ablender
Member of DD Central
Posts: 2,204 
Likes: 555
|
Post by ablender on Oct 28, 2015 6:00:47 GMT
Actually each SS loan come with two documents. One is called the "Bridging Loan Particulars" which describe security, loan amount, LTV, loan term, etc. The other document is called "Valuation document" and this is prepared by valuation companies such as Cooper & Tanner LLP, Tyler Greenwood Surveyors, and Bruton Knowles. There is also mention of valuers who are "RICS Registered Valuer", although I do not know exactly what this means. I am assuming that it is a professional body for valuers.
Also the model SS uses makes sure that SS itself earns a profit that makes them viable.
|
|
|
|
Post by aloanatlast on Oct 28, 2015 7:06:11 GMT
Trouble is, overheads don't scale. The volume has to reach a break-even point before a company is viable. This has taken years even for the bigger players.
Dunno about SS, but many of those on the P2B bandwagon don't seem to know the trick when it comes to building volume. There's going to be a shakeout when the backers don't see enough growth.
|
|
adrianc
Member of DD Central
Posts: 10,015
Likes: 5,143
|
Post by adrianc on Oct 28, 2015 8:15:37 GMT
IMHO, the LTV's are overly optimistic possibly to entice investors into the water. We are so reliant on the underwriting / valuation quality within these platforms. Oh, absolutely. And there are other platforms I'm far more sceptical about in that regard than SS. As ablender says, SS publish their valuations in full, with the valuer's name, logic, findings and reasoning attached. That, to me, says that these valuations are sounder than just a figure waved about. ablender - yes, RICS is the Royal Institute for Chartered Surveyors, the industry body. www.rics.org/uk/knowledge/professional-guidance/red-bookIf a valuation has a RICS member's name on it, but is an artificial puff-piece, then the valuer and their company are risking a lot of professional reputation, even their membership of the professional body.
|
|
|
|
Post by jackpease on Oct 28, 2015 8:19:08 GMT
So a simple assessement of the risk of the SS loanbook could be distilled down to one question "On how many of the loans have the security valuations been overstated ?" Unfortunately you've only to look at some of the AC bridging loans (Kent , Ipswich, Anglesey) and FS (Lubin art, aboriginal art, Michael Jackson memorbillia) to realise that the probability is a proportion of secured loans on p2p/p2b platforms will actually have inadequate security cover. This is exactly my fear - Assetz is obsessive with its checks and still found that when push came to shove, security may not be as secure as it seems. Some of SS's loans are so massive that if they go wrong and the security doesn't pan out the impact could be catastrophic. My kneejerk reaction is to grab as much of their 12% as i can but i'm restricting my exposure to c10% of my portfolio - i see from another thread that many have huge proportions (>50%) of their portfolio on SS and that is scary. Jack P
|
|
bjorn
Posts: 102
Likes: 39
|
Post by bjorn on Oct 28, 2015 8:51:59 GMT
IMHO, the LTV's are overly optimistic possibly to entice investors into the water. We are so reliant on the underwriting / valuation quality within these platforms. Oh, absolutely. And there are other platforms I'm far more sceptical about in that regard than SS. As ablender says, SS publish their valuations in full, with the valuer's name, logic, findings and reasoning attached. That, to me, says that these valuations are sounder than just a figure waved about. ablender - yes, RICS is the Royal Institute for Chartered Surveyors, the industry body. www.rics.org/uk/knowledge/professional-guidance/red-bookIf a valuation has a RICS member's name on it, but is an artificial puff-piece, then the valuer and their company are risking a lot of professional reputation, even their membership of the professional body. Agree that having a surveyor's valuation is better than not. But remember that surveying is traditionally the profession of choice for public school boys who weren't bright enough to get into other professions. Harry Enfield's character Tim Nice But Dim (that's going back a bit!) would almost certainly have been a Chartered Surveyor. Now there's a red rag to flush out any surveyors on the forum 
|
|
acky
Posts: 481
Likes: 262
|
Post by acky on Oct 28, 2015 9:05:46 GMT
No idea. savingstream may be willing to give you a definitive answer. My own gut feel is that it's academic to us whether their underwriting is internal or external. Bear in mind, too, that loans don't necessarily draw-down immediately, and that they take and hold-back all the interest from loans, so will have substantial-enough cash reserves on hand to fill any gaps, so I don't see it as impossible. Are we certain they (SavingStream) hold back the interest on loans advanced? I've looked around their website for mention of this but can't find reference anywhere. That certainly makes a big difference on risk.
