MarkT
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PBL066
Jul 24, 2017 14:19:31 GMT
Post by MarkT on Jul 24, 2017 14:19:31 GMT
This and it's ugly twin have both apparently been sold and despite a nice comfortable 60 percent LTV, both would appear to have shortfalls. What's with these RICS folk? Can you say how much they went for?
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MarkT
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PBL066
Jul 24, 2017 15:19:41 GMT
Post by MarkT on Jul 24, 2017 15:19:41 GMT
OK. Thanks.
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GeorgeT
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PBL066
Jul 25, 2017 14:50:08 GMT
Post by GeorgeT on Jul 25, 2017 14:50:08 GMT
Repaid today. Along with PBL067.
Happy days.
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Jeepers
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Post by Jeepers on Jul 25, 2017 15:00:19 GMT
Why aren't we told what they went for? Was there a shortfall? If so, was the PF used?
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oldgrumpy
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PBL066
Jul 25, 2017 15:02:34 GMT
Post by oldgrumpy on Jul 25, 2017 15:02:34 GMT
Why aren't we told what they went for? Was there a shortfall? If so, was the PF used? Capital repaid but no outstanding bonus/interest. That will be a long time coming, if ever. No revelation regarding PF contribution
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r1200gs
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Post by r1200gs on Jul 25, 2017 15:16:29 GMT
Why aren't we told what they went for? Was there a shortfall? If so, was the PF used? not a shortfall on the capital amount - unless Lendy tell us, it's speculation. (Although my 50p wager is on there being one.) But there has been a shortfall against all monies owned to lenders (hence holding back the accrued interest / bonus accrual) and a significant one against the VR's valuation figures - hence (potentially) looking to the valuer for financial recourse. Well it would seem odd that the sale netted exactly the right amount to pay the capital only. I would have thought if there was any over it was due to lenders. So, I vote for a capital shortfall.
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Jeepers
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PBL066
Jul 25, 2017 15:22:58 GMT
via mobile
Post by Jeepers on Jul 25, 2017 15:22:58 GMT
Why aren't we told what they went for? Was there a shortfall? If so, was the PF used? Capital repaid but no outstanding bonus/interest. That will be a long time coming, if ever. No revelation regarding PF contribution Well if we knew how much of the PF was used we'd have a better idea of whether interest will be paid. No doubt the PF will be repaid before interest so if that's got a 10/20% stake, we've no chance.
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GeorgeT
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Post by GeorgeT on Jul 25, 2017 15:24:10 GMT
Why aren't we told what they went for? Was there a shortfall? If so, was the PF used? not a shortfall on the capital amount - unless Lendy tell us, it's speculation. (Although my 50p wager is on there being one.) But there has been a shortfall against all monies owned to lenders (hence holding back the accrued interest / bonus accrual) and a significant one against the VR's valuation figures - hence (potentially) looking to the valuer for financial recourse. The assets were valued in a non distressed/non forced sale state, pre-Brexit and pre-political uncertainty at a time of a buoyant and rising market. They were sold as distressed assets, post Brexit at a time of great political uncertainty and in a flat (at best) market. No question of a claim against the valuer's insurance. It would be defended robustly and the costs and uncertainty of bringing such action would outweigh any unlikely gain. Not losing any capital on a defaulted loan is a good result. Nobody who holds a loan to default should expect to see any interest IMO. That's like wanting to have your cake and eat it.
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mickj
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PBL066
Jul 25, 2017 16:19:28 GMT
Post by mickj on Jul 25, 2017 16:19:28 GMT
"Accrued interest and Bonus accrual will only be payable on successful enforcement action being taken against the borrower and/or valuer."
I understood the provision fund was to make up any shortfall (I will need to look in my dictionary), the very idea of being stuck with holding loans that go into default and not then receiving interest leaves a bad taste for me, lucky I was out of these long ago when selling was easy - these days with large amounts on the SM and the Default tab if you are in the loan I guess it will become even more difficult to sell if not impossible, where's the incentive to buy a defaulted loan? - better off with a building society or bank paying next to nothing, capital is possibly safer and some return.
Are we to assume that Lendy will take enforcement action against the borrower and/or valuer?
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GeorgeT
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Post by GeorgeT on Jul 25, 2017 16:21:38 GMT
Nobody who holds a loan to default should expect to see any interest IMO. That's like wanting to have your cake and eat it. That is the most ridiculous thing I have read on this forum. Just who do you expect to buy your SM pieces? What's ridiculous about that? If I was invested in a defaulted loan I know I'd be breathing a big sigh of relief not to lose any capital. These were 12% high risk loans. To come out without any capital loss is a very good result. To then ask about interest on top feels a bit like taking the Michael to me. What else do you think people should get along with the full repayment of a defaulted loan? Full 12% interest, a cake, a bottle of champagne and a years' complimentary membership of the National Trust?!  Risk increases as a loan ages. That's why I and most others sell out early. That's why there's a always a demand for long dated loans and short dated / negative day / defaulted loans are hard to shift. I never sell loan parts that are even within 6 months of default. The 2 exceptions being a little bit I've got left stuck in the castle and one of the Exeters - due to bad loan management on my part and leaving it a month too late to list for sale - and if I get 50% of my capital back on those I'll be amazed and delighted. I'm certainly not expecting an interest bonus on top and I've written that money off in my mind. I wouldn't expect anybody to buy a LY loan part that had less than 60 days to run. Strangely, some folks do. Now I list for sale at 200 days ish as a rule, so I'm not selling dross. I'm selling medium quality loan parts. It is the responsibility of the next owner to manage their way out before the loan part becomes untradable. The last owner is left carrying all the risk. I think it's a remarkable achivement by LY that in over 4 years of operation, not a single investor has ever lost a penny of their capital. To me that is the record that needs to be preserved. Digging into resources to pay interest on defaulted loans will weaken the platform. P2P investing is a high risk type of investment, hence the double digit returns that are possible. The interest, which is received in full in most cases, should be viewed as a bonus in my view, and not an entitlement.
