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Post by andrewholgate on Sept 22, 2015 8:23:40 GMT
<take a deep breath before hitting POST>
Why are AC a pushover? Everything we do is with the lender in mind. Recovery of your funds is the one thing that I continually hit my team with and they are always mindful of the actions to take.
As a wider business we are now chasing down 2 or 3 PG's where we will pursue to bankruptcy where necessary. We have enforced security and we have recovered. On the FF case we even rebuffed attempts to negotiate a reduced settlement. AC are not a soft touch. The difference is that enforcing security involves due process and a lot of legals. Done in a rushed or slipshod way would mean it becomes unenforceable. Insolvency Practitioners are some of the most highly experienced, and highly paid, professionals because the rules around enforcement and collection are so hard. Less than 20% of the people who start the IP exams actually pass them.
At AC the whole credit team have spent time in recoveries and turnaround. We have a qualified IP in the business and an insolvency lawyer. We know what we are doing so I refute that we are a soft touch. If any affected lender wants to come into stockport and see the team in action then they can.
In this case, what is the better option? They don't have the cash now as the FIT payments are delayed. They are still moving to the higher repayments now that the turbine is running and will make good the shortfall in a few months. We have a reservation of rights to come back to this date should they not make the repayment as planned. That is a fair and reasonable position and would satisfy the treating customers fairly rules the FCA have. The alternative is enforce now, go into a sales process that could take months and end up in a worse position.
Part of me wants to shout that we are experienced lenders but they wouldn't help. Every investor is entitled to their opinion but I do refute we are a light touch.
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niceguy37
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Post by niceguy37 on Sept 22, 2015 8:49:13 GMT
andrewholgate I think what has bothered some lenders is that the borrower is asking for a favour without appearing to offer anything, other than promises, in return. It seems that these lenders consider a principle is at stake. If the borrower had suggested, say an extra 0.25% or 0.5% interest until repayments were back on track in December, I think there'd be much less upset. I do appreciate what a comparatively good job AC are doing in recovering our funds so far, especially in the case of FF. Thank you. I know AC have to be very careful to be seen to not be giving financial advice, but it is a shame that it is so hard to glean what AC would do if it were their money. Perhaps AC could take a 0.1% stake in each loan, and then publish what their vote is on their share.
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Post by andrewholgate on Sept 22, 2015 9:09:10 GMT
Noted. First point to make is that we don't have permissions to lend as a balance sheet lender. Putting our cash in is a no-no at present but might change.
My own view on this one is I would take the deal. THIS IS MY PERSONAL VIEW AND IS NOT REPRESENTATIVE OF THE VIEWS OF AC NOR DOES IT CONSTITUTE FINANCIAL ADVICE. I have family in this loan and when I discussed it with them, they agreed with my rationale.
The borrower has agreed to pay £5k now I thought?
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SteveT
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Post by SteveT on Sept 22, 2015 9:21:12 GMT
If the Borrower (or the Monitoring Surveyor) had raised the cash flow mismatch issue a month or two ago then I'd have been more minded to cut them some slack. To be "asked" literally the day before the reduced payment was requested, and then for the reduced payment to be made even before the vote is taken (presuming acceptance) is simply taking liberties.
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Post by andrewholgate on Sept 23, 2015 9:33:38 GMT
Also noted. I am aware that the information was known by the introducer well before they approached us. To say I am cheesed off by that is an understatement.
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Post by bracknellboy on Sept 23, 2015 10:51:12 GMT
I voted for option A (with a request that the borrower be told in no uncertain terms that late notification was received extremely badly and was not on). The fact that "they" came to AC at the last moment is a **** take, however David R had suggested on this board that he thought hte issue was likely at the introducer side. Not that to a degree that matters. The reality w.r.t. cash flow is as it is; and had they come to the table 1 to 2 months beforehand I doubt there would have been much quibble at option a (bar perhaps insisting on some additional interest rate). And the admin side of sorting out higher interest rate for short period was probably asking a lot of AC for very little overall return, esp. given the news that was relayed that the terms would only allow that on the missing repayment. I therefore swallowed hard and decided option b was probably a case of nose and face.
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Post by andrewholgate on Sept 23, 2015 12:51:30 GMT
Please believe me when I say I don't disagree. They probably knew well before that they couldn't make the payment and should have stated so. What we don't have the luxury of is reams of bank account data that we could have acted upon. Banks do have that luxury.
In my personal view, right solution but annoyed that it came at such late notice. We are where we are. Let's move on.
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shimself
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Post by shimself on Sept 23, 2015 14:00:29 GMT
... The alternative is enforce now, go into a sales process that could take months and end up in a worse position.... The alternative is to charge a higher rate of interest for the time that the repayments are behind. I was hoping this would be automatic. It's not world war 3 it's just a cost that a sensible borrower would rather avoid.
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shimself
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Post by shimself on Sept 23, 2015 14:01:47 GMT
I'm told that we won't know the results of the vote until Friday, do you know different?
