ben
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Post by ben on Feb 29, 2016 11:12:16 GMT
The loans that have ,so far, fallen short on funding are all property loans. I looked back over my first 100 repaid loans and only 3 were property loans. The reason that I signed up with FS was to diversify away from property into smaller more easily disposed of items. Perhaps they need some sort of consolidated/portfolio loans (as do MT). As an investor I would rather invest in a platform with a property loan where I get my interest monthly. With the FS model they have nothing to lose if it fails, so to them is quite low risk, if it succeeds all well and good if it fails just walk away at end
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Post by Financial Thing on Feb 29, 2016 16:46:38 GMT
The loans that have ,so far, fallen short on funding are all property loans. I looked back over my first 100 repaid loans and only 3 were property loans. The reason that I signed up with FS was to diversify away from property into smaller more easily disposed of items. Perhaps they need some sort of consolidated/portfolio loans (as do MT). As an investor I would rather invest in a platform with a property loan where I get my interest monthly. Seems it's hard for a p2p platform to grow putting loans up smaller loans, so naturally they moved to property since bigger loans means bigger fees. I feel the same way as you however, but I vote with my wallet. I have stopped funding the property loans and now buy lots of jewelry bits on the SM at par or below (if they are newly funded).
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Hairbear
He who dares..wins (most of the time)
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Post by Hairbear on Feb 29, 2016 17:00:09 GMT
The loans that have ,so far, fallen short on funding are all property loans. I looked back over my first 100 repaid loans and only 3 were property loans. The reason that I signed up with FS was to diversify away from property into smaller more easily disposed of items. Perhaps they need some sort of consolidated/portfolio loans (as do MT). As an investor I would rather invest in a platform with a property loan where I get my interest monthly. Seems it's hard to for a p2p platform to grow putting loans up smaller loans, so naturally they moved to property since bigger loans means bigger fees. I feel the same way as you however, but I vote with my wallet. I have stopped funding the property loans and now buy lots of jewelry bits on the SM at par or below (if they are newly funded). Your right , the only way they can grow is by funding large property loans, I think the days are numbered for the small trinket type loans, cars , carpets etc, FS WILL SOON NOT BE INTERESTED IN THESE SMALL LOANS, SO, the big important aspect for me now is LTV%, lets see what happens when the 1st property default comes in.
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ben
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Post by ben on Feb 29, 2016 17:04:45 GMT
Seems it's hard to for a p2p platform to grow putting loans up smaller loans, so naturally they moved to property since bigger loans means bigger fees. I feel the same way as you however, but I vote with my wallet. I have stopped funding the property loans and now buy lots of jewelry bits on the SM at par or below (if they are newly funded). Your right , the only way they can grow is by funding large property loans, I think the days are numbered for the small trinket type loans, cars , carpets etc, FS WILL SOON NOT BE INTERESTED IN THESE SMALL LOANS, SO, the big important aspect for me now is LTV%, lets see what happens when the 1st property default comes in. I can see why they want to do property as that be were the big money is but they seem to be doing to many, so a few have found it hard to fund and really with that amount of loans how much checking can they be doing
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mikes1531
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Post by mikes1531 on Feb 29, 2016 18:52:24 GMT
The loans that have ,so far, fallen short on funding are all property loans. I looked back over my first 100 repaid loans and only 3 were property loans. The reason that I signed up with FS was to diversify away from property into smaller more easily disposed of items. Perhaps they need some sort of consolidated/portfolio loans (as do MT). As an investor I would rather invest in a platform with a property loan where I get my interest monthly. With the FS model they have nothing to lose if it fails, so to them is quite low risk, if it succeeds all well and good if it fails just walk away at end AIUI, in addition to any fees they get from arranging the loan FS make money via the interest rate spread -- the difference between what borrowers pay and what lenders earn. Unless they're getting interest up front and not telling us that, fundingsecure have a lot to lose if the security has to be sold and the interest paid from the proceeds. They'd be better off than their lenders, though, because the Ts&Cs mean that FS get their interest and fees immediately after lender capital is repaid in full. Only if there are surplus proceeds after that do lenders receive their accrued interest. Having said that, though, there have been cases in the past where security sale proceeds from defaulted loans would have been insufficient to pay all lenders' accrued interest and FS have repaid lenders in full anyway, reducing their own profit as a result. Lenders, of course, are very grateful for such action, but, as others have pointed out, it's a lot easier to do that on a sub-£10k jewellery/art loan than it would be with a six- or seven-figure property loan, so it remains to be seen what will happen when the first big loan defaults. And it looks like we may be about to have our first example if the Scottish Boatyard borrower doesn't come up with a chunk of cash very shortly. We won't find out quickly, though. Based on my experience with other platforms (AC and SS), property defaults will take months to resolve and might even take years!
