lobster
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Post by lobster on Aug 31, 2015 9:35:39 GMT
Hi all,
I'm new to AC (and to P2P) and am just trying to get my head around how the "Upcoming Loans" work with regard to drawdown. I have more than a sneaking suspicion that both these questions display a high level of ignorance (!?), but I can't seem to find the answers on the AC website. I think it boils down to 2 questions :
Q1. What happens if an upcoming loan is either over-subscribed or under-subscribed when it comes to drawdown ?
Q2. Can someone tell me about "underwriters" ?! Who are they and what is their function?
Thanks in advance,
Lobster
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Post by mrclondon on Aug 31, 2015 10:08:13 GMT
Q1. If oversubscribed the system will scale back the bigger requests such that "small" requests get filled completely upto a limlit, then all larger requests get a fixed scaled back amount. If undersubscribed, the surplus will appear in the loan units available list.
Q2. The underwriters are a group of very large lenders (IIRC £250k is AC's preferred minimum underwriting amount) who fund the loan at drawdown. This ensures almost all loans have funds available when drawdown is to happen, and reduces the admin of AC chasing for the funds during the tight legal timetable prior to drawdown.
Underwriters do have some discretion as to which loans they bid for (and the amount therof), but have to release a minimum of 50% of their bid on drawdown to retail lenders.
One other point, the drawdown dates given are only indicative, and are subject to revision due to legals proceeding faster/slower than anticipated. Around 3 to 5 working days before drawdown a flag will appear against the loan indicating that underwriter funds have been requested. At this point its fairly certain drawdown will occur with two weeks, and for smaller loans (or some high yield loans) where oversubscription is likely, this is the point to ensure you have cash in your AC MLIA to cover your request as the loan drawsdown.
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ilmoro
Member of DD Central
'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 Aug 31, 2015 10:12:53 GMT
Hi all, I'm new AC (and to P2P) and am just trying to get my head around how the "Upcoming Loans" work with regard to drawdown. I have more than a sneaking suspicion that both these questions display a high level of ignorance (!?), but I can't seem to find the answers on the AC website. I think it boils down to 2 questions : Q1. What happens if an upcoming loan is either over-subscribed or under-subscribed when it comes to drawdown ?
Q2. Can someone tell me about "underwriters" ?! Who are they and what is their function?
Thanks in advance,
Lobster Hi & welcome 1. If the loan is oversubscribed the system will allocate the loan amongst all lenders with targets enabled (and funds) equally, with any surplus left after smaller requests are filled allocated to larger targets. If supply is insufficient to give all lenders at least £1 then distribution will be to random lenders. If the loan is underscribed then the remainder will be available on the market. If eligible, the GBBA & GEIA funds will also buy chunks within their own distribution parameters. 2. Underwriters are HNW individuals who bid on the loan to fund it prior to it being avaliable to normal lenders and receive a fee from AC for this. So behind the scenes each new proposal will be initially shown to UW who will then bid to fill it. Once filled it will be listed as upcoming for normal lenders to review & set targets whilst AC do the legal stuff. When legals are complete funds will be requested from UW over 3-5 days and once received the loan will drawdown. At this point UW are required to release a minimum of 50% of their holding to normal lenders which the system allocates to those with bids as per Q1.Originally normal lenders could participate in loan auctions like on other platforms but this stopped when the new platform launched Edit. Crossed with MrL. Really need to find out why my tablet dislikes this website so much, crashes in middle of answers, randomly moves cursor, wont delete in right place. Very annoying
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lobster
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Post by lobster on Aug 31, 2015 12:14:03 GMT
Many thanks mrclondon and ilmoro - most helpful and much appreciated
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Post by max47 on Sept 1, 2015 14:52:55 GMT
Many thanks mrclondon and ilmoro - most helpful and much appreciated Another question related to above. What if i deposit money in my MLIA for an upcoming loan on which i have set a target but at the same time I already have unfulfilled targets on existing loans in my loan book. Which is prioritised?
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Post by mrclondon on Sept 1, 2015 15:03:31 GMT
Many thanks mrclondon and ilmoro - most helpful and much appreciated Another question related to above. What if i deposit money in my MLIA for an upcoming loan on which i have set a target but at the same time I already have unfulfilled targets on existing loans in my loan book. Which is prioritised? The first loan to have available loan parts will take your cash (or a slice thereof) be it an existing loan or a newly drawn down loan with parts newly available. This is for me the most annoying aspect of the AC model - you have to keep adjsuting your targets to just above current holdings to stop cash waiting for new loans being snaffled. The problem is compounded as many lenders sell chunks of existing loans shortly before the drawdown of new loans to release cash but this increased availability of existing loans mucks up those who already had cash in the account for the new loan(s).
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niceguy37
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Post by niceguy37 on Sept 1, 2015 15:08:20 GMT
Another question related to above. What if i deposit money in my MLIA for an upcoming loan on which i have set a target but at the same time I already have unfulfilled targets on existing loans in my loan book. Which is prioritised? The first loan to have available loan parts will take your cash (or a slice thereof) be it an existing loan or a newly drawn down loan with parts newly available. This is for me the most annoying aspect of the AC model - you have to keep adjsuting your targets to just above current holdings to stop cash waiting for new loans being snaffled. The problem is compounded as many lenders sell chunks of existing loans shortly before the drawdown of new loans to release cash but this increased availability of existing loans mucks up those who already had cash in the account for the new loan(s). It would be very useful if there was a way to prioritise loans, or have various pots of money for various uses. I've suggested such things but higher programming priorities have always come in the way.
