adrianc
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Post by adrianc on Feb 7, 2017 19:15:21 GMT
Good grief! savingstream have remembered their password! Welcome back! Play nicely, everybody, we don't want to scare them off again. |
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 7, 2017 19:15:56 GMT
I'm sure SS have previously said that a loan goes in to default (has the big red box) as soon as the borrower fails to service the interest. Obviously the borrower hasn't been even servicing the interest so why hasn't this default been communicated to investors? Why have unknowing investors been mislead into buying what they were lead to believe is a decent loan on the SM? SS said that many moons ago, and that policy has now apparently changed, and in some cases (which loans we don't know) it is SS paying the interest. What SS now constitutes a default is anybody's guess.
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Post by Whitbourne on Feb 7, 2017 21:52:02 GMT
I'm sure SS have previously said that a loan goes in to default (has the big red box) as soon as the borrower fails to service the interest. Obviously the borrower hasn't been even servicing the interest so why hasn't this default been communicated to investors? Why have unknowing investors been mislead into buying what they were lead to believe is a decent loan on the SM? SS said that many moons ago, and that policy has now apparently changed, and is some case (which loans we don;t know) it is SS paying the interest. What SS now constitutes a default is anybody's guess. To be fair, it seems reasonably clear what approach SS are now taking. A loan is in default when the borrower has ceased making interest payments *and* the amount estimated as recoverable, either by way of an offer from the borrower or a reasonable estimate of the likely proceeds from sale, is estimated to be less than the capital outstanding. Where the borrower cannot pay interest but the security looks to be more than adequate to repay the capital, then that is a loan in the course of realisation and is not in default. And in these cases, SS choose to pay the interest from their own funds during the realisation process. I am not saying it is wholly transparent, but there is some logic to that position. I do agree that it would be better to tell investors once the borrower is no longer servicing the loan. That is material information. Perhaps savingstream would consider adding a new Q&A at savingstream.co.uk/how-it-works#faq the question being: Under what circumstances will a loan be declared as being in default?
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lobster
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Post by lobster on Feb 8, 2017 7:13:44 GMT
That current assumption is incorrect. We have been offered a settlement amount over and above the outstanding capital owed to investors, but lower than the full outstanding amount including default interest. We are working with the borrower to repay in an orderly and timely fashion. We cannot give much more detail than that at the moment. In many ways I understand why SS (and many other P2P firms) are so reluctant to engage on the forum. When they do go ahead and attempt to make a constructive contribution, the result is always a barrage of further questions / accusations , many expressed in less than amicable terms. This is exactly what the result of the above contribution was. Doubtless they could respond to some of the points made above, but from their point of view, would it be worth it ? Because inevitably, whatever they have to say will result in a further mushrooming of questions, and finger-pointing. They probably reckon it's best not to engage at all, or only when absolutely essential, and I'm tempted to agree. I'm not saying that SS don't have issues, particularly with some of their overdue loans such as the "Gloucestershire 6". I'm just saying that I have some sympathy with them regarding engagement on the forum.
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toffeeboy
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Post by toffeeboy on Feb 8, 2017 12:39:24 GMT
That current assumption is incorrect. We have been offered a settlement amount over and above the outstanding capital owed to investors, but lower than the full outstanding amount including default interest. We are working with the borrower to repay in an orderly and timely fashion. We cannot give much more detail than that at the moment. In many ways I understand why SS (and many other P2P firms) are so reluctant to engage on the forum. When they do go ahead and attempt to make a constructive contribution, the result is always a barrage of further questions / accusations , many expressed in less than amicable terms. This is exactly what the result of the above contribution was. Doubtless they could respond to some of the points made above, but from their point of view, would it be worth it ? Because inevitably, whatever they have to say will result in a further mushrooming of questions, and finger-pointing. They probably reckon it's best not to engage at all, or only when absolutely essential, and I'm tempted to agree. I'm not saying that SS don't have issues, particularly with some of their overdue loans such as the "Gloucestershire 6". I'm just saying that I have some sympathy with them regarding engagement on the forum. It isn't just about engaging on this forum it is about communication in total. The fact that SS have been funding the interest on these loans themselves is information that we as lenders should have been made aware of, admittedly I think most of us on here already had that suspicion anyway but it should have been confirmed. Only a small percentage of lenders actually use this forum so there are lot of lenders out there that are continuing to pick up these loans on the second market unaware that the loan is actually in default because the borrower is no longer paying the interest.
Hopefully once Paul64 gets up to speed the communication will improve but for now we would like clarification of what actually now constitutes a loan in default as it has obviously changed since the last time that SS decided to engage with us on the forum about it and defaults are a major factor in P2P.
