|
|
Post by Deleted on Feb 13, 2016 17:35:32 GMT
I am not worried about the delay at all.
I am worried that FC is not taking any interest in defending lenders' interests.
FC should have negotiated a new (higher rate/lower band) bridging loan with this borrower at least 2 weeks before the deadline. Even if this was only a 1-2 months bridging loan, for the extra time they should have offered to lenders more than they offered originally, as the borrower clearly missed on his obligations and his plans, and I cannot keep lending at the same rate with someone not able to keep up plans....
Also these are supposed to be the most secure loans on the network. If FC cannot even manage to find a timely resolution/continuation path for these very easy loans, how can they manage difficult cases (very very very badly, as they are doing for all the defaults)...
|
|
|
|
Post by GSV3MIaC on Feb 13, 2016 19:42:38 GMT
Seconded .. since there is a 'pay early with no penalty' option on all the FC loans, there is damn-all excuse for overrunning, and certainly none for FC not having a penalty interest rate clause in place (see AC for instance) .. it's not like FC haven't been dinged about that before (although good luck finding it on their forum!).
|
|
jayjay
Member of DD Central
Posts: 264 
Likes: 116
|
Post by jayjay on Feb 14, 2016 10:36:58 GMT
Does anyone know about the contract here? Surely FC must have a clause in there that invokes penalty rates if they procrastinate indefinitely (after 90 days, say). I just assumed we were in a grace period and for the moment was happy with that. Or does FC only have the nuclear option of defaulting the loan and calling in the security? That would seem rather odd given the nature of a lot of these deals.
|
|
pip
Posts: 542
Likes: 725
|
Post by pip on Feb 15, 2016 11:25:35 GMT
People seem to think this loan is risk free. This in my opinion is deeply flawed logic.
The borrower has got planning permission that was different from what was originally planned. Let me explain the risks:
a) The new lender may dispute the value of the development due to i) changes in market conditions since the original loan (the valuations seem very very punchy for the area) or ii) the changes in the plans
b) The planning changes, delays, potentially new/updated cost estimates may change the estimated cost of the development.
Based on this there is no guarantee the borrower will be able to borrow enough to repay the loan and retain their equity in the property. Maybe in this case they have more equity to inject, who knows?
Look i am not saying this will default, hopefully it's all fine. But I know one thing with loans, delays are not good, sometimes things are happening that you are not told about. My only problem is the idea that this is risk free, it isn't.
|
|
jayjay
Member of DD Central
Posts: 264
Likes: 116
|
Post by jayjay on Feb 15, 2016 11:48:49 GMT
People seem to think this loan is risk free. This in my opinion is deeply flawed logic. The borrower has got planning permission that was different from what was originally planned. Let me explain the risks: a) The new lender may dispute the value of the development due to i) changes in market conditions since the original loan (the valuations seem very very punchy for the area) or ii) the changes in the plans b) The planning changes, delays, potentially new/updated cost estimates may change the estimated cost of the development. Based on this there is no guarantee the borrower will be able to borrow enough to repay the loan and retain their equity in the property. Maybe in this case they have more equity to inject, who knows? Look i am not saying this will default, hopefully it's all fine. But I know one thing with loans, delays are not good, sometimes things are happening that you are not told about. My only problem is the idea that this is risk free, it isn't. The current BoE Rate for risk free lending is about 0.5% - this is twenty times risk free rate. That is the investment decision.
|
|
jayjay
Member of DD Central
Posts: 264
Likes: 116
|
Post by jayjay on Feb 15, 2016 13:12:14 GMT
Cornwall - at least the early tranches- seem to have started to be paid back. So that is a property loan allowed a grace period to sort itself out satisfactorily with a little bonus of a few days extra interest but no default rate.
|
|
pip
Posts: 542
Likes: 725
|
Post by pip on Feb 15, 2016 16:41:35 GMT
Cornwall - at least the early tranches- seem to have started to be paid back. So that is a property loan allowed a grace period to sort itself out satisfactorily with a little bonus of a few days extra interest but no default rate. What are you on about 'no default rate'? Do you mean by that risk free. The units haven't sold to completion. While you would hope that they will all go through at a price sufficient to repay loans you have no idea of that and to suggest it is risk free is highly misleading.
