Investboy
Member of DD Central
Trying to recover from P2P revolution
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Post by Investboy on Feb 24, 2016 10:45:52 GMT
If we all dumping late loans who is buying them? I guess people who do not read this forum...
Anyway my plan is the same as other people above. I have one big loan that has 30% of my SS investment and I use it to purchase new loans. I also dumped all late loans last week when SM was empty.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Feb 24, 2016 12:58:02 GMT
I cannot remember when I first joined SS but when I did it was a boattie business, none of this bricks and mortar stuff. At that time my main P2P provider was AC but as soon as they started to make their site overly complex and confusing, whilst at the same time reducing the rates on offer, I started to look elsewhere. I have now ended up spread across five P2P providers with SS getting a good share. Currently I have 40 loans with SS and I try to limit myself to this number. I also limit my investment in each to 5% of my total SS pot. I have followed the same model with other P2P outfits.
On a cautionary note, if any of the P2P loans goes bad expect a long wait to get your money back, expect to loose your interest and count yourself lucky if you get all of your capital back. This applies to bricks and mortar loans just as much to cars, boats or any other capital assets. I still have six defaulted loans with AC and hope one day7 to get my money back but probably not this year!
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mikes1531
Member of DD Central
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Post by mikes1531 on Feb 24, 2016 15:00:11 GMT
Everything I'm buying now is funded by selling other loans for diversity, so if the SM came to a standstill, I and many others, wouldn't be able to meet clear their negative balance. A seize-up of the SM resulting in the scenario described by Liz has to be the SS nightmare. Hopefully they have a plan to cope with it if it happens, presumably by using their own working capital, and by calling in underwriters, to cover the loans they've committed to make. As long as they can do that -- and not be tempted into raiding the Provision Fund to 'temporarily' cover the cashflow deficit -- all should be well.
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Post by sunspot on Feb 24, 2016 16:13:10 GMT
I assume you're referring to Saving Stream loans rather than the whole industry...
On this basis, it's by no means certain that any capital will be lost - it all depends on what the asset can be sold for. Moreover, we get to deduct interest during the sale period. Only when that and other costs have been covered, are any remaining monies returned to the original borrower. And there's a provision fund to cover deficits - although I think it needs to be larger.
Personally, I think there are too many loans overdue, but I don't see this as a threat to the business model. Far more significant is the basis upon which valuations are made - a point I've raised before. Personally, I would like to see Lendy produce their own template, and have valuers fill it in. This would make all these documents far more readable, and get rid of all the guff. Indeed, some of the valuation reports I've read are epic fails in terms of clarity and focusing on what's important. Some are positively misleading, and one in particular was based on blue-sky thinking. I'm not going to name it, but I've noticed that it's traded as if overdue, even though it's not, so other people have presumably come to the same conclusion.
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mikes1531
Member of DD Central
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Post by mikes1531 on Feb 24, 2016 19:22:35 GMT
Personally, I think there are too many loans overdue, but I don't see this as a threat to the business model. I see two threats from overdue loans... - On old T&Cs loans, continuing interest payments come out of SS/Lendy's pocket. They may have sufficient working capital that this isn't a problem for them, but the number of overdue loans and the amount of time they are overdue must amount to a significant sum.
- On new Ts&Cs loans, there would be no continuing interest payments. There'd be no strain on SS/Lendy, but it could put a dent in investors' enthusiasm. Again, no big deal if the occurrences are rare, but if they continue at the current rate it could become off-putting.
Perhaps it's nothing to be concerned about, but it is something to bear in mind.
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webwiz
Posts: 1,133
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Post by webwiz on Feb 24, 2016 19:27:12 GMT
Personally, I think there are too many loans overdue, but I don't see this as a threat to the business model. I see two threats from overdue loans... - On old T&Cs loans, continuing interest payments come out of SS/Lendy's pocket. They may have sufficient working capital that this isn't a problem for them, but the number of overdue loans and the amount of time they are overdue must amount to a significant sum.
- On new Ts&Cs loans, there would be no continuing interest payments. There'd be no strain on SS/Lendy, but it could put a dent in investors' enthusiasm. Again, no big deal if the occurrences are rare, but if they continue at the current rate it could become off-putting.
Perhaps it's nothing to be concerned about, but it is something to bear in mind.
On new Ts&Cs loans when does the interest stop accruing? As soon as the loan becomes overdue or when SS declare that it is default, or some other time?
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Liz
Member of DD Central
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Post by Liz on Feb 24, 2016 19:32:14 GMT
I see two threats from overdue loans... - On old T&Cs loans, continuing interest payments come out of SS/Lendy's pocket. They may have sufficient working capital that this isn't a problem for them, but the number of overdue loans and the amount of time they are overdue must amount to a significant sum.