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ilmoro
Member of DD Central
'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 Sept 1, 2015 15:10:41 GMT
Many thanks mrclondon and ilmoro - most helpful and much appreciated Another question related to above. What if i deposit money in my MLIA for an upcoming loan on which i have set a target but at the same time I already have unfulfilled targets on existing loans in my loan book. Which is prioritised? The system will buy whatever is available at the time. So if you want to ensure you invest in the upcoming loan you would need to disable the targets on the existing loans prior to the deposit. However, apart from those with availability showing which would be bought immediately, it very much depends on which loans as many loans only rarely appear on the SM, so more than likely in most cases you can probably judge whether you are likely to pick up bits of existing loans or not, eg. around the time payments are due tends to be the most likely point for sales by other lenders. Its educated guesswork as you are obviously dependent on the decisions of others. Edit Goddamit MrL, stop showing up my tablet & typing skills 
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Post by lynnanthony on Sept 1, 2015 22:37:57 GMT
... This is for me the most annoying aspect of the AC model - you have to keep adjsuting your targets to just above current holdings to stop cash waiting for new loans being snaffled. The problem is compounded as many lenders sell chunks of existing loans shortly before the drawdown of new loans to release cash but this increased availability of existing loans mucks up those who already had cash in the account for the new loan(s). I can't say I find it a problem at the moment! The amount of existing loans I pick up is tiny. Shrapnel. In theory it could be a problem if the secondary market (by which I mean loans after the initial draw down flurry of activity) got more volatile but even then, hey, you're picking up loans that you've said you want to pick up. That said, a way of ring fencing cash for particular loans would be useful.
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niceguy37
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Post by niceguy37 on Sept 2, 2015 8:36:25 GMT
... This is for me the most annoying aspect of the AC model - you have to keep adjsuting your targets to just above current holdings to stop cash waiting for new loans being snaffled. The problem is compounded as many lenders sell chunks of existing loans shortly before the drawdown of new loans to release cash but this increased availability of existing loans mucks up those who already had cash in the account for the new loan(s). I can't say I find it a problem at the moment! The amount of existing loans I pick up is tiny. Shrapnel. In theory it could be a problem if the secondary market (by which I mean loans after the initial draw down flurry of activity) got more volatile but even then, hey, you're picking up loans that you've said you want to pick up. That said, a way of ring fencing cash for particular loans would be useful. I'd like it if we could mark our favourite loans and then reserve part of our available funds in case any of them became available.
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Post by chris on Sept 2, 2015 8:52:28 GMT
I can't say I find it a problem at the moment! The amount of existing loans I pick up is tiny. Shrapnel. In theory it could be a problem if the secondary market (by which I mean loans after the initial draw down flurry of activity) got more volatile but even then, hey, you're picking up loans that you've said you want to pick up. That said, a way of ring fencing cash for particular loans would be useful. I'd like it if we could mark our favourite loans and then reserve part of our available funds in case any of them became available. I've got a couple of ideas along those lines, will revisit them after the next big release is out and the dust has settled. That in itself is bringing quite a few changes to the MLIA.
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jonah
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Post by jonah on Sept 2, 2015 20:05:55 GMT
I'd like it if we could mark our favourite loans and then reserve part of our available funds in case any of them became available. I've got a couple of ideas along those lines, will revisit them after the next big release is out and the dust has settled. That in itself is bringing quite a few changes to the MLIA. Oooooh, sounds interesting. Any details which can be shared or approximate timelines?
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Post by chris on Sept 3, 2015 8:23:31 GMT
I've got a couple of ideas along those lines, will revisit them after the next big release is out and the dust has settled. That in itself is bringing quite a few changes to the MLIA. Oooooh, sounds interesting. Any details which can be shared or approximate timelines? New release will be next week barring any last minute changes. I'm in the middle of implementing a pretty major change to our original plans which still needs testing but the plan is still to be live next week. Not able to share too much yet but there'll be a new investment account and the MLIA will become more focussed on our "power" users with a more flexible implementation that can handle premiums and discounts (although premiums are likely to remain disabled for now), with the current simple target system being replaced. The investment decision code that powers the GBBA and GEIA has also been rewritten from the ground up to address the deficiencies in the current implementation. Whilst the launch code will be broadly similar and relatively simple the restructuring of that part of the code gives us much more control and flexibility over time should we need it.
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sl75
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Post by sl75 on Sept 7, 2015 18:34:08 GMT
... with the current simple target system being replaced... I assume that those of us who like the current simple target system will still be able to use something approximating it?
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Post by chris on Sept 7, 2015 18:44:00 GMT
... with the current simple target system being replaced... I assume that those of us who like the current simple target system will still be able to use something approximating it? It's not night and day different, instead of setting a target and leaving it you create buy and sell orders. These deal in absolute amounts only (so buy £100 which if you already had £2,000 would take your investment up to £2,100) and have a few more controls but if you stick with the defaults and adjust for it being a discrete instruction rather than being an adjustment to your holding then it's similar enough.
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