ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Dec 2, 2015 12:25:51 GMT
I suppose that once a borrower realises that he is not going to be able to repay a loan, and so he will lose his asset, he will keep renewing the loan for as long as he can? ISTM that if the borrower realises he can't repay, he ought to renew only if he thought he'd be in a position to repay in six months' time. If not, he's just throwing good money after bad. If the borrower received 70% of the value of the item in the beginning, then by the time they've paid a full year's interest and other fees it will have cost them something close to 100% of the value to get their item back. It would make sense if the item is unique or has sentimental value. Or if the value assigned by the pawnbroker is considered to be an underestimate of the value by the borrower. Otherwise, they might be better off to abandon the item and replace it with something equivalent at some point in the future when they can afford it. Of course, borrowers' emotions play a part as well and what they feel is best for them might not be what's best from an objective financial point of view. It's not just emotions; you are speaking from the point of view of a person who is savvy with money. One heck of a lot of people are not, and apply no sense whatsoever to borrowing, spending, or indeed anything else money related. Also, human beings are notoriously bad at accepting and seeing what they don't want to, being insolvent being a case in point.
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SteveT
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Post by SteveT on Dec 2, 2015 13:06:14 GMT
fundingsecure, on the "Secondary market - history" page, could you please turn the loan reference numbers (in each SM sale entry) into a live link to the loan, as is the case elsewhere on the site. That way we can work out what has sold without having to write down a reference number and then go look it up. Thanks.
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Investboy
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Trying to recover from P2P revolution
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Post by Investboy on Dec 2, 2015 13:24:02 GMT
fundingsecure , on the "Secondary market - history" page, could you please turn the loan reference numbers (in each SM sale entry) into a live link to the loan, as is the case elsewhere on the site. That way we can work out what has sold without having to write down a reference number and then go look it up. Thanks. I've already suggested this (and some other slight changes) somewhere (the improvements thread I think).
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mikes1531
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Post by mikes1531 on Dec 2, 2015 16:39:36 GMT
That makes sense if he is paying the interest in cash up front but I thought it was added to the loan outstanding. I can't work out whether a loan extending is a good sign or a bad sign from the lender's viewpoint. AIUI, FS receive no interest in advance. The borrower would pay the accrued interest and fees when the loan matures if they wish to renew/extend the loan -- or interest, fees, and the amount borrowed if they wish to have their security back. What they can't do -- except in very rare cases -- is let the interest roll over and increase the debt, as that would be a recipe for disaster for lenders. The rare case is if the initial LTV is low, and replacing the old loan with another one that's a bit larger by enough to pay all the outstanding interest/fees doesn't increase the LTV to an unacceptable level. (I suspect that's what has happened with some of the FS loans that have been issued in tranches.) There are bound to be some 'borrowers' who use FS as a means of quickly disposing of something they have that they can't easily sell themselves. (We've seen how long it takes FS to dispose of some things, and FS have experience and contacts that the average person doesn't.) If they're happy with receiving the amount 'lent' as payment for their item, then they'll take the 'loan' with no intention of redeeming the security. That's why FS have to be pretty confident with their valuations -- if they get it wrong, the borrower goes home happy and FS, and its lenders, are left holding the bag.
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webwiz
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Post by webwiz on Dec 2, 2015 18:00:06 GMT
Thanks. That's cleared up some of my confusion.
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jonah
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Post by jonah on Dec 2, 2015 20:58:06 GMT
All bar one of the loan parts with an effective rate over 9% have gone.... I guess the books aren't popular
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LittleBear
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Post by LittleBear on Dec 3, 2015 0:15:30 GMT
We have made further changes to the Secondary Market, accommodating some of the feedback we have received from our investors directly and via the forum. The changes are as follows; 1. Investors will be prohibited from placing investments on the secondary market which show a negative effective rate. An error message will be displayed when placing the sale requesting the seller to reduce the premium if the effective rate is negative. 2. Investments which currently show a negative effective rate on the secondary market have been removed. Investors will need to start the sale process again. I guess these changes haven't worked as planned as there are currently five loans showing with negative effective rates.
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mikes1531
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Post by mikes1531 on Dec 3, 2015 4:20:46 GMT
We have made further changes to the Secondary Market, accommodating some of the feedback we have received from our investors directly and via the forum. The changes are as follows; 1. Investors will be prohibited from placing investments on the secondary market which show a negative effective rate. An error message will be displayed when placing the sale requesting the seller to reduce the premium if the effective rate is negative. 2. Investments which currently show a negative effective rate on the secondary market have been removed. Investors will need to start the sale process again. I guess these changes haven't worked as planned as there are currently five loans showing with negative effective rates. Those loan parts probably had positive returns when they were placed on the SM, but the return drops every night at midnight when the remaining term reduces. I expect that the process of removing parts that had negative returns when FS changed the rules was a manual one, and FS may not have been checking for rates that switch from being positive to being negative. Or perhaps they do, but just not immediately after midnight. Looking at the list now, I see no parts with negative returns.
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Post by mrclondon on Dec 3, 2015 13:41:06 GMT
fundingsecure - you may wish to recheck the algorithm for calculating the effective rate - is it accidentally using a time component not just the date in calculating duration to maturity ? The attached screen grab shows the available loan parts from two loans, all at the same 1 % premium. No two parts from the same loan have the same effective rate which would appear to be incorrect. 
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Post by mrclondon on Dec 3, 2015 20:12:56 GMT
Interesting ... FS provide details of a new large loan in just over 12 hours time, and the secondary market suddenly spring to life with a variety of 0% premium offerings (effective rate > 11%)
Disclosure: they aren't all mine !
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mikes1531
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Post by mikes1531 on Dec 3, 2015 20:23:57 GMT
Interesting ... FS provide details of a new large loan in just over 12 hours time, and the secondary market suddenly spring to life with a variety of 0% premium offerings (effective rate > 11%) And ten minutes later they're all gone!
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Post by mrclondon on Dec 3, 2015 20:31:09 GMT
Interesting ... FS provide details of a new large loan in just over 12 hours time, and the secondary market suddenly spring to life with a variety of 0% premium offerings (effective rate > 11%) And ten minutes later they're all gone! Indeed ... there must be a lot of non tax payers about as all my parts were just over a month to go so by the time the buyer has paid tax on the accrued intrest they've paid me, their actual return will be virtually zero. 'tis a strange world we live in.
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mikes1531
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Post by mikes1531 on Dec 3, 2015 20:43:26 GMT
And ten minutes later they're all gone! Indeed ... there must be a lot of non tax payers about as all my parts were just over a month to go so by the time the buyer has paid tax on the accrued intrest they've paid me, their actual return will be virtually zero. 'tis a strange world we live in. : It would be great if you were right, but I'd think it a lot more likely that most of those buyers are taxpayers who don't understand the tax situation.
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mikes1531
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Post by mikes1531 on Dec 3, 2015 21:15:07 GMT
Interesting ... FS provide details of a new large loan in just over 12 hours time, and the secondary market suddenly spring to life with a variety of 0% premium offerings (effective rate > 11%) And ten minutes later they're all gone! And now they're back again. There's about a dozen parts for sale at par right now.
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Investboy
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Trying to recover from P2P revolution
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Post by Investboy on Dec 3, 2015 23:32:11 GMT
Cross posted. Before reading here I've created new thread for interesting SM loans similar to SS forum.
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