shimself
Member of DD Central
Posts: 2,563 
Likes: 1,171
|
Post by shimself on Nov 30, 2015 17:04:38 GMT
This took off from another thread about a loan which went bad very quickly p2pindependentforum.com/post/76702/quote/3790?page=4Anyway my answer is a very loud yes - if they take a risk alongside us then there will not be the temptation to go a bit lightly on some weaknesses, or even dishonestly offer us a what they know is probably a dud. The honour board so far seems to be: TC sponsors Capital Engine (50% of their fee) TC Sponsors F&P (varying amounts but they say always something) Wellesley Andy from Ablrate personally What do others think, are there any other good eggs out there? How much is enough to properly align interests? |
|
ben
Posts: 2,020
Likes: 589
|
Post by ben on Nov 30, 2015 17:08:56 GMT
money thing underwrites most to begin with, westkev has previously stated he invests in ratesetter so a few that do
|
|
shimself
Member of DD Central
Posts: 2,563
Likes: 1,171
|
Post by shimself on Nov 30, 2015 17:12:18 GMT
money thing underwrites most to begin with, westkev has previously stated he invests in ratesetter so a few that do Good points thanks. I think Underwrites isn't really the same thing, we need them to be with us until the loan is fully repaid.
|
|
ben
Posts: 2,020
Likes: 589
|
Post by ben on Nov 30, 2015 17:13:46 GMT
money thing underwrites most to begin with, westkev has previously stated he invests in ratesetter so a few that do Good points thanks. I think Underwrites isn't really the same thing, we need them to be with us until the loan is fully repaid. true I agree with that but at least a start
|
|
|
|
Post by betterthanworking on Nov 30, 2015 17:16:49 GMT
ReBS now buy a chunk of each loan (then promptly sell it on the SM).
|
|
Steerpike
Member of DD Central
Posts: 1,978
Likes: 1,687
|
Post by Steerpike on Nov 30, 2015 17:20:02 GMT
ReBS now buy a chunk of each loan (then promptly sell it on the SM). My understanding is that ReBS bid on every loan, but may be outbid before the loan ends
|
|
|
|
Post by Ton ⓉⓞⓃ on Nov 30, 2015 17:54:28 GMT
There was, or is, one AC loan where the broker/introducer put in the first piece of underwriting which was of a significant size and agreed not to sell. Can't remember which loan that was, I think the broker/introducer previously had given a loan to that Borrower personally, so this one was in effect was an extension for him.
|
|
JamesFrance
Member of DD Central
Port Grimaud 1974
Posts: 1,323
Likes: 897
|
Post by JamesFrance on Nov 30, 2015 19:10:32 GMT
Mintos do the lending themselves then retain 5% of every loan.
|
|
|
|
Post by bengilbert on Nov 30, 2015 19:24:39 GMT
I think that co-investment is a positive, but as samford71 pointed out, how it's structured is important. That's a matter of the amount invested and also where it sits relative to other investors.
The people who make credit decisions on loans, and oversee the loan process, will always have more information about and control over deals than end p2p investors. Finding ways of aligning introducer/platform incentives with investor incentives seems to me a really important way of boosting the likely quality of deals.
(Marketing pitch begins:) In my role at Broadoak Private Finance I'm now involved in originating deals which will be listed on Moneything. We've decided to invest 5% into every loan on a first loss basis. This is enough to be very much material to us (it should quickly run into a 6-figure exposure), and by making it first loss, we have a particularly strong incentive to do our best to keep deal quality high. Also, all deals are funded by us or Moneything in advance of being listed on the platform, so we are committed to any part of the loan that isn't taken up by the platform.
I came into this as a lender and it makes sense to me that, if I'm going to have funds invested in the sector anyway, I should be invested in the deals which I'm involved in originating and inviting others to invest in. It would at least raise questions for me if introducers who have funds of their own to invest don't choose to put them into the deals they introduce, though there are of course legitimate reasons for this, eg risk appetite or a need for diversification into other assets.