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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 29, 2016 19:35:06 GMT
With the FS model they have nothing to lose if it fails, so to them is quite low risk, if it succeeds all well and good if it fails just walk away at end AIUI, in addition to any fees they get from arranging the loan FS make money via the interest rate spread -- the difference between what borrowers pay and what lenders earn. Unless they're getting interest up front and not telling us that, fundingsecure have a lot to lose if the security has to be sold and the interest paid from the proceeds. They'd be better off than their lenders, though, because the Ts&Cs mean that FS get their interest and fees immediately after lender capital is repaid in full. Only if there are surplus proceeds after that do lenders receive their accrued interest. Do FS charge interest? They say they make their money from admin fees, despite the fact they quote rates on the site. No mention of interest in repayment schedules, just fees/costs How does FundingSecure make its money?
FundingSecure earns revenue from the monthly administration fee it applies to borrowers’ loans. We do not take commission from the investors' interest.Cant see this being true for property loans (1.5%pm upwards certainly implies interest charge) Similarly do they really not do a credit check on someone borrowing £1m? Looks like their site needs a bit of an update. Brings us back to a question elsewhere, what is the loan agreement for property, just their standard pawn one, or something more comprehensive with PG and other potential recovery strategies included. Hmm, lot of questions starting to form here
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ben
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Post by ben on Feb 29, 2016 19:51:07 GMT
website defiantly needs a bit updating, it would also be nice to know how FS makes there money ie before or afterwards on these bridging loans, they must charge something upfront as the cost of setting up the loan must be more then a generic one for a watch for example and the cost of trying to reclaim the asset at the end if defaults must be much more as they do not have it
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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 29, 2016 20:22:05 GMT
website defiantly needs a bit updating, it would also be nice to know how FS makes there money ie before or afterwards on these bridging loans, they must charge something upfront as the cost of setting up the loan must be more then a generic one for a watch for example and the cost of trying to reclaim the asset at the end if defaults must be much more as they do not have it Property loan tab specifically says no upfront fees, though that would not preclude taking any set up fees out of the loan. Does seem unlikely that FS bears the cost of valuation, brokers, legals etc for 6 months unless the borrower pays those and no upfront fees refers to admin fees only
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mikes1531
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Post by mikes1531 on Feb 29, 2016 21:41:34 GMT
website defiantly needs a bit updating, it would also be nice to know how FS makes there money ie before or afterwards on these bridging loans, they must charge something upfront as the cost of setting up the loan must be more then a generic one for a watch for example and the cost of trying to reclaim the asset at the end if defaults must be much more as they do not have it Property loan tab specifically says no upfront fees, though that would not preclude taking any set up fees out of the loan. Does seem unlikely that FS bears the cost of valuation, brokers, legals etc for 6 months unless the borrower pays those and no upfront fees refers to admin fees only : I think we're dealing with semantics. The Ts&Cs say... There may be legal/tax reasons why it needs to be called an admin fee instead of interest but the net effect is the same -- money accrues to FS daily over the term of the loan, and that part of FS's income is at risk if the borrower defaults, the security has to be sold, and the proceeds aren't enough to cover all the outstanding costs/fees/interest. I never kept a copy of the earlier version(s) of the Ts&Cs but, back when all FS did was pawnbroking, they used to specify the admin fees. They depended of the size of the loan, and IIRC ranged from about 3.4%/month for small (less than £1500?) loans down to about 2%/month for large (£15k) loans. It was from those fees that FS paid their investors the typical 1.08%/month (13% p.a.) when the security was redeemed. PS. If you're really keen, you should be able to find threads discussing the Ts&Cs in the forum archives, as there was considerable criticism of them in my early FS days (2H13).
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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 Feb 29, 2016 22:01:34 GMT
ilmoro : I think we're dealing with semantics. The Ts&Cs say... There may be legal/tax reasons why it needs to be called an admin fee instead of interest but the net effect is the same -- money accrues to FS daily over the term of the loan, and that part of FS's income is at risk if the borrower defaults, the security has to be sold, and the proceeds aren't enough to cover all the outstanding costs/fees/interest. I never kept a copy of the earlier version(s) of the Ts&Cs but, back when all FS did was pawnbroking, they used to specify the admin fees. They depended of the size of the loan, and IIRC ranged from about 3.4%/month for small (less than £1500?) loans down to about 2%/month for large (£15k) loans. It was from those fees that FS paid their investors the typical 1.08%/month (13% p.a.) when the security was redeemed. PS. If you're really keen, you should be able to find threads discussing the Ts&Cs in the forum archives, as there was considerable criticism of them in my early FS days (2H13). Still there under 'Rates' I think. I did originally type the fees equate to interest point but then lost it in an edit. My point is it lacks clarity referring to interest on site but fees in terms. Is it clear to the financially illiterate. Something all sites need to improve with IFISA pending IMHO.
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mikes1531
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Post by mikes1531 on Feb 29, 2016 22:47:12 GMT
Still there under 'Rates' I think. I did originally type the fees equate to interest point but then lost it in an edit. My point is it lacks clarity referring to interest on site but fees in terms. Is it clear to the financially illiterate. Something all sites need to improve with IFISA pending IMHO. Yes, indeed. And the rates are even higher than I remembered! To get back to the original issue, the bottom line is that FS do have a risk of their revenue being reduced if they can't make a good recovery from a security sale after a loan defaults, and they could find themselves making a loss on a loan if their costs (valuation/legal/storage/whatever) can't be recovered from the proceeds.
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