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 Sept 4, 2014 8:53:12 GMT
Thanks for the calculations mikes1531; it certainly concentrates the mind. And it brings me straight back round to my old stuck record (sorry folks  ) only this time I'm not really going to question about whether 70% LTV isn't a bit too high for these esoteric kind of difficult to sell items - I'm actually stating it as my firm opinion now. Apologies for self-quoting, but really what I'd say is pretty much said in this post earlier in this thread back in April. Back in the mists of time last summer some time, just after FS had opened its doors to both us and the borrowers, there was coincidentally the first of the Posh Pawn programmes on Channel 4. Being suddently consumed with fascination for all things Pawn, I watched it avidly, and it was watching the operation of that highly experienced pawn broker that led me to question the 70% LTVs. It wasn't anything to do with my knowledge or any cleverness on my part - it was simply that they, generally speaking, didn't appear to lend at LTVs anywhere near that high. FS, at the time, said that it was already difficult getting people to pawn their items for the 70% LTVs, and that it would only get more difficult at lower LTVs, especially with them being just an invisible brand in the ether, and not a physical shop. I'm sure that's true, so maybe we just have to take it on the chin and accept that the reason we demand the higher interest rates is that we will get some losses. That doesn't seem unreasonable to me. I'd like to think that only people who are comfortable with a level of risk are lending here, and only lending on the items they consider 'safe', but I'm sure as the lender numbers are creeping up there will be more and more who haven't really appreciated that the risks are real and who can't stomach any loss. |
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mikes1531
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Post by mikes1531 on Sept 4, 2014 10:34:58 GMT
And it brings me straight back round to my old stuck record (sorry folks ) only this time I'm not really going to question about whether 70% LTV isn't a bit too high for these esoteric kind of difficult to sell items - I'm actually stating it as my firm opinion now. I've come to the same conclusion. ... maybe we just have to take it on the chin and accept that the reason we demand the higher interest rates is that we will get some losses. That doesn't seem unreasonable to me. I'd like to think that only people who are comfortable with a level of risk are lending here, and only lending on the items they consider 'safe', but I'm sure as the lender numbers are creeping up there will be more and more who haven't really appreciated that the risks are real and who can't stomach any loss. The people most comfortable with the level of risk may also be the people most likely to be higher-rate taxpayers, and they're the ones hit hardest by the unfavourable tax treatment of P2P lending losses. Zopa & RS have addressed this issue with investor protection funds. FS are in a better position than those platforms because of the structure of pawnbroking and the fact that interest isn't payable until the loan is paid off. So the first thing lenders lose is their expected interest. As a result, there should be few cases of actual capital losses at FS. But it's not impossible. There were two or three Michael Jackson memorabilia loans earlier this year that probably would have produced capital losses if FS hadn't decided to be generous and repay lenders out of their own pocket rather than putting the security up for auction for what appeared likely to be very disappointing results. [The last -- I think -- MJ memorabilia loan was due for repayment recently, and was paid off last week. I've seen no comment from fundingsecure to say whether the borrower paid off the loan or whether FS decided to repeat what they did in April to protect their lenders from losses. Did I miss an announcement?] It remains to be seen what the final result will be for the bassoon, but I'm expecting little or no interest unless FS are generous and give lenders some income 'protection' so as to keep the platform from suffering a serious setback. With a fledgling platform like FS, and so many other investing alternatives for P2P/P2B lenders, one bad loan could be enough to send many investors looking elsewhere.
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bugs4me
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Post by bugs4me on Sept 4, 2014 12:56:18 GMT
And it brings me straight back round to my old stuck record (sorry folks ) only this time I'm not really going to question about whether 70% LTV isn't a bit too high for these esoteric kind of difficult to sell items - I'm actually stating it as my firm opinion now. I've come to the same conclusion. ... maybe we just have to take it on the chin and accept that the reason we demand the higher interest rates is that we will get some losses. That doesn't seem unreasonable to me. I'd like to think that only people who are comfortable with a level of risk are lending here, and only lending on the items they consider 'safe', but I'm sure as the lender numbers are creeping up there will be more and more who haven't really appreciated that the risks are real and who can't stomach any loss. <snip> It remains to be seen what the final result will be for the bassoon, but I'm expecting little or no interest unless FS are generous and give lenders some income 'protection' so as to keep the platform from suffering a serious setback. With a fledgling platform like FS, and so many other investing alternatives for P2P/P2B lenders, one bad loan could be enough to send many investors looking elsewhere. And I think it will especially as FS have always maintained that the LTV is always at the lower end of the valuation scale. In my eyes that equates to auction value but clearly that's not going to happen with the bassoon being offered retail at £1900. Note to self: do some more research on the items being offered before automatically jumping in!!!
