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Post by gusgorilla on Jan 21, 2016 2:40:05 GMT
My reading of the FAQ is that BLX offer guaranteed buyback of bad loans. Is that correct? I am asking because this would seem to render most of the loan information provided with BLX loans superfluous from the lender POV. Is this information ever relevant to us? Would we ever care about the credit-worthiness of the original borrower?
What happens if BLX goes bust, which its credit report suggests is entirely possible? Who is then the borrower? What would happen to a bad loan? Would the good loans repayments continue to come to us or be diverted to BLX'S creditors? If the latter then there is no diversification created by investing in multiple BLX loans but only a single gamble of the total sum loaned to BLX. In effect the only documents of any interest would be those about BLX itself. If the former then the original borrower's details are suddenly of interest after all.
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Post by parag on Jan 21, 2016 13:01:22 GMT
My reading of the FAQ is that BLX offer guaranteed buyback of bad loans. Is that correct? I am asking because this would seem to render most of the loan information provided with BLX loans superfluous from the lender POV. Is this information ever relevant to us? Would we ever care about the credit-worthiness of the original borrower? What happens if BLX goes bust, which its credit report suggests is entirely possible? Who is then the borrower? What would happen to a bad loan? Would the good loans repayments continue to come to us or be diverted to BLX'S creditors? If the latter then there is no diversification created by investing in multiple BLX loans but only a single gamble of the total sum loaned to BLX. In effect the only documents of any interest would be those about BLX itself. If the former then the original borrower's details are suddenly of interest after all. gusgorilla All loans are made to BLX who are the borrower. They use hire agreements they have already originated as security against the loan requests they make to us by assigning them to our Security Trustee company at the point of draw down of the loan with us. As per their loan agreement with us, BLX are required to make repayments to our lenders irrespective of whether their borrower under the hire agreement (the one used as security against their loan requests to us) pays late or defaults. If for whatever reason BLX terminate the hire agreement with their borrower (due to default / litigation or their borrower repays early), BLX must make an early repayment to us to clear the loan that they have used that hire agreement as security against. If BLX did not make their repayments due to our lenders under the terms of the loan agreement with us, our Security Trustee company would step in and exercise the assignment notice to collect all future rentals from the BLX borrower directly. If the BLX borrower then defaulted, the Security Trustee would look to repossess the assets under the hire agreement, dispose of them and pursue the borrower for any shortfall if one arose after this. Funds recovered during this process would be used to make the repayments to our lenders. Our Security Trustee also has a debenture over the assets financed under the hire agreements used by BLX for loan requests to us which allow us to step in and repossess assets from their borrower if we needed to do so. If BLX were to go bust, their creditors could not use the hire agreements they have assigned to our Security Trustee company. As per the terms of the collaboration agreement, we have access to their CRM system, loan book, bank statements, accounts, board meetings and management meetings. I also sit on their board as a non-exec director (with no remuneration or benefits received) with the sole view of protecting our lenders funds by monitoring BLX's ongoing financial stability and identifying any adverse issues early on. Hope this helps. Regards, Parag
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Post by gusgorilla on Jan 24, 2016 14:32:47 GMT
That sounds very satisfactory. The original borrower information is of some interest to lenders then, but only because BLX might go bust. I think it is a great credit to you that you provide such full information and I will be happy to invest because of this.
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Post by parag on Jan 24, 2016 15:15:27 GMT
gusgorilla Thank you. If you have any other questions please feel free to drop me a line.
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Post by 2pornot2p on Aug 22, 2016 15:08:43 GMT
Apologies in advance for hijacking OP's thread but my question follows on quite nicely. In the scenario that BLX is loss-making and recovering less than par on it's loans, there will come a time when it runs out of capital or cash to repay Funding Empire lenders. There is still of course the underlying purchase agreement from which monies might be recovered, but in this (unlikely) scenario there would be a loss on recovery for Funding Empire lenders. The BLX arrangements therefore acts like a buffer for lenders, flooring the loss at the outstanding principle of the loan, as long as BLX is solvent. This buffer however is shared by all loans BLX issues under these terms, as well as any other obligations it may have why rank equal or higher. To my knowledge there is nothing stopping the directors of BLX withdrawing this capital buffer if things start to turn sour and the owners want out (is this correct?) Therefore - The amount of capital that BLX has is of direct relevance to all Funding Empire investors in BLX issued loans, as are
- Controls around capital and liquidity. Can Parag block capital withdrawls? What is process if liquity drops below certain threshold (e.g. stop acceping and new BLX loans)
- Total claims on BLX capital - i.e. The total notional value of BLX issued loans outstanding (which would share the buffer) and the value of any obligations (or contingent obligations) that BLX has which rank on par or senior to the Funding Empire loans.
- Measures of the health of BLX loans on a portfolio basis, seeing as how a deterioration of these puts BLX capital at risk.
1. delinquency rate of BLX borrowers (observed and expected) and recovery rate on defaults (observed and expected)
2. The sum of the loan level £ LTV excess, split by asset type of security. By this i mean Sum accross all BLX issued loans to give the total amount of LTV buffer accross all BLX loans .
Ideally the above should be visible as a graph over time so we can see trajectory. Could you comment on the four points above - are there any plans to make all/some of this info available?
Thanks 2p
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shimself
Member of DD Central
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Post by shimself on Aug 23, 2016 8:32:42 GMT
are BLX profitable?
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Post by 2pornot2p on Aug 26, 2016 13:46:59 GMT
gusgorilla Thank you. If you have any other questions please feel free to drop me a line. Parag- Could you comment on the four points in my post above - are there any plans to make all/some of this info available? Thanks 2p
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Post by 2pornot2p on Aug 30, 2016 12:35:18 GMT
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Post by parag on Aug 30, 2016 18:34:13 GMT
2pornot2pApologies for the late response; I've been out of the office recently. We considered making the information you refer to public and were aiming to do so as the loan book grew. We are currently reviewing the product line up and will consider your comments as part of this process. There are clauses in the collaboration agreement that cap the level of remuneration the principals of BLX can withdraw from the business. If you can drop me an email - parag@fundingempire.com I will reply to your points in more detail where I can.
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shimself
Member of DD Central
Posts: 2,560
Likes: 1,169
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Post by shimself on Aug 31, 2016 15:07:29 GMT
Are BLX profitable?
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Post by pepperpot on Aug 31, 2016 16:33:13 GMT
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Post by parag on Sept 1, 2016 9:09:21 GMT
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