bugs4me
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Post by bugs4me on May 17, 2015 18:24:14 GMT
The current trend in defaults is concerning and I am glad I stayed away from the property loans on FS. There do seem to have been a lot of defaults recently, but I don't think we should be surprised. Someone quoted a statistic indicating what proportion of pawnbroking loans defaulted and, while I don't remember the number, IIRC the number was large. As long as the initial valuations are correct, recovery of capital and accrued interest should be achievable by selling the security, although the sale of unusual items can take a while and success depends on finding the right buyer. If there's anything to be concerned about, it's the reliability/accuracy of the valuations, and I have to say that does worry me, particularly after recent events at FS and another P2P platform where I have a significant investment. I haven't avoided property loans because I thought that the valuation process for those might be reasonably reliable. But I'm beginning to doubt that based on developments at another platform where the earlier valuations appear to have been generous, possibly because a valuation survey generally doesn't go into enough depth to expose structural problems or deferred maintenance issues that can make it hard to sell a property in a relatively short time if that becomes necessary/appropriate. And, similar to fine art, expensive one-of-a-kind properties can be difficult to sell for a good price in a hurry. I'm 100% with you on this mikes1531 - on another platform so possibly going OT - a property loan is listed at 70% LTV based on market value. Now this is where the confusion and platform optimism comes into play as the market value assuming a 6 month sale period drops to 800k making the LTV 87.5%. More confusion rules as the market value drops to 525k in the event of the business closing which would I assume be the case if the loan defaulted - so the LTV is now 133%. Even more confusion is that the value with the business closed assuming a 6 month sale period is 425k making the LTV a whopping 164%. Plus of course you still need to factor in receiver fees plus any other fees. Not good IMO. So I really do think lenders are on their own and reliance upon platform valuations can itself be a risk in addition of course to the actual loan itself. I'm rapidly coming round to the thinking that in addition to AC having it's own pink section, all the platforms listed on here should also have a pink section so that we, as lenders/investors can 'pool' our DD on individual loan offerings before jumping in.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jun 11, 2015 17:41:50 GMT
Two more possible defaults 1164395549 Diamond Ring 2814925719 Print. Notices sent. These will be my first. Not too worried about the Print as the LTV is single digits unless there are more tranches I cant see. Also seems to be silence on Steinway & some jewellry (same lot that was sold then reclaimed) that should have renewed but aernt even showing in pending loans  |
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bugs4me
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Post by bugs4me on Jun 11, 2015 21:44:17 GMT
Two more possible defaults 1164395549 Diamond Ring 2814925719 Print. Notices sent. These will be my first. Not too worried about the Print as the LTV is single digits unless there are more tranches I cant see. Also seems to be silence on Steinway & some jewellry (same lot that was sold then reclaimed) that should have renewed but aernt even showing in pending loans Diamond ring should be okay as FS state '....Please note ring has been assessed at higher value than previously noted....' and the Print is single digit LTV. So with a bit of luck and a following wind........... The Steinway states the borrower intends to renew as per 30th May. The Caravan is due to be sold so a 30 day loan extension agreed by FS.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jun 15, 2015 16:21:21 GMT
Two more possible defaults 1164395549 Diamond Ring 2814925719 Print. Notices sent. These will be my first. Not too worried about the Print as the LTV is single digits unless there are more tranches I cant see. Also seems to be silence on Steinway & some jewellry (same lot that was sold then reclaimed) that should have renewed but aernt even showing in pending loans Steinway 2576894525 looks like its going to default. So thatll be 3 in a row. Jewelery 1043854162 is due to renew still and should appear in upcoming later today
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jonbvn
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Post by jonbvn on Jun 15, 2015 22:49:33 GMT
Steinway 2576894525 looks like its going to default. So thatll be 3 in a row. Jewelery 1043854162 is due to renew still and should appear in upcoming later today There has certainly been a run of defaults lately. IMO more defaults than redemptions / renewals. Thankfully all my defaults, about 7 to date, have been repaid in full with interest but they have been smallish loans, <£30k if I remember correctly. What will happen when a big one goes into default. Some of the LTVs are not to accurate and I'm much more careful about which loans I put money into. The recent run of defaults makes me very uneasy. IMHO, the LTV on many (most?) FS loans are just too high for my appetite.
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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 Jun 16, 2015 19:05:20 GMT
There has certainly been a run of defaults lately. IMO more defaults than redemptions / renewals. Thankfully all my defaults, about 7 to date, have been repaid in full with interest but they have been smallish loans, <£30k if I remember correctly. What will happen when a big one goes into default. Some of the LTVs are not to accurate and I'm much more careful about which loans I put money into. The recent run of defaults makes me very uneasy. IMHO, the LTV on many (most?) FS loans are just too high for my appetite. You probably haven't been here long enough to remember that I have been very critical of the high LTVs with FS from the very start - I stopped posting about it recently because I was even boring myself with it  That's why I am inisistent that I won't lend at the lower rates that are often offered - losses here are essentially unavoidable so my own view is that I need to start with a high base rate to end up with a high enough return to make it worth bothering to lend here - otherwise I might as well lend with platforms offering the lower returns, but with safety nets, which also require less effort on my part to invest in. However, I don't think the number of defaults is any higher than the industry norm, and they don't worry me. In fact I don't really think 'default' is the way to term it correctly. In the pawn industry in general it is perfectly normal and expected that a large number of items are not redeemed. It's just part of the way it works, so you have to factor it in to your lending decisions, and your expected eventual return rates. I fear we have a lot of newer lenders who don't understand this and are expecting to end up with the headline rates of return. They are going to be disappointed because it isn't going to happen.
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jonbvn
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Post by jonbvn on Jun 16, 2015 22:39:49 GMT
The recent run of defaults makes me very uneasy. IMHO, the LTV on many (most?) FS loans are just too high for my appetite. You probably haven't been here long enough to remember that I have been very critical of the high LTVs with FS from the very start - I stopped posting about it recently because I was even boring myself with it That's why I am inisistent that I won't lend at the lower rates that are often offered - losses here are essentially unavoidable so my own view is that I need to start with a high base rate to end up with a high enough return to make it worth bothering to lend here - otherwise I might as well lend with platforms offering the lower returns, but with safety nets, which also require less effort on my part to invest in. However, I don't think the number of defaults is any higher than the industry norm, and they don't worry me. In fact I don't really think 'default' is the way to term it correctly. In the pawn industry in general it is perfectly normal and expected that a large number of items are not redeemed. It's just part of the way it works, so you have to factor it in to your lending decisions, and your expected eventual return rates. I fear we have a lot of newer lenders who don't understand this and are expecting to end up with the headline rates of return. They are going to be disappointed because it isn't going to happen. Point taken. What concerns me is that some of the valuations appear to be "optimistic" coupled with "high" LTV's may lead to very poor returns (if any).
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That's why I am inisistent that I won't lend at the lower rates that are often offered - losses here are essentially unavoidable so my own view is that I need to start with a high base rate to end up with a high enough return to make it worth bothering to lend here - otherwise I might as well lend with platforms offering the lower returns, but with safety nets, which also require less effort on my part to invest in.