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Post by chawkes2 on Sept 4, 2014 12:56:25 GMT
The term 'valuation' always needs a qualifier to clarify the purpose of the said valuation - we may assume a valuation of an item to tell us its 'worth' but, in FS's case, we are only interested in it's value in a firesale situation sometime in the fairly near future - We have no real idea of what FS mean by the 'V' in their stated LTV's that we use to decide whether or not to invest. I have used the results that are published to us concerning 'uncollected' items to fine tune my gut feeling about how to invest in the future. Of course, quite rightly, FS have said that some of the early loans may have been valued in a different way to the way in which they would now be valued.
My own feeling about the way in which the funds from sold items are distributed back to FS and the lenders is that the rule is at present inequitable. This will not matter where items fetch enough to cover the debts that are secured on them but there is a clear conflict of interest (good word here) when they do not and the sales take longer than anticipated by FS or the lenders. I think that should be looked at again. If the capital were to be repaid and the balance is short,my first thought is that all parties should 'lose' in proportion to what they are owed - I don't in this case see any particular imperative for FS to be given special status among the creditors; but that is my own humble opinion.
As has already been stated, there are a lot of lending platforms out there at present and we will have to make our own choices.
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mikes1531
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Post by mikes1531 on Sept 4, 2014 15:04:53 GMT
I have used the results that are published to us concerning 'uncollected' items to fine tune my gut feeling about how to invest in the future. Is this based only on your own experience of 'uncollected' items? Or have you tried to include info you have gleaned from elsewhere as well? AFAIK, fundingsecure do not publish any such data. Or, for that matter, info regarding successful loans. All lenders can see the initial info about a loan if they look before the loan is 'activated', but only participating lenders have access to that info after activation. There is no further communication to participating lenders about a successful loan aside from a message saying that the loan has been repaid, but I don't see that as an issue. For 'uncollected' items, participating lenders will receive a message saying that the loan is going to be defaulted, and a bit of info regarding what FS will be doing to turn the security into cash, but it's a long, drawn out, process and it seems like it takes forever between updates. Not having had one of those loans before the bassoon, I don't know what info participating lenders receive after the sale process is complete. Non-participating lenders will be unaware of the defaulted loan unless the subject comes up here in the forum -- which probably means that only a tiny percentage of them are aware of the defaulted loans. I firmly believe that FS ought to make all loan info permanently available to all FS lenders, whether or not they participate in that loan, and that there should be info available to all regarding repaid and unrepaid loans. FS have been in operation for over a year now, so it's time they started publishing their performance statistics. If they don't, potential lenders might conclude that FS are not proud of their track record and that might affect FS's success at recruiting more lenders.
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ramblin rose
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Post by ramblin rose on Sept 4, 2014 16:09:43 GMT
FS have been in operation for over a year now, so it's time they started publishing their performance statistics. If they don't, potential lenders might conclude that FS are not proud of their track record and that might affect FS's success at recruiting more lenders. They've been publishing some basic stats on the lenders savers page for a few month now, which they update on a monthly basis. Not sure whether the MJ loans that they elected to pay us out on are included in the defaults there or not. FS Savers page link
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mikes1531
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Post by mikes1531 on Sept 4, 2014 17:16:08 GMT
FS have been in operation for over a year now, so it's time they started publishing their performance statistics. If they don't, potential lenders might conclude that FS are not proud of their track record and that might affect FS's success at recruiting more lenders. They've been publishing some basic stats on the lenders savers page for a few month now, which they update on a monthly basis. Not sure whether the MJ loans that they elected to pay us out on are included in the defaults there or not. FS Savers page linkThanks for the reminder -- I had forgotten about that page/data. It will be interesting to see how they report the bassoon loan once the situation is fully resolved. At the moment, they show the defaulted loans they've had which were fully recovered, and how much of lenders' capital has been lost. If the bassoon loan goes the way they've indicated they expect it to, there would be no capital lost. Would FS consider that to be a 'fully recovered' loan even if lenders lose some of their accrued interest? I would hope not, but we'll have to see exactly what happens. I note that the statistics show two loans overdue, with a total value of £3,850. I don't seem to have a part of the second overdue loan. Does anyone here know which loan it is? (Since the bassoon is a loan for £1400, the other overdue loan ought to be for £2,450.) PS. I wonder whether fundingsecure are aware that the 'Calculate your return' part of the page works only if values are set using the sliders. Changing the numbers directly by entering them in the appropriate boxes has no effect on the results displayed.