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Nov 30, 2015 21:13:56 GMT
We've decided to invest 5% into every loan on a first loss basis. This is enough to be very much material to us (it should quickly run into a 6-figure exposure), and by making it first loss Do be sure that all of the descriptions for loans you originate mention this, the first loss aspect is particularly important in reducing the potential for loses by others if a deal does go bad.
|
|
|
|
Post by jh on Nov 30, 2015 21:23:53 GMT
I tend to invest in the ReBS deals I take to the platform, generally somewhere between £100 and £250 on each one. Often trade on the secondary market once first few payments are in I can spread it around a little. I don't on FC, mostly because of the charges and the lower rates. Also don't get the opportunity as so many of my cases end up in their 'whole loans' market.
|
|
bigfoot12
Member of DD Central
Posts: 1,817
Likes: 816
|
Post by bigfoot12 on Nov 30, 2015 21:51:07 GMT
The honour board so far seems to be: TC sponsors Capital Engine (50% of their fee) TC Sponsors F&P (varying amounts but they say always something) Wellesley Andy from Ablrate personally What do others think, are there any other good eggs out there? How much is enough to properly align interests? Brokers/introducers may be more able to re-invest some of their fees but my tendency is to believe such a process would just encourage brokers to print more lower quality deals to offset the cashflow impact. It's also simply not material to re-invest 1-2% of the notional of the loan. That's nice marketing spin but it simply doesn't cause enough pain if things go wrong. I would only take co-investment seriously if it involved a material percentage of the personal net wealth of a director of a platform/broker/introducer. Taking the hedge fund industry as an example, the partners in a start-up fund might be asked to invest say 25% of their net personal wealth (including primary residence) or perhaps 50% of their liquid wealth into the fund. That aligns interests and means they are feeling some genuine pain if the SHTF. If platforms or brokers did the same then I would take that seriously. So co-investment is a positive but only if it's material to the director at a personal level. I would question the judgement of any broker putting 25% of his total worth at risk to earn 0.5%-1% per year in fees. The hedge fund guys might increase their wealth by a factor of 2 (or 10) if things go well; that is a very different prospect. I think that on a platform, such as TC, which leaves so much (too much in my view) to the sponsor, having the sponsor invest half its fees does give me more confidence. Of the (small number of) platforms I have invested in TC is the one I have least confidence in surviving in something like its present form. I was happier to invest in Capital Engine sponsored loans knowing that if something went wrong with TC (but not necessarily that loan) CE might still put some effort in to sort out their investment and hence mine. (Recently I have lost so much faith in TC that I have withdrawn nearly everything that I been able to sell. I will look again at TC once their platform and ownership changes are concluded.)
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Dec 1, 2015 3:22:35 GMT
I would question the judgement of any broker putting 25% of his total worth at risk to earn 0.5%-1% per year in fees. : Isn't that 0.5%-1% per year a percentage of the total loan rather than of the broker's investment? If the broker's investment is a small part of the total loan then the return on their investment would be sizeable and well worth taking the risk for.
|
|
|
|
Post by domUP on Dec 1, 2015 9:33:23 GMT
Couldn't agree more. I think it's really important that not just the companies invest in the loans, but also the teams at the platforms. Show's trust in the product, as well as better understanding. From a company point of view, we're looking at ways to incentivise the entire team to start to build their own personal portfolios of the back of themselves. On a personal level, I need a pay rise to really kickstart my own activities  |
|
|
|
Post by proplend on Dec 1, 2015 10:08:50 GMT
We discussed this in detail and came to the view that one way for us to align ourselves with lenders is to split our fees so that both borrower and lender pay.
Rather than taking a much larger fee off the borrower and nothing from the lender, we do take a fee from the lender. We charge 10% of the interest that we collect and pay into their Proplend account, it is not just a fee based on how much money the lender has lent via the platform i.e. a management fee
This means we are highly incentivised to make sure that we only list loans / borrowers who we feel are credit worthy and likely to be able to make monthly interest payments on an ongoing basis. Our income is related to lender performance.
|
|
