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Post by Deleted on Oct 9, 2015 6:49:24 GMT
"skin-in"
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koba
Posts: 45
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Post by koba on Oct 10, 2015 13:39:44 GMT
koba. Your comments are fair. Even if they act for the borrower in the first instance, lenders have the right to expect sponsors to execute their responsibilities with professionalism and competence. I'd also agree that there have been a number of loans on TC that really never should have been anything but equity propositions. As loans, the return to risk was horribly skewed against the lender. I suppose my (perhaps feeble) point here is that it's incredibly easy to be negative about TC; I know I have been on the old forum! Nonetheless, we all need to try to be somewhat balanced since there is a risk of being irrational. I haven't calculated the numbers, but if an investor had bought into the "TC total return index" I suspect they'd be sitting on returns in the high single digits over the past three years, which is hardly a bad result. The fact that some investors' returns have been far worse is unfortunate but not really TC's fault. TC and sponsors could have possibly improved those returns and clearly improved the user's experience but a wide distribution of returns was inevitable on a platform where investors have complete discretion to take risk. The second point is one of being fair to TC when comparing it with other platforms. I think it's very easy to take pot shots at TC because they are a genuine P2B platform where investors get offered a ring side seat for the less pleasant side of taking credit risk: the reality of default and the extended recovery process. On many platforms that process is partially or completely hidden from view or made to feel somehow irrelevant through the use of provision funds. On platforms like SS, Wellesey or LendInvest, it would be quite possible to never know a genuine default had occurred or what how the recovery really panned out. Operational processes are also quite opaque. Of course, emotionally it's far easier to invest on those platforms than having to live with with than the ups and downs of platforms like TC (or AC). My concern here is that if most investors keep choosing those platforms over places like TC, then my choice will also be limited. I don't want provision funds at the expense of lower yields, a fire-and-forget "savings account" or opaque platforms where all the risk is hidden (until it's too late). Some very good points (as usual) samford71. It is, I believe, true as you state that a "TC Total Return Index" would not have been too shabby over the last three years. Certainly a portfolio comprised of selected conservative investments (e.g. my own) would in no way to date have been inferior to a similar portfolio (wrt achieved return or default experience) on AC or other platform. Again, like you, I have little interest in the lower-risk, lower-return platforms like Wellesley, Zopa and would like to see the AC/TC model thrive. I do tend to disagree, however, that it is the sight of default sausage being made or over-exposure to a defaulted loan that puts people off. If that was the case, you would expect the opprobrium to be more evenly spread over actual defaulters whereas, in fact, the most persistent complaints are very much concentrated in a handful of loans (like those mentioned by liz in the first posting in this thread). These are precisely those loans where there has been some obvious failure (failure in DD, failure in documentation, failure to effectively monitor or manage defaults, generally some failure in process). This I suggest matters and cannot be simply disregarded as the price of investing in risky assets irrespective of achieved returns to date. It is important, I believe, to realise that P2P is still a relatively recent phenomenon. Taken together with the rapid growth seen over the last two years means that the 'average' P2P loan is quite recent and portfolios unseasoned. In addition, the last several years have been quite benign for P2P - lots of demand displaced from banks and a decent economy (at least to the degree there has been no recession). In other words these portfolios have never, by and large, been stressed. Sooner or later we are going to see a more difficult environment and it would be reasonable to expect that defaults will rise and achieved returns will start to depend a lot more on efficient documentation, management and recovery - all the areas where TC has proved to be lacking. It was Saint Warren who said that "it is only when the tide goes out you can see who has been swimming naked". The suspicion is that, beneath the surface, TC is indeed swimming naked.
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pikestaff
Member of DD Central
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Post by pikestaff on Oct 10, 2015 15:20:24 GMT
koba My view is that in only 1 of the 3 loans mentioned in the OP (Eurojet) is there a possible absence of swimming trunks. Furthermore, any mistakes that were made on this loan were made at the outset. I believe both TC and the sponsor have improved their processes since then. I have seen nothing yet to convince me that the post default process could have been handled better - except for the lamentable communications. CTL was wholly dependent on a supposed order from the US military whch never came, and the guarantors have played hardball. As for SAS, I think the sponsor and TC are blameless. If I said why, it would be moderated but it's clear enough on the old forum. Which is not to say that the default handling process has been perfect. That's why they recruited Jill Sandford, but it's unrealistic to expect everything to be perfect overnight. I personally have more issues with the handling of loans in the hospital ward than of those that are defunct.
