blender
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Post by blender on Nov 30, 2015 14:28:59 GMT
I was meaning, but did not explain well, that the consequence of this fund taking more SME whole loans will be that the consumer lenders on the partial market will be force-fed property, through PM and SM. Except that they don't seem to have enough property to feed us - I've just withdrawn 3.5% of my account total because the uninvested portion was getting out of hand (6% rising to 7.5% when Wolverhampton repays). Not so many with good cash back I agree. May I recommend Hendon 9? Consider that the partial board, PM and SM, will increasingly place property as the SME loans go as whole loans. FC are in a bind because their diversity rules for Autobidders apply to property, even though some of us think that the security makes the annual loss rate for property A+ much less than 0.6%, especially if you do not hold to term. And of course you need an impossibly high number of independent property holdings to get the 0.6% as an average of all your property defaults. The real danger is common mode factors in the property sector. So FC need the partial board and cash back underwriters to get it away. Property loan parts are selling much better than before the fixed rates on SMEs. Therefore, buy bigger chunks.
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metoo
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Post by metoo on Nov 30, 2015 16:19:09 GMT
New Autobidders must think they will be lending to SME businesses but will find, increasingly, that their money is going into property development in the new loans. I suppose, to get the money invested quickly, they have to buy a large number of loans on the SM. The money is going to be deployed in the PM via WLs - no purchasing on the SM. There is no mention of property loans at all in the prospectus so I think they are specifically excluded or would have been highlighted within the risk factors. In the prospectus, whereas property is not mentioned under the "Risk Factors" summary/introduction on p16, in the section "1. Risks relating to the Company and its business" which begins on p17, see the sub-heading "Investment in loans relating to, or secured on, real estate may have a different risk profile to other loans" on p21. This says that "The Company may invest in Credit Assets originated by Funding Circle that are secured on real estate. Such loans may be loans made to finance expansion or for other general purposes of the borrower, or may be loans made for the purposes of real estate development." It goes on to spell out the risks. So it does seem the investment trust will probably buy property loans on FC. Further details are given on p75.
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SteveT
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Post by SteveT on Dec 7, 2015 16:22:13 GMT
Was 18025, first tranche for 18092 Alton, the first property WL? Looks like it. One very large bid of £345,000 in "All Bids"
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am
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Post by am on Dec 7, 2015 16:46:15 GMT
Was 18025, first tranche for 18092 Alton, the first property WL? Looks like it. One very large bid of £345,000 in "All Bids" On the one hand we can "expect" this to repay in 6-8 months, which gives an effective interest rate in the range 9.5%-10%. On the other hand the LTV is nothing to shout about.
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metoo
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Post by metoo on Dec 7, 2015 17:03:30 GMT
I happened to look at the IR for 18025, and its a random one from another development altogether. Not that it affects anyone. Either this WL buyer isn't interested in the details, or had other ways of receiving them.
I wonder how opening up property to WL buyers will affect supply, and other dynamics... Time will tell.
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blender
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Post by blender on Dec 7, 2015 17:23:28 GMT
Oh dear - property whole loans. And they had 1% cash back. Presumably, because the selection is a random process, this must mean that most property loans are being offered as WL first.
You can find the name of the lender on 'all bids'. Not to be repeated here.
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bigfoot12
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Post by bigfoot12 on Dec 7, 2015 18:16:41 GMT
Oh dear - property whole loans. And they had 1% cash back. Presumably, because the selection is a random process, this must mean that most property loans are being offered as WL first. I'm not sure that follows. In the loanbook I can see one other WL, first charge loan, and two that look like rejects. It can be random without being 50:50. I get the impression that some funds don't want property loans and so FC aught only to offer them to those funds requesting them. That might be 1 in 100 or something else I have no idea.
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blender
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Post by blender on Dec 7, 2015 18:43:28 GMT
I would have thought that if property loans were to be included as whole loans then then the random selector should just operate over all loans, SME and property, and not have special arrangements for property. If there are special selections for property then FC needs to declare it as a change. It may have only just started. The first 17957, dated 4th. We will not see today's, 18025 and any more, until tomorrow. We may see some WL rejects.
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blender
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Post by blender on Dec 8, 2015 8:54:33 GMT
There are now three property development whole loans in the loanbook, and so it look like from Friday the property loans were included in the random selector for the whole loans fraternity. These are 18027, Hythe2, 18025, Alston 1, and 17957, Cheshire 2. They were all purchased by the same lender. It may be that the larger number of SME loans we have seen from Friday comes not from seasonal change, but perhaps from a compensatory reduction in the percentage of loans being offered as WL.
The issue of cherry picking will need to be watched carefully, though there is no evidence at present. But it does seem that FC have another significant outlet for property loans.
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acky
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Post by acky on Dec 8, 2015 9:00:04 GMT
I would have thought that if property loans were to be included as whole loans then then the random selector should just operate over all loans, SME and property, and not have special arrangements for property. If there are special selections for property then FC needs to declare it as a change. It may have only just started. The first 17957, dated 4th. We will not see today's, 18025 and any more, until tomorrow. We may see some WL rejects. 17957 appears to be the first accepted Property Whole Loan, but just before that, 17644 (Billinghurst) appears to have been a WL reject. 18027 (accepted yesterday) is another Property WL, 18 month £260k - we won't be able to see any more details unless and until a later tranche of the same development comes to us lesser mortals.
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blender
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Post by blender on Dec 8, 2015 9:16:33 GMT
Thanks, Acky - I did not look that far back because everything was PL. It could have been a system test, though of course Flying Circus do not normally bother with testing. We must keep a close eye on developments.
There will probably be fewer 2% CB offers and we will see about half of them.
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fasty
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Post by fasty on Dec 8, 2015 9:40:08 GMT
Do we think that our funky chums have even realised that property loans are appearing on the whole loan market?  |
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acky
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Post by acky on Dec 8, 2015 10:32:22 GMT
I guess my long wait for West Byfleet 4 with 2% CB may be for nowt if it goes to the WL market.  Yes, it will certainly make it harder to be clever anticipating CB levels on future tranches if we don't know whether we are going to see the tranche or not! B****r!
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Post by goldservice on Dec 8, 2015 10:46:25 GMT
Love the toy town atmosphere of the new Funky Crafts thumbnails and loan images   |
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nick
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Post by nick on Dec 8, 2015 12:17:45 GMT
Maybe the property WL are being munched by the FC investment trust. They are obliged to randomly select investments on the platform so if the investment mandate extends covers property (as others have pointed out seems to be the case from their prospectus) they are most likely the culprits.
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