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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 Sept 4, 2014 17:45:06 GMT
I note that the statistics show two loans overdue, with a total value of £3,850. I don't seem to have a part of the second overdue loan. Does anyone here know which loan it is? (Since the bassoon is a loan for £1400, the other overdue loan ought to be for £2,450.) There's a camera equipment loan for that amount that was due on 1st September - presumably included in the end of Aug update because it was known to be late when the update was produced. It's the only other late one I have on my books. I'm pretty sure that one was a renewal of one of the earliest loans to a professional photographer with cash flow problems. Perhaps worth giving very careful consideration to should there be a further renewal on the cards - given that it's now a year on since the original valuation. And it was a 70% LTV.
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mikes1531
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Post by mikes1531 on Oct 8, 2014 17:51:29 GMT
We can only hope that either the slow bassoon sale is atypical, or that FS are more generous to lenders than required by the Ts&Cs. And, with a bit of luck, FS will be more eager to grow the business than to squeeze every penny they can out of it in its early life. I remain hopeful, but I'm also thinking a bit more about the saleability of the security offered in some FS loans. I received a very brief message today saying that the bassoon loan had been repaid. Looking at the loan's page, I can see the following has been added to the text... If there was an email sent giving more info, I haven't received it. What I'd really like to know from fundingsecure is whether the proceeds from the sale actually were enough to cover all FS's fees and the sale costs, etc., or whether FS were more generous to lenders than required by the Ts&Cs. If the former, that's really good to know. If the latter, I appreciate FS's generosity, but I'd like to know the details. Unless the Ts&Cs are changed with respect to the priority of distribution of security sale proceeds, my return depends on sale results and/or FS generosity. Since FS generosity cannot be relied upon indefinitely, I need to know what the actual sale result was in order to attempt to assess the risk I'm taking by lending through FS.
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bugs4me
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Post by bugs4me on Oct 8, 2014 22:09:32 GMT
We can only hope that either the slow bassoon sale is atypical, or that FS are more generous to lenders than required by the Ts&Cs. And, with a bit of luck, FS will be more eager to grow the business than to squeeze every penny they can out of it in its early life. I remain hopeful, but I'm also thinking a bit more about the saleability of the security offered in some FS loans. I received a very brief message today saying that the bassoon loan had been repaid. Looking at the loan's page, I can see the following has been added to the text... If there was an email sent giving more info, I haven't received it. What I'd really like to know from fundingsecure is whether the proceeds from the sale actually were enough to cover all FS's fees and the sale costs, etc., or whether FS were more generous to lenders than required by the Ts&Cs. If the former, that's really good to know. If the latter, I appreciate FS's generosity, but I'd like to know the details. Unless the Ts&Cs are changed with respect to the priority of distribution of security sale proceeds, my return depends on sale results and/or FS generosity. Since FS generosity cannot be relied upon indefinitely, I need to know what the actual sale result was in order to attempt to assess the risk I'm taking by lending through FS. I doubt if you will get the detailed information you require for the bassoon. If all fees were covered then fine but if not then I don't feel FS would feel like disclosing (another) gesture on their part. The one I'm looking at with interest is the Yamaha as this a definitely not the time of year to be selling a motorbike. Even though I only have minimal exposure I should have taken a closer look before throwing my hat into the ring.