I agree with how Whitbourne has described what it appears SS currently consider a default although it isn't what I do, I thought they were spot on with there original description.
Another couple of questions to ask now
Are SS going to prop up every loan that stops paying interest so they don't have to default any loans at all as this isn't a very good business policy to get into
Who has been paying the interest the main company or the provisional fund?
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seeingred
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Post by seeingred on Feb 8, 2017 12:48:08 GMT
To some degree I agree with Whitbourne that SS are given an unduly hard time here, and elsewhere. There are several key issues. So long as only a small number of loans fail to pay back most of the capital and at least most of the interest due, the overall performance should remain good.
If SS have to take a hit by effectively paying interest on some loans rather than formally defaulting the loan (with all the costs that might entail?) it could be the best way to go. As an investor I expect to lose a little capital from time to time.
The sheer number of 'negative' loans at the moment has given rise to some anxiety. How many of these at still paying interest, and how many are being propped up so as to make the platform look healthier than maybe it is? Some of the 'negative' loans are quite small ones anyway?
It might help if we knew which loans fell into which categories - thus keeping us informed as much as is reasonable. Maybe there needs to be three formal categories - satisfactory, being propped up, and defaulted (= some chance of capital loss).
Of perhaps greater concern is the overall platform viability in the longer term if (as has been suggested for another platform that has been in the news) there is a suggestion of it having been operated as a get rich quick scheme for the principal directors and with less regard for the long term health of the platform and (thereby) the security of investments. In order to assess this we would need to see the books - actual income, salaries, provision fund, money set aside to tide the platform over a bad period when, for whatever reason, few new loans became available.
The Gloucester loans illustrate a systemic weakness of some P2P platforms - too many loans to one borrower. Student flats and other related loans come to mind..........I don't think SS is one of the worst platforms in this regard but as always transparency can help to stymie Chinese whispers - if a new loan is in any way connected with other loans, then tell us.
post crossed with toffeeboy - similar sentiments?
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registerme
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Post by registerme on Feb 8, 2017 12:56:14 GMT
I agree with toffeeboy in that the forums are a symptom, and not a cause. Also the observation / criticism that communications in general are somewhere between woeful and not good enough is valid for most if not all platforms. It's an example of a problem that must be resolved, if it can't be platforms simply won't be able to scale, and we'll all be left with AC GBBA / FC IT or their like. To the best of my knowledge the only platform that successfully monitors loans, the companies they are made to, and reports on this back to lenders throughout the life of those loans in an effective way, is AC. ablrate has done a good job in terms of keeping lenders up to date on a defaulted loan. The combination of MoneyThing and Broadoak do a good job in currently benign circumstances. But even with ablrate and MoneyThing there are unanswered questions as to how it will scale, or how well it will work in the event of a default. No annual reports, no analyst coverage, very limited press coverage - it's almost inherent in the nature of SME / property development / pawn / bridging finance. But that does not obviate the need to keep investors informed, and the best place for this to be done is the platforms themselves. In the absence of this the platforms are effectively running their business (ie getting individuals to lend to specific loans) on a "trust me, it'll be all right" basis, and I simply can't see the regulators accepting this. If there is non-privileged information available and I am not kept abreast of it how can I be expected to make informed decisions? Platforms have an obligation to lenders, so I would argue that it is the duty of them to get this right. My funds will naturally flow to the platforms that do this better, even at the cost of lower returns, but I do worry about the "dumb" money. |
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Post by jackpease on Feb 8, 2017 13:16:23 GMT
In many ways I understand why SS (and many other P2P firms) are so reluctant to engage on the forum. Indeed - eleven questions already tabled in response to the one answer - Westonkev noted this was a reason why RS questioned whether engaging with this forum was worthwhile Yeh yeh yeh (anticipating similar response to similar thoughts posted previously) we know it would be better if platforms did answer every question in real time, but take a few minutes to figure out how that could work in practice if we say that every answer prompts a further ten questions - and whether honest answers would really halt the baying for blood..... The problem as i see it is that this forum over the past few years has changed and that I'm not sure the 'I'm out' anger that is becoming ubiquitous is truly a reflection of the health of a platform given that the wider world we exist in has changed. We cannot seriously expect SS or anyone else to offer the same quality loans, at the same high rates, and same security as a few years ago. Something has to give and we shouldn't punish them for that. Jack P
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oldgrumpy
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Post by oldgrumpy on Feb 8, 2017 13:38:59 GMT
In many ways I understand why SS (and many other P2P firms) are so reluctant to engage on the forum. .... The problem as i see it is that this forum over the past few years has changed and that I'm not sure the 'I'm out' anger that is becoming ubiquitous is truly a reflection of the health of a platform given that the wider world we exist in has changed. We cannot seriously expect SS or anyone else to offer the same quality loans, at the same high rates, and same security as a few years ago. Something has to give and we shouldn't punish them for that. Jack P I think a high proportion of the "punishment" is more likely to be the result of far too little accurate and "transparent" and easily understood ongoing information being automatically provided in good time to actual lenders via email updates or even better, fully visible to logged in investors on the SS website. Were that to be corrected, there would be far less need to even "waste" SS's time on any forum such as this one. Most questions would not need to be repetitively asked, and lender bluster might reduce. Plus more careful selection of actual borrowers, of course. I don't need (or expect) 12% from the best deals.
