Extending loans- not fair practice

mikes1531 - even if loan parts are sold quickly on the SM the interest is effectively locked until the loan (eventually) matures. This is not a problem and is accepted provided the loan matures on time or in the event of a default, then the asset is disposed of. Then and only then, is the locked interest released which seems fair enough. What is a totally unacceptable practise is to keep the interest locked whilst savingstream decide to extend a loan without lender's agreement. Whilst this may be contained somewhere in the small print it is not something I wish to be part of.

So a business model, which is relatively straightforward has now just had a spanner thrown in the works. It is no longer straightforward IMO.

mikes1531 - thank you. I'll reconcile my statement tomorrow as apart from being slightly annoyed about this it's getting past my bedtime. So I'll take a close look tomorrow and maybe with a clearer head decide if SS is for me afterall. I'm not comfortable anyway with lending to Lendy direct and whilst they may have a PF the extending of loans at their discretion could have an adverse effect on the LTV's.

Presumably you also understood that if the borrower couldnt repay at term you wouldnt get your money as the loan would default and you would have to await recovery. There doesnt seem to be any real difference other than in the case of PBL8 they dont appear to have given any warning. Interest is still being paid so no issue there. There is no restriction on you selling your loan parts to realise your capital subject to the market. I accept that with the boat loans SS used to repay the loans & run a new auction but the platform has evolved since then & the PBLs are of a different magnitude which makes such an action difficult.

You dont loose the interest you are owed if you sell, you just stop accruing interest while you sell- not ideal but presumably you knew that?

SS could have asked lenders to vote on extension or default but this still wouldnt change anything due to the way the platform works currently. I think MT is the only platform that automatically repays a loan at the end of term. AC, for example,  would either extend, with interest as normal & access to SM to recover capital, or default with interest accruing & capital frozen, so SS is more flexible than that

Is there something in the T&C which led you to believe that SS would act differently to most other platforms when a loan couldnt repay on term?

Now I would agree that SS could be a lot better in their communication, particularly on the loan pages themselves, & it is disappointing that they didnt notify us that PBL8 was going to be extended beyond its term (though they usually allow a 1 month buffer on most loans anyway). It would be nice if they responded on this forum but this is not their own source of communication & we have no right to expect them to reply here

ilmoro:  How do you know that?  Did savingstream tell you?  I have parts of these loans and I've heard nothing at all from them.

SS can pay monthly interest during a loan's term because they retained that money when the loan drew down.  Once the maturity date passes, the only way they could continue to pay interest if the borrower doesn't provide more funds would be if they were to use their own funds.  AFAIK they've not said what's going to happen.  Maybe they're going to use some of the money they've theoretically set aside for the Provision Fund.  I just don't know!

IMHO, the lack of communication is the most serious problem here.  I accept that SS don't have to respond here, but I do feel that they have an obligation to tell their investors -- particularly those involved in the affected loans -- what they've done, and why, and what's going to happen next.

Surely SS/Lendy must realise that leaving their investors completely in the dark isn't going to encourage anyone to invest more in SS loans, and might even cause people to start taking money out.  Rumours will spread and damage the platform, and they seem to be doing absolutely nothing at all to try to mitigate this.  I can't think of any good reason for their complete silence, and I find that to be very worrying.

IMHO, anyone who really wanted their money back at the time their loans matured ought to be selling their parts now, while they still can.  I haven't a clue what's going to happen on Tuesday when the next interest payment is due on the extended loans and SS don't have retained interest that they can credit to their investors' accounts. 

No, they haven't. I was just going on previous actions/statements. PBL7, which is in default, has clear statement that interest will continue to be paid monthly, PBL6 was already extended once & is paying interest monthly though no statement was made to this effect. Plus SS stated willingness to pay any interest accruing  on loans that dont draw down & therefore dont have retained interest. Hands up, I am guilty of making an assumption based on precedent and balance of probability


Yes, lack of communication is the major issue. Particularly disappointing as the introduction of the update had gone some way to resolving that. Although the update mentioned PBL6 & SY would likely be extended there was a large degree of vagueness and no statement about interest. PBL8 was even more contradictory as it clearly implied the loan was expected to be repaid with no indication that an extension was on the cards. There is also the confusing ref to PBL8 on PBL21 in the update. (Both apparently refinancing with Lloyds) They had previously stated that they had offered to role it in update 6/3 as refinance was due in 6 weeks (confusion here as CR says agreed before drawdown so is there a delay in redevelopment completion), hands up who remembered that - not me, but you could argue they had given us some warning it was possible

I would also agree that they have set a precedent by previously offering to buy back parts from lenders on PBL6 & PBL4/4a but maybe take up was so low that thought it wasnt worth the effort. 

Has anyone corresponded with SS directly about these concerns rather than just flagging posts here? Maybe their ISP blocks forum notifications! 

The weekly update from 2nd Feb says that a payment of £150k has been received for PBL008. Commercial mortgage in place to take Lendy out. This loan is a mix of retail and commercial, so may have more than one exit strategy. Needs SS to inform lenders what's happening, re-valuation etc.