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Post by andrewholgate on Sept 25, 2015 15:40:04 GMT
A few lenders have raised a point about default interest and that this is a breach of the agreement which should trigger default interest.
In the loan agreement is a section on variation of the agreement which says it is not allowed unless agreed to by the Agent and the Borrower in writing. The borrower has requested to vary the agreement in writing to AC as the Agent for the loan. The result of the vote was to agree to the variation and we will confirm in writing to the borrower that the agreement can be varied. As such the loan is not in default. It would not be deemed acceptable under TCF rules to now charge the borrower the higher default rate as it has been agreed to vary the loan.
What we do have is a reservation of rights which means should the payment not be made on the new due date then we revert back to this event as the default event and default interest can be back dated to this point.
I trust this clarifies the position.
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shimself
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Post by shimself on Sept 25, 2015 16:33:43 GMT
A few lenders have raised a point about default interest and that this is a breach of the agreement which should trigger default interest. In the loan agreement is a section on variation of the agreement which says it is not allowed unless agreed to by the Agent and the Borrower in writing. The borrower has requested to vary the agreement in writing to AC as the Agent for the loan. The result of the vote was to agree to the variation and we will confirm in writing to the borrower that the agreement can be varied. As such the loan is not in default. It would not be deemed acceptable under TCF rules to now charge the borrower the higher default rate as it has been agreed to vary the loan. What we do have is a reservation of rights which means should the payment not be made on the new due date then we revert back to this event as the default event and default interest can be back dated to this point.I trust this clarifies the position. I must correct this. I had written to Dave trying to get some agreement on the matter before having a battle on the forum, but Andrew has obviously decided to get his response in first. Dave was kind enough to send me a redacted* copy of the agreement. In it para 6 says very plainly If the borrower misses a payment, then default interest (4% over the loan rate) shall be paid until it's rectified. No ifs or buts - it shall be paid. It also says that the borrower must inform the agent (which is Assetz) promptly of any potential default event (such as this). They didn't, they told the monitor at the last minute (no mention of a "monitor" in the agreement) I am hoping that Assetz will tell us that from now on default interest on any loan will automatically be charged as per the agreement, that you will never waive default interest again without expressly asking lenders, and only in circumstances where the whole loan is jeopardised without some compromise (or where the borrower has a good case to plead innocence). And Andrew I think we are owed an explanation as to why AC formulated an option A which sneakily let the borrower off without making it clear to lenders that we would normally have expected this extra interest. A couple of stage payments with catchup in December with that bit of extra interest was the fair solution and I just don't understand why it wasn't proposed by you in the first place. Do you seriously imagine lenders would have said no let them off. Do you seriously think letting the borrower off was helpful? * Not redacted a jot as far as I can see, but AC held onto it for 10 days before sending it. This doesn't feel "Fair."
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shimself
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Post by shimself on Sept 25, 2015 17:13:17 GMT
So if the lenders want default interest, we have to say no. But AC usually make it clear in the vote requests that voting no might involve increase costs and possibly a less than 100% recovery of capital. It's tricky isn't it? It's important to avoid the temptation to "punish" the borrower somehow and focus instead on the best outcome going forward but it's difficult to avoid the feeling that the lenders are being played. I'm in the fortunate position of never missing a payment on a loan that I took out but does anyone know what typically happens when a company take a loan from Barclays and misses a couple of payments? Do high street banks make loans with bullet repayments? Do they charge any kind of penalty? i.e. What happens in the "real world"? Banks take every opportunity to impose utterly extortionate charges at the least excuse (maybe a touch exaggerated, but no way on this earth do they say, oh well never mind just catch up soon and we'll say no more about it). Our default interest is modest. That's my point the AC proposal was needlessly soft and sneakily described.
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ilmoro
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112 vote
Sept 25, 2015 17:16:24 GMT
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Post by ilmoro on Sept 25, 2015 17:16:24 GMT
A few lenders have raised a point about default interest and that this is a breach of the agreement which should trigger default interest. In the loan agreement is a section on variation of the agreement which says it is not allowed unless agreed to by the Agent and the Borrower in writing. The borrower has requested to vary the agreement in writing to AC as the Agent for the loan. The result of the vote was to agree to the variation and we will confirm in writing to the borrower that the agreement can be varied. As such the loan is not in default. It would not be deemed acceptable under TCF rules to now charge the borrower the higher default rate as it has been agreed to vary the loan. What we do have is a reservation of rights which means should the payment not be made on the new due date then we revert back to this event as the default event and default interest can be back dated to this point.I trust this clarifies the position. I must correct this. I had written to Dave trying to get some agreement on the matter before having a battle on the forum, but Andrew has obviously decided to get his response in first. Dave was kind enough to send me a redacted* copy of the agreement. In it para 6 says very plainly If the borrower misses a payment, then default interest (4% over the loan rate) shall be paid until it's rectified. No ifs or buts - it shall be paid. It also says that the borrower must inform the agent (which is Assetz) of any potential default event (such as this). They didn't, they told the monitor at the last minute (no mention of a "monitor" in the agreement) I am hoping that Assetz will tell us that from now on default interest on any loan will automatically be charged as per the agreement, that you will never waive default interest again without expressly asking lenders, and only in circumstances where the whole loan is jeopardised without some compromise (or where the borrower has a good case to plead innocence). And Andrew I think we are owed an explanation as to why AC formulated an option A which sneakily let the borrower off without making it clear to lenders that we would normally have expected this extra interest. A couple of stage payments with catchup in December with that bit of extra interest was the fair solution and I just don't understand why it wasn't proposed by you in the first place. Do you seriously imagine lenders would have said no let them off. Do you seriously think letting the borrower off was helpful? * Not redacted a jot as far as I can see, but AC held onto it for 10 days before sending it. This doesn't feel "Fair." Begs the question how many of the monitoring loans that are in default should be paying default interest but arent at ACs discretion.