|
|
jayjay
Member of DD Central
Posts: 264
Likes: 116
|
Post by jayjay on Feb 15, 2016 17:06:26 GMT
Cornwall - at least the early tranches- seem to have started to be paid back. So that is a property loan allowed a grace period to sort itself out satisfactorily with a little bonus of a few days extra interest but no default rate. What are you on about 'no default rate'? Do you mean by that risk free. The units haven't sold to completion. While you would hope that they will all go through at a price sufficient to repay loans you have no idea of that and to suggest it is risk free is highly misleading. Sorry I mean a default rate of interest i.e 10% or even 12% - instead on Cornwall 1 it is 8% plus ten days or so free interest as we were paid a full month today.
|
|
jamesc
Member of DD Central
Posts: 447
Likes: 253
|
Post by jamesc on Feb 16, 2016 11:40:03 GMT
Looks like the Bucks loans have finally been repaid, not sure about any penalty interest though !
|
|
jamesc
Member of DD Central
Posts: 447
Likes: 253
|
Post by jamesc on Feb 16, 2016 11:45:13 GMT
SORRY my mistake my balance went up and I assumed this was the reason I guess wishful thinking !
|
|
|
|
Post by Deleted on Feb 16, 2016 12:59:30 GMT
Besides this single payment (which, I am sure, will come sooner or later), I would like FC to listen the intelligent suggestions proposed.
An easy solution, applicable to *any* property late loans would be the following "automatic mechanism":
(eventually to be inserted in the Borrowers T&C):
"... Any short delay from the borrower side due to unforseen circumstances, which are still considered by FC to be under control, will require the borrower to pay interest at 125% of the original rate and this extra interest is payable for every day beyond the original termination date."
This effectively will put a penalty of an higher interest (8%->10%; 10%->12,5%) only for the days the loan is late/extra borrowing days needed beyond the original plan. On one side will push the borrowers to be more careful in their planning and on the other side will also push them to complete the refinancing/sales as soon as possible once late! And the automatic mechanism would be fair also for the lenders which would at least see rewarded the extra (and unknown) time of lending.
|
|
ptr120
Member of DD Central
Posts: 1,202
Likes: 1,350
|
Post by ptr120 on Feb 16, 2016 15:37:17 GMT
Has anyone seen this refinance on any other platform other than FC? I know that they may not necessarily be using P2P finance, but I'd assume that they may at least want to try that route and that we may have seen it pop up elsewhere?
|
|
|
|
Post by Deleted on Feb 16, 2016 17:38:17 GMT
Has anyone seen this refinance on any other platform other than FC? I know that they may not necessarily be using P2P finance, but I'd assume that they may at least want to try that route and that we may have seen it pop up elsewhere? SS regularly 'reassesses' the borrowers and allows them extra time/refinance quite often. But they start from higher rates (12%) than FC and with usually very good securities (and a more convervative LTV max of 70%).
|
|
jayjay
Member of DD Central
Posts: 264
Likes: 116
|
Post by jayjay on Feb 16, 2016 18:29:50 GMT
New message posted on Bucks. FC's only mechanism to award penalty rates appears to give borrowers an extra month. In this case it will probably not amount to much. Unless it is an extra extra month.
SS is always annoyingly opaque about penalties and it clearly cross subsidises high extension rates to get to its one size fits all 12%. I much prefer AC where default rates are very clear and the dilemmas of a grace period are apparent.
FC may indeed be charging a penalty rate to the Bucks client but we don't know. They are apparently tied by the fact that everything has to be in complete months for payments to us lenders.
|
|
jayjay
Member of DD Central
Posts: 264
Likes: 116
|
Post by jayjay on Feb 19, 2016 15:30:13 GMT
So we have reached the end of 'this' week and still no funds. The promise of an 'extra' months interest for Bucks 1 (maturing on 21st) becomes more interesting just as that for Bucks 2 (maturing 27th) diminishes.
I think we have already established from other loans that the two maturity dates are probably not matched by how the borrower sees it, who may for instance have a single sum due on the 18th Jan. He may or may not be subject to formal notices, and penalties from FC. We are not told
If this is really how Faulty Colaborations handle the reward for late payments to the lender it is very crude. Does the promise now mean that we get two months extra on Bucks 1 or am I missing something?
|
|