|
|
|
|
Post by Financial Thing on Oct 28, 2015 13:08:28 GMT
Are we certain they (SavingStream) hold back the interest on loans advanced? I've looked around their website for mention of this but can't find reference anywhere. That certainly makes a big difference on risk. (afaik) yes, the interest is retained from the loan advance. The only mention I can find of it is here where SS are talking about something slightly different. (not a perfect find I admit, but at least it does mean that they do retain the interest) The question about SS profitability was summarised by SS here. Thanks pepperpot. Good to know SS is profitable.
|
|
SteveT
Member of DD Central
Posts: 6,875
Likes: 7,924
|
Post by SteveT on Oct 28, 2015 16:17:42 GMT
In a subsequent post SS asserted they were probably the most profitable P2P business in the known universe |
|
ablender
Member of DD Central
Posts: 2,204
Likes: 555
|
Post by ablender on Oct 28, 2015 17:21:34 GMT
No idea. savingstream may be willing to give you a definitive answer. My own gut feel is that it's academic to us whether their underwriting is internal or external. Bear in mind, too, that loans don't necessarily draw-down immediately, and that they take and hold-back all the interest from loans, so will have substantial-enough cash reserves on hand to fill any gaps, so I don't see it as impossible. Are we certain they (SavingStream) hold back the interest on loans advanced? I've looked around their website for mention of this but can't find reference anywhere. That certainly makes a big difference on risk. Yes. They do mention on various occasions that borrowers have paid x months of extra interest to extend their loan. This is because they have to cover all the 18% of interest (12% of which will go to the lenders).
|
|
|
|
Post by Financial Thing on Oct 28, 2015 17:28:11 GMT
|
|
acky
Posts: 481
Likes: 262
|
Post by acky on Oct 28, 2015 17:51:48 GMT
So it was clear they were in deep doo-doo some time ago! I feel sure that if I'd received that letter from anyone I was invested with, I'd have run for the hills immediately. In fact, knowing they put that letter out and based on my experience of SavingStream, I feel more confident that they won't go the same way as Trustbuddy, at least not yet awhile. Thanks for posting that.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Oct 29, 2015 23:29:38 GMT
At last ABLrate have an aircraft loan, 10% for six months with instant returns. Helps with diversification to jump into a plane rather than another ship.
|
|
oldgrumpy
Member of DD Central
Posts: 5,087
Likes: 3,233
|
Post by oldgrumpy on Oct 30, 2015 11:47:11 GMT
"Trustbuddy also posted some assertions investor.trustbuddy.com/wp-content/uploads/2015/07/TB-Lender-Letter.pdf."
They had nothing to say then?
|
|
nick
Member of DD Central
Posts: 1,056
Likes: 825
|
Post by nick on Oct 30, 2015 20:48:45 GMT
adrianc, do you know if my impression that SS invest in the loans is correct or not? My understanding is that when Saving Stream first started they would lend their own money to fill each loan, then offer the loan to other lenders so that Saving Stream had enough cash to make the next loan. Saving Stream was a loan company first and it later created the P2P facility to raise extra funds for lending. But the concept of Savings Stream lending their own money has not been mentioned since they moved into bigger loans and asked for underwriters. The elephant in the room is that Savingstream isn't p2p. Savingstream lends to each borrower. We lend to Savingstream, not the underlying borrowers. Our loans to Savingstream are 'secured' against security held by Savingstream in relation to the notional underlying loan. The bottom line is that in addition to taking on the underlying borrower's credit risk, we are also taking on Savingstream's credit risk. The security provided to us are a pass through of the security held in respect of the underlying loan. However, if Savingstream were to suffer a loss other than directly related to that specific underlying loan (ie the specific borrower does not default), then that security cannot be used to satisfy our debt. Examples of how a catastrophic loss could arise are fraud at Savingstream, other losses in any other business/activities Savingstream may undertake beyond lending on the platform we see, etc, etc. The credit risk posed by Savingstream may be small (they appear to be fairly profitable), but their failure could prove catastrophic to any portfolio held with them and cannot be mitigated by diversifying across the underlying loans. It is because of this concentrated credit risk posed by Savingstream themselves that I limit my lending on the 'platform' to no more than 5% of portfolio. I just wish there were 20 move Savingstreams out there so that I could truly diversify and pick up 12% across the board!
|
|
ablender
Member of DD Central
Posts: 2,204
Likes: 555
|
Post by ablender on Oct 30, 2015 20:51:35 GMT
nick, this is not the case anymore. SS changed the way it operates.
|
|