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pikestaff
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Post by pikestaff on Sept 25, 2015 17:47:15 GMT
A few lenders have raised a point about default interest and that this is a breach of the agreement which should trigger default interest. In the loan agreement is a section on variation of the agreement which says it is not allowed unless agreed to by the Agent and the Borrower in writing. The borrower has requested to vary the agreement in writing to AC as the Agent for the loan. The result of the vote was to agree to the variation and we will confirm in writing to the borrower that the agreement can be varied. As such the loan is not in default. It would not be deemed acceptable under TCF rules to now charge the borrower the higher default rate as it has been agreed to vary the loan. What we do have is a reservation of rights which means should the payment not be made on the new due date then we revert back to this event as the default event and default interest can be back dated to this point.I trust this clarifies the position. I must correct this. I had written to Dave trying to get some agreement on the matter before having a battle on the forum, but Andrew has obviously decided to get his response in first. Dave was kind enough to send me a redacted* copy of the agreement. In it para 6 says very plainly If the borrower misses a payment, then default interest (4% over the loan rate) shall be paid until it's rectified. No ifs or buts - it shall be paid. It also says that the borrower must inform the agent (which is Assetz) of any potential default event (such as this). They didn't, they told the monitor at the last minute (no mention of a "monitor" in the agreement) I am hoping that Assetz will tell us that from now on default interest on any loan will automatically be charged as per the agreement, that you will never waive default interest again without expressly asking lenders, and only in circumstances where the whole loan is jeopardised without some compromise (or where the borrower has a good case to plead innocence). And Andrew I think we are owed an explanation as to why AC formulated an option A which sneakily let the borrower off without making it clear to lenders that we would normally have expected this extra interest. A couple of stage payments with catchup in December with that bit of extra interest was the fair solution and I just don't understand why it wasn't proposed by you in the first place. Do you seriously imagine lenders would have said no let them off. Do you seriously think letting the borrower off was helpful? * Not redacted a jot as far as I can see, but AC held onto it for 10 days before sending it. This doesn't feel "Fair."Hmmm. AC was notified before the payment was missed (albeit via the MS; I don't think this makes a jot of difference). The request for the variation was made before the payment was missed, and the request was assented to. The question is whether it is sufficient for the request to have been made prior to the default, provided it was subsequently accepted. I'm inclined to think that it is, in which case no default. The question as to what AC should have done is not entirely straightforward. If they had let the loan default without a lender vote then the loan would have been non-tradeable until the default is cured (expected to be December) which would have made some lenders very unhappy. To avoid this outcome they needed an agreement with the borrower, and if I was the borrower I would expect to get something in exchange. There is also the TCF point (albeit perhaps a weak one) of to what extent is it reasonable to refuse outright the customer's request for the variation. What they might have done IMO is say "sorry, we are not prepared to put this late request to our lenders which we think is unreasonable in the circumstances and does not reward them for their forbearance. We would however be prepared to ask them if they would agree to +2% (reserving rights to the full 4% if the default is not cured in December).
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shimself
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Post by shimself on Sept 25, 2015 18:55:34 GMT
What they might have done IMO is say "sorry, we are not prepared to put this late request to our lenders which we think is unreasonable in the circumstances and does not reward them for their forbearance. We would however be prepared to ask them if they would agree to +2% (reserving rights to the full 4% if the default is not cured in December). I don't really think the borrower had much negotiating clout. The agreement says pay +4% for as long as you are in default (about £500 I think). What is there to discuss? What could the borrower threaten? Why any forgiveness esp given the late notice (the agreement actually obliges the borrower to confess promptly any potential default event, and they therefore could and should have fessed up a month or more earlier). The concession on our part is to wait until December and not to go nuclear, that's quite enough. As regards TCF - aren't we customers? Have we been treated fairly? The real point is to get AC to rectify future handling. Assuming this goes as promised it's not a lot, but it might be different another time.
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