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koba
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Post by koba on Oct 10, 2015 17:36:11 GMT
koba My view is that in only 1 of the 3 loans mentioned in the OP (Eurojet) is there a possible absence of swimming trunks. Furthermore, any mistakes that were made on this loan were made at the outset. I believe both TC and the sponsor have improved their processes since then. I have seen nothing yet to convince me that the post default process could have been handled better - except for the lamentable communications. CTL was wholly dependent on a supposed order from the US military whch never came, and the guarantors have played hardball. As for SAS, I think the sponsor and TC are blameless. If I said why, it would be moderated but it's clear enough on the old forum. Which is not to say that the default handling process has been perfect. That's why they recruited Jill Sandford, but it's unrealistic to expect everything to be perfect overnight. I personally have more issues with the handling of loans in the hospital ward than of those that are defunct. pikestaff, I must with respect disagree with your analysis - at least to some extent. I have no view on SAS. For me the lamentable communications on Eurojet were only one of several issues giving pause for thought. We do not have visibility on the whole saga but when a PG is not supported by a requirement that all parties (husband and wife) independently receive legal advice, you know you are dealing with amateurs. Doubly so when the PG is altered at the last minute without notice. Maybe the post-default debacle was a foregone conclusion which could not have been handled better but only because the groundwork was not there. The fact that CTL did not get this order or that order is only the proximate cause of the issues. The root cause is that they financially over-extended and invested in fixed assets beyond the company's ability to pay for them and were vulnerable to any setback. This was also not his first company to have failed in a seemingly very similar way judging from the financial record - a fact that was not disclosed at the time.
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Post by tybalt on Oct 11, 2015 6:22:18 GMT
" The fact that CTL did not get this order or that order is only the proximate cause of the issues. The root cause is that they financially over-extended and invested in fixed assets beyond the company's ability to pay for them and were vulnerable to any setback. This was also not his first company to have failed in a seemingly very similar way judging from the financial record - a fact that was not disclosed at the time. "
It was disclosed in the Q & As
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koba
Posts: 45
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Post by koba on Oct 11, 2015 9:16:11 GMT
" The fact that CTL did not get this order or that order is only the proximate cause of the issues. The root cause is that they financially over-extended and invested in fixed assets beyond the company's ability to pay for them and were vulnerable to any setback. This was also not his first company to have failed in a seemingly very similar way judging from the financial record - a fact that was not disclosed at the time. "
It was disclosed in the Q & As
But not in the IP.
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bigfoot12
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Post by bigfoot12 on Oct 11, 2015 10:48:33 GMT
Replying to samford71, pikestaff and koba without reposting as my post became far too big. Returns on TC might have been okay so far, but the platform has been growing and defaults happen after a while. Most of the defaults being discussed now were lent in 2013. What will the total return look like when 2014 and 2015 loans have had some time to age? Will TC be here to see those loans age? And given their technological incompetence what is the chance of any run off procedure working? Most evidence and experience seems to suggest that it expecting a lot to hope that the borrowers agent will in most cases treat the lenders fairly, especially when the loan gets into difficultly. Certainly there are many cases when this has happened, but have there been enough? Whilst we might get a ring side seat ( samford71), I don't think that there is anyone fighting in our corner. I have suffered losses on most of the platforms I invest in, but my experiences on TC are my worst, not in total loss terms, but in how abandoned by the platform I feel. TC effectively requires some lenders to get involved to recover their money or else little will happen. If everyone is sensibly diversified there might not be anyone who cares enough. The arrival of Jill Sandford is obviously good news, but I am not convinced that lessons are learned. As the sponsors are still so important are other sponsors learning from the 'mistakes' of the others? I am increasingly wondering if P2P can succeed at a reasonably risk point? This isn't entirely my own thesis there have been a number of people suggesting it, in particular with reference to either P2PGI or VSL new issue (I can't remember which) saying that they don't really believe there is market failure in lending at the moment; there might have been in 2008 - 2013 but not so much now that the banks have re-adjusted. I am not close enough to banks now to know but the platforms, are increasingly looking more like GE capital or MBNA, but on a much smaller scale with larger overheads (in proportion). I hope that TC can survive, switch to new platform and oversee new contracts in a way that gives me confidence. I too would like to increase my exposure to this sector and AC seems to be unable to bring a significant number of new loans.
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Post by qwerty on Dec 2, 2015 13:20:49 GMT
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Post by captainconfident on Dec 2, 2015 18:18:45 GMT
Delighted to have read through this old thread again.
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shimself
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Post by shimself on Dec 2, 2015 21:26:26 GMT
That sort of link doesn't work on TC login forum News about loans board search for Eurojet at the time of writing the last post was about 4 weeks ago. Some people got very badly caught by this, the proposition,security and PG backstop looked entirely adequate when it was floated. You can remind yourself about the very bad feeling towards the borrower and his behaviour, not only from lenders but also from ex staff of the company. My take is that TC and the sponsor half dropped the ball, but it is not certain how much difference this made faced with the circumstances. Certainly one lesson has been learned (concerning the PG being the last resort). The average return at TC is very good, the default rate is about on forecast, and they now have a Recovery guru on board.
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