's failure, and for money to cover the cost of such administration to be provided for in advance. In most cases, the interest due from borrowers is greater than that paid to lenders, and the difference could be used to pay for the administration. As always, regulation provides little but the distortion of choice, the illusion of safety and of course some additional costs. There's no reason to suppose that the receiver must be bound by the same terms and conditions as the original operator, or more to the point if the receiver is prevented from introducing new efficiencies in this way, the chances of the revenue meeting required levels are further reduced. Contrariwise for those platforms not so exposed to these risks, the 'excessive' reserves required to hedge them to the same extent as a riskier provider reduce their profitability. As always when regulators impose practices on providers, there's a "race to the bottom" in terms of returns, service and terms in favour of more conservative practices yet paradoxically also more tolerance of risky behaviour among customers. In more concrete terms, the FCA's involvement is likely to mean lower rates of return on the one hand, combined with more restrictive terms and conditions, and on the other hand less incentive for lenders to scrutinise the specific practices of the lending platforms. In addition to this universal problem presented by the 'mixed economy', the problem remains that lenders falsely believe they can isolate themselves by choosing only certain types of loans, when in fact (FCA or no FCA) what matters is the health of the lending platform, not the individual loans.
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Post by Deleted on Mar 26, 2015 1:22:38 GMT
Would the fully automated system go & check on progress, chase late payment, organise pursuit of debt. Got to be someone to do the leg work or are you assuming the system would also vet the borrowers and ensure that none will default. Computer says no. A true peer-to-peer arrangement by definition doesn't involve a middleman. The scenario I described isn't necessarily desirable: the point is that it's peer-to-peer, as in you-to-someone-else, rather than you-to-someone-else-to-someone-else-else. A p2p lending platform is not you connecting with borrowers, even when it almost is! In the end, if the platform goes down on account of the loans you don't support, you're still in trouble - the point being that this is not something that only applies to the SavingStream type of platform: it applies to them all. FCA or no FCA, p2p lending is no different to lending through a high street bank except it's risker: these are the borrowers the banks don't want, and rather than having a loan book consisting of millions of different actors, you're looking at one with dozens (hundreds at most). The question is why do you personally take that additional risk, and the answer is "for the additional yield". Given that the BoE sets the base rate at a level that strongly discourages savers from investing in cash deposit accounts with the high street banks, the ultimate answer is "because that's what I've been encouraged to do by the BoE". Unless you're sure that the BoE has your best interests at heart as one of the hated "1%", this ought to be at least mildly disturbing. The specific risk of SavingStream loans depends on their LTV. If property prices fall to any significant extent, these LTVs will shift radically higher as a simple fact of arithmetic. With other platforms, the question is "which businesses will go under first in a large recession? Those lent to by the mainstream or those lent to by the extra provision provided by p2p finance?". This doesn't mean we all have to be fatally bearish about p2p but it does mean we should step carefully and not rush headlong into something which could look quite different in three years' time than it does right now.
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star dust
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Post by star dust on Mar 26, 2015 6:59:46 GMT
There's no reason to suppose that the receiver must be bound by the same terms and conditions as the original operator, or more to the point if the receiver is prevented from introducing new efficiencies in this way, the chances of the revenue meeting required levels are further reduced.
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mikes1531
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Post by mikes1531 on Mar 26, 2015 11:17:35 GMT
From what I have seen of receivers/ administrators in practise - they do it their way. I have expressed this opinion before, and I am aware it doesn't seem to be the view of most forum members! Is that the triumph of hope over reality? (Those with no experience hope it will work out for the best, while those who have seen it happen before aren't so optimistic.)
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shimself
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Post by shimself on Mar 26, 2015 11:31:40 GMT
What about the pre-existing wind-down procedure as instructed by the FCA, I would have expected that hold up whatever the receiver's instincts.
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webwiz
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Post by webwiz on Mar 26, 2015 12:05:57 GMT
So is the answer to invest in equity platforms like Property Moose?
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Post by Deleted on Apr 14, 2015 11:36:29 GMT
Based on weekly update 14/4, looks like the timetable for recovery on this default is slipping.
A month or so ago we were told the asset was going into a property auction in late April.
Today we are told "A court hearing for the 5th of May is scheduled and we should receive vacant possession soon after."
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mikes1531
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Post by mikes1531 on Apr 14, 2015 11:57:33 GMT
Based on weekly update 14/4, looks like the timetable for recovery on this default is slipping. A month or so ago we were told the asset was going into a property auction in late April. Today we are told "A court hearing for the 5th of May is scheduled and we should receive vacant possession soon after." That's not good news. I suspect th repossession process takes longer than most lenders would like and, in this case, longer than SS was expecting. Perhaps savingstream would be so kind as to tell us how long they think it will take after gaining vacant possession until the actual auction might occur. Unfortunately, the longer it takes to sell the property, the harder it will be to cover all of the accruing interest and fees out of the sale proceeds. That's when SS/we find out whether a 65-70% LTV is too high. 
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paulg
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Post by paulg on Apr 14, 2015 13:13:42 GMT
Based on weekly update 14/4, looks like the timetable for recovery on this default is slipping. A month or so ago we were told the asset was going into a property auction in late April. Today we are told "A court hearing for the 5th of May is scheduled and we should receive vacant possession soon after." That's not good news. I suspect th repossession process takes longer than most lenders would like and, in this case, longer than SS was expecting. Perhaps savingstream would be so kind as to tell us how long they think it will take after gaining vacant possession until the actual auction might occur. Unfortunately, the longer it takes to sell the property, the harder it will be to cover all of the accruing interest and fees out of the sale proceeds. That's when SS/we find out whether a 65-70% LTV is too high. Interesting. It's still listed on Countrywide Property Auctions 29th April Sheffield catalogue. As to whether the sale proceeds will cover capital and interest - I wouldn't have thought that would be a problem with the guide price they're quoting.
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bugs4me
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Post by bugs4me on Apr 14, 2015 13:27:28 GMT
That's not good news. I suspect th repossession process takes longer than most lenders would like and, in this case, longer than SS was expecting. Perhaps savingstream would be so kind as to tell us how long they think it will take after gaining vacant possession until the actual auction might occur. Unfortunately, the longer it takes to sell the property, the harder it will be to cover all of the accruing interest and fees out of the sale proceeds. That's when SS/we find out whether a 65-70% LTV is too high. Interesting. It's still listed on Countrywide Property Auctions 29th April Sheffield catalogue. As to whether the sale proceeds will cover capital and interest - I wouldn't have thought that would be a problem with the guide price they're quoting. More than interesting - is it possible to auction a property without vacant possession. Certainly the guide price makes everything look safe on the financial front.
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Post by Deleted on Apr 14, 2015 13:54:49 GMT
My guess would be that the property will have to be withdrawn from the April 29 auction (perhaps it already has been but the auctioneer hasn't updated website?) because it seems that SS / Lendy haven't yet got a court order for repossession and can't see how they could sell it before they've got possession of it in the full, legal sense. Plus we don't know how long after that before all the legal stuff is in order such that it can be sold off.
I thought SS was a bit quick out of the traps on this one and perhaps in their desire to get it sorted ASAP they may have under estimated how long these sorts of legal things can take?
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