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mikes1531
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Post by mikes1531 on Oct 9, 2014 4:32:34 GMT
I received a very brief message today saying that the bassoon loan had been repaid. Looking at the loan's page, I can see the following has been added to the text... If there was an email sent giving more info, I haven't received it. What I'd really like to know from fundingsecure is whether the proceeds from the sale actually were enough to cover all FS's fees and the sale costs, etc., or whether FS were more generous to lenders than required by the Ts&Cs. If the former, that's really good to know. If the latter, I appreciate FS's generosity, but I'd like to know the details. Unless the Ts&Cs are changed with respect to the priority of distribution of security sale proceeds, my return depends on sale results and/or FS generosity. Since FS generosity cannot be relied upon indefinitely, I need to know what the actual sale result was in order to attempt to assess the risk I'm taking by lending through FS. I doubt if you will get the detailed information you require for the bassoon. If all fees were covered then fine but if not then I don't feel FS would feel like disclosing (another) gesture on their part. The one I'm looking at with interest is the Yamaha as this a definitely not the time of year to be selling a motorbike. Even though I only have minimal exposure I should have taken a closer look before throwing my hat into the ring. While I can understand why fundingsecure might be reluctant to disclose the details of a sale that did not produce enough proceeds to cover all costs, to withhold that info and simply tell lenders that the sale was completed and all lenders were paid their full accrued interest would mislead lenders into thinking that all went well when, in fact, it didn't. If FS wish to commit themselves to keeping lenders insulated from shortfalls, then I don't mind if they keep the details of the sale results to themselves. But if they're not going to make that commitment then they must reveal the actual results in order to avoid misleading people. I'm a bit surprised that we haven't heard anything from FS about the Yamaha. In the past, FS have said they wouldn't make an announcement until a week after a loan is due so as to give the borrower a chance to decide what to do. But the Yamaha loan matured on 27/Sep, and nearly two weeks have passed since then. I take bugs4me's point about this not being an ideal time to try to sell a motorcycle, but I am hopeful that valuations of these things are a bit less dependent on finding the exact right person to buy them, so that it won't take a huge discount to find someone willing to buy. We may find out before very long whether or not that's a reasonable assessment.
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ramblin rose
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Post by ramblin rose on Oct 9, 2014 8:59:23 GMT
I'm a bit surprised that we haven't heard anything from FS about the Yamaha. In the past, FS have said they wouldn't make an announcement until a week after a loan is due so as to give the borrower a chance to decide what to do. But the Yamaha loan matured on 27/Sep, and nearly two weeks have passed since then. I take bugs4me's point about this not being an ideal time to try to sell a motorcycle, but I am hopeful that valuations of these things are a bit less dependent on finding the exact right person to buy them, so that it won't take a huge discount to find someone willing to buy. We may find out before very long whether or not that's a reasonable assessment. The following note is in the loan details, but I don't know when it went in there: "NOTE: THIS LOAN HAS DEFAULTED. WE ARE IN THE PROCESS OF ARRANGING THE SALE OF THE BIKE."
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mikes1531
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Post by mikes1531 on Oct 9, 2014 11:10:54 GMT
I'm a bit surprised that we haven't heard anything from FS about the Yamaha. In the past, FS have said they wouldn't make an announcement until a week after a loan is due so as to give the borrower a chance to decide what to do. But the Yamaha loan matured on 27/Sep, and nearly two weeks have passed since then. I take bugs4me's point about this not being an ideal time to try to sell a motorcycle, but I am hopeful that valuations of these things are a bit less dependent on finding the exact right person to buy them, so that it won't take a huge discount to find someone willing to buy. We may find out before very long whether or not that's a reasonable assessment. The following note is in the loan details, but I don't know when it went in there: "NOTE: THIS LOAN HAS DEFAULTED. WE ARE IN THE PROCESS OF ARRANGING THE SALE OF THE BIKE." Thanks for spotting that, ramblin rose. It's good that fundingsecure have 'said' something, but I feel strongly that they should have distributed this info directly to affected investors via an email or website message. Lenders shouldn't have to keep checking the website to see what's happening, especially for something as significant as a default. Am I the only one who considers FS's communication on this matter to be inadequate?
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ramblin rose
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Post by ramblin rose on Oct 9, 2014 21:05:06 GMT
The following note is in the loan details, but I don't know when it went in there: "NOTE: THIS LOAN HAS DEFAULTED. WE ARE IN THE PROCESS OF ARRANGING THE SALE OF THE BIKE." Thanks for spotting that, ramblin rose. It's good that fundingsecure have 'said' something, but I feel strongly that they should have distributed this info directly to affected investors via an email or website message. Lenders shouldn't have to keep checking the website to see what's happening, especially for something as significant as a default. Am I the only one who considers FS's communication on this matter to be inadequate? No you aren't the only one mikes1531 - I also think they should have emailed us. I think they normally tend to inform us of defaults, so perhaps this was an oversight.
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Post by elljay on Oct 11, 2014 7:39:39 GMT
so perhaps this was an oversight. That appears to have been the case based on the email that came out late on Thursday.
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) only this time I'm not really going to question about whether 70% LTV isn't a bit too high for these esoteric kind of difficult to sell items - I'm actually stating it as my firm opinion now. Apologies for self-quoting, but really what I'd say is pretty much said in this post earlier in this thread back in April.