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GeorgeT
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PBL066
Jul 25, 2017 19:58:44 GMT
Post by GeorgeT on Jul 25, 2017 19:58:44 GMT
What's ridiculous about that? Here's what. You used to sell 12% loans at 90 days. As a buyer, I would get 90 days guaranteed interest and a reasonable expectation of getting some or all interest covered on a loan should it default, understanding that it may be six months to a year before I saw any of those accrued returns. To give a working example, if I invested £1000 in a loan with 90 days remaining, which defaulted and returned 50% of accrued interest 9 months later, I'd get roughly £30 regular interest plus £45 accrued interest. Or, put another way, £75 interest on £1000 for a year = 7.5% returns. Take away the possibility of accrued interest and I go from 7.5% on that defaulted loan to 3% which, at an individual loan level, isn't worth the risk. So, if accrued interest were removed as a possibility, in order to make the risk acceptable to anyone, I'd suggest that they'd have to hold from 'new', get 12 months assured interest, hope that the default doesn't last 9 months and settle for 6.8% if it does. Buying at 180 days given a 9 month default with no accrued interest would earn the investor 4.8% -- that doesn't sound very appealing, does it? Question: Who is going to risk buying your 210 day loan pieces if there is no chance of accrued interest in the event of default and the potential return is c. 5%? Answer: Very few, IMO. You have stated elsewhere that you used to be able to comfortably sell 12% loans at 90 days. That's no longer possible for various reasons, but if accrued interest hadn't been on the table back then, do you think that would ever had been the case? Yes OK, but 'accrued interest' has never been a given has it. I always understood it to be subject to the net sale proceeds. In the garden centre case it was paid in full out of the PF I believe (which surprised a few people) but I don't think it's a sustainable long term policy to do that or that there's ever been any guarantee that would happen. I rather think they paid it on the garden centre because they'd got themselves in a bit of pickle with some of their own wording (since clarified with a clearer defaults policy) and also were keen to keep the full interest paid boast for as long as possible given it was the 1st or 2nd ever loan to default. I've always understood that accrued interest may or may not be paid - on a case by case basis and subject to what the asset realises. i.e. it accrues but may or may not be paid, subject to what they can recover.
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twoheads
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Post by twoheads on Jul 26, 2017 8:57:05 GMT
Risk increases as a loan ages. That's why I and most others sell out early. That's why there's a always a demand for long dated loans and short dated / negative day / defaulted loans are hard to shift. My bold in the quote.
Actually, most do not sell out early. The current loan book is £188M and the total value of the SM (even at its recent peak) is/was less than 5% of the total loan book. That means that 95% of investments are not selling at all.
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seeingred
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Post by seeingred on Jul 26, 2017 9:02:43 GMT
"That's why I and most others sell out early."
So who buys all these loans that MOST INVESTORS sell out of early?
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GeorgeT
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PBL066
Jul 26, 2017 14:42:42 GMT
Post by GeorgeT on Jul 26, 2017 14:42:42 GMT
"That's why I and most others sell out early."So who buys all these loans that MOST INVESTORS sell out of early? Investors looking to pick up a bit more on the SM - who would like more in a particular loan. Same reason I buy on the SM. We all have different portfolios and different favourite loans. The PM offers only fixed max allocations, on the SM you can fill your boots. Quality stuff always sells.
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GeorgeT
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PBL066
Jul 26, 2017 14:51:45 GMT
Post by GeorgeT on Jul 26, 2017 14:51:45 GMT
Risk increases as a loan ages. That's why I and most others sell out early. That's why there's a always a demand for long dated loans and short dated / negative day / defaulted loans are hard to shift. My bold in the quote.
Actually, most do not sell out early. The current loan book is £188M and the total value of the SM (even at its recent peak) is/was less than 5% of the total loan book. That means that 95% of investments are not selling at all.
The people who don't sell out early are the people who end up holding parts in defaulted loans and who will suffer all the losses (if any). Not selling out early before your capital starts being at risk is too high risk a strategy for me. If the interest rate payable on loan parts increased with age in correlation with the increasing risk, there would be some logic to holding to the end, but when you get 12% for the 1st 6 months (near zero risk - platform failure risk only) and the same 12% for the final 6 months as the loan reaches maturity, why hold it during the much riskier latter period when liquidity decreases and risk of default grows nearer and when you could end up being the one left holding the parcel when the music stops. To me that's common sense. Also I disagree that most don't sell out early. I would say most people do - or try to. However some leave it too late and have been caught short by the recent changes in SM liquidity. I believe a Poll would show that to be the case, because in my opinion it is the way the rational investor would behave.
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