- On new Ts&Cs loans, there would be no continuing interest payments. There'd be no strain on SS/Lendy, but it could put a dent in investors' enthusiasm. Again, no big deal if the occurrences are rare, but if they continue at the current rate it could become off-putting.
Perhaps it's nothing to be concerned about, but it is something to bear in mind.
On new Ts&Cs loans when does the interest stop accruing? As soon as the loan becomes overdue or when SS declare that it is default, or some other time? Last time they carried on paying interest all the way through default and sale of the asset. Next time, if the loan is much larger, it is unclear whether they would be able to keep paying interest.
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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 Feb 24, 2016 20:27:35 GMT
I see two threats from overdue loans... - On old T&Cs loans, continuing interest payments come out of SS/Lendy's pocket. They may have sufficient working capital that this isn't a problem for them, but the number of overdue loans and the amount of time they are overdue must amount to a significant sum.
- On new Ts&Cs loans, there would be no continuing interest payments. There'd be no strain on SS/Lendy, but it could put a dent in investors' enthusiasm. Again, no big deal if the occurrences are rare, but if they continue at the current rate it could become off-putting.
Perhaps it's nothing to be concerned about, but it is something to bear in mind.
On new Ts&Cs loans when does the interest stop accruing? As soon as the loan becomes overdue or when SS declare that it is default, or some other time? You mean start accruing I assume. It would start accruing from the point the loan term expired. It would then be up to Savingstream & SSSH how they handled the situation as they have authority to restruct the loan contract or enforce security. They need to give us 5 days notice but we dont have any say. T&Cs Clauses 9.6-9.9 All parts of 12 & 13
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geoff
Member of DD Central
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Post by geoff on Feb 24, 2016 22:20:48 GMT
On new Ts&Cs loans when does the interest stop accruing? As soon as the loan becomes overdue or when SS declare that it is default, or some other time? You mean start accruing I assume. It would start accruing from the point the loan term expired. It would then be up to Savingstream & SSSH how they handled the situation as they have authority to restruct the loan contract or enforce security. They need to give us 5 days notice but we dont have any say. T&Cs Clauses 9.6-9.9 All parts of 12 & 13 by Saving Stream last year explains the differences between the old and new T&Cs including details of how a default will affect interest arrangements. Clearly a default will be an explicitly declared event and not merely an overrun of the original loan term.
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freddy
Member of DD Central
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Post by freddy on Feb 25, 2016 0:17:42 GMT
Regarding the provision fund. My understanding is that this is discretionary. In the event of defaults, is there the danger that the fund may be used more generously for loans on the old T&Cs as opposed to those on the new. If a number of the older loans were to default could it be that the fund is gone leaving limited cover if any for any newer loans? Are SS better covered by this fund on older loans than we are on the newer loans?
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 25, 2016 3:40:54 GMT
Regarding the provision fund. My understanding is that this is discretionary. In the event of defaults, is there the danger that the fund may be used more generously for loans on the old T&Cs as opposed to those on the new. If a number of the older loans were to default could it be that the fund is gone leaving limited cover if any for any newer loans? Are SS better covered by this fund on older loans than we are on the newer loans? The problem with the old T&C loans is that one default could affect us all whereas on the new T&C loans a default can only affect the investor in that loan. As such, I would imagine that if defaults concurrently occurred on the old & new T&Cs, that the defaulted loan on the old T&C would be given priority to compensate from the provision fund. So yes (in my opinion) while older T&C loans exist on the system, the provision fund would benefit them over newer loans if a default occurs.
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mikes1531
Member of DD Central
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Post by mikes1531 on Feb 25, 2016 4:28:54 GMT
Regarding the provision fund. My understanding is that this is discretionary. In the event of defaults, is there the danger that the fund may be used more generously for loans on the old T&Cs as opposed to those on the new. If a number of the older loans were to default could it be that the fund is gone leaving limited cover if any for any newer loans? Are SS better covered by this fund on older loans than we are on the newer loans? The problem with the old T&C loans is that one default could affect us all whereas on the new T&C loans a default can only affect the investor in that loan. As such, I would imagine that if defaults concurrently occurred on the old & new T&Cs, that the defaulted loan on the old T&C would be given priority to compensate from the provision fund. So yes (in my opinion) while older T&C loans exist on the system, the provision fund would benefit them over newer loans if a default occurs. Another way to look at it is that with old loans, SS/Lendy reap the benefits of PF payouts because any payouts reduce their obligations to investors. With new loans, the benefits of PF payouts go straight to investors.
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