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toffeeboy
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Post by toffeeboy on Feb 8, 2017 15:09:34 GMT
In many ways I understand why SS (and many other P2P firms) are so reluctant to engage on the forum. Indeed - eleven questions already tabled in response to the one answer - Westonkev noted this was a reason why RS questioned whether engaging with this forum was worthwhile Yeh yeh yeh (anticipating similar response to similar thoughts posted previously) we know it would be better if platforms did answer every question in real time, but take a few minutes to figure out how that could work in practice if we say that every answer prompts a further ten questions - and whether honest answers would really halt the baying for blood..... The problem as i see it is that this forum over the past few years has changed and that I'm not sure the 'I'm out' anger that is becoming ubiquitous is truly a reflection of the health of a platform given that the wider world we exist in has changed. We cannot seriously expect SS or anyone else to offer the same quality loans, at the same high rates, and same security as a few years ago. Something has to give and we shouldn't punish them for that. Jack P If the answers provided by SS were complete and not completely out of right field then they wouldn't get 11 questions raised for every comment they make. We were previously informed that when a borrower stopped paying interest that was when a loan was considered in default to now be told that SS have been paying the interest on this loan for god knows how long. We should have been informed that SS were paying the interest not the borrower as we were on PBL056, how many others are in a similar situation as personally I don't wish to lend to involved in loans that SS are paying the interest as to me that makes them higher risk.
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seeingred
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Post by seeingred on Feb 8, 2017 20:22:00 GMT
Would it help if each loan was kept properly up to date on a rating system similar to this?
Could SS say if it might be possible?
ROLLING INTEREST (everything OK, and interest paid up front)
EXTENDED (also paid up front and with days adjusted)
OVERDUE (interest being paid monthly but no formal agreement to extend)
PROPPED UP (interest not being paid but not yet defaulted as capital security still looks OK, interest being paid by SS) and finally,
DEFAULTED (some risk to capital unless PF can compensate).
Then when people buy on the SM there is clarity.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 8, 2017 20:50:01 GMT
Would it help if each loan was kept properly up to date on a rating system similar to this? Could SS say if it might be possible?
ROLLING INTEREST (everything OK, and interest paid up front) EXTENDED (also paid up front and with days adjusted) OVERDUE (interest being paid monthly but no formal agreement to extend) PROPPED UP (interest not being paid but not yet defaulted as capital security still looks OK, interest being paid by SS) and finally, DEFAULTED (some risk to capital unless PF can compensate). Then when people buy on the SM there is clarity. I think this is a brilliant idea, and I hope SS implement something similar - just one note; "ROLLING INTEREST" usually means that the borrower is sending interest on a rolling bases, not up front.
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seeingred
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Post by seeingred on Feb 8, 2017 20:57:54 GMT
change Rolling interest to PAID INTEREST
It is the concept - and the need to have accurate and timely updates in a format that everyone understands that is key to avoiding so many Chinese whispers and (needless?) questioning of the SS platform.
This should benefit SS as well as investors.
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Carter
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Post by Carter on Feb 8, 2017 21:09:32 GMT
Got my vote. In the recent general update there was mention of the default policy documentation being updated and I'd like to see this type of simple transparency incorporated also.
I have a question. As there is more than a strong suspicion that loans are being propped up can someone explain the benefit of this from the borrower's viewpoint? As SS prop up a loan in which they think they will retrieve the interest upon sale why wouldn't the borrower prefer to default and avoid additional loss from the asset value. Is this because the borrower would be hit with even higher fees in the case of default and being propped up is preferable?
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seeingred
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Post by seeingred on Feb 8, 2017 21:12:47 GMT
I suspect a default involves paperwork, expense and a 'record' . To be avoided if at all possible?
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