fasty
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Post by fasty on Mar 14, 2016 0:23:39 GMT
I imagine like most lenders, I like keep an eye on our Friendly Chum's "Earnings Summary". The figures for Bad Debt and recoveries seem clear enough, but I have become increasingly uneasy about the escalating number of my loans that have become "Risk Band Removed", particularly as the volume of such loans isn't clearly consolidated and measured anywhere.
Yes, I know that many are still repaying, but experience seems to suggest that a fair proportion are, frankly, doomed and I certainly can't sell any of them if I need the cash.
So, my calculations show that I have around twice as much money tied up in not-yet-failed-but-RBR'ed loans as the amount shown for actual bad debt. In other words, in the worst case scenario, if all my RBR'ed loans failed, my losses could be three times as much as a naive glance at the Earnings Summary might suggest. Admittedly, a chunk of this is due to a couple of recent "E" loans which were RBR'ed shortly after drawdown, which is another debate entirely.
I do wonder how many lenders might be failing to fully appreciate just how much of their money may be out of reach if they needed to wind up their accounts.
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Post by Deleted on Mar 14, 2016 9:39:21 GMT
I will be very frank.
In my view FC is manipulating the statistics to try and resemble as long as possible their own 'expectations' on defaults.
So, when they are too close (or over) their expectations they just RBR loan after loan, even when it looks obvious they should be defaulted, and leave to the default only the extremly urgent cases.
So it is effectively a buffer of lies, to show things are going to plan and no problem exist (as they always repeat on their forums).
My feeling is that in reality the situation is totally out of control and it is made worse by a totally inefficient (slow and not deep enough) due diligence, solicitation and recovery process, which encourages the worst borrowers on the networks. Effectively the only thing FC is good at is keeping things (payments and distributions) moving for honest borrowers. But as a problem shows, they are lost...
The non payers have been far too many and too frequent in the last year and the loan bands are a complete shamble (we already now see A defaults over 5% in real life and a lot of loans are still at early stages). Nothwithstanding my full engagement and analysis I have had a lot of defaults and have a lot of RBRs.
This is why I am progressing selling off everything and moving elsewhere and now lending only to borrowers with Securities in place...
(BTW: FC will continue to repeat the mantra that the total returns are better than a savings account. Yes, this is true. But the effort I put and risk I take to loose my capital are incommensurably higher...)
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blender
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Post by blender on Mar 14, 2016 10:23:45 GMT
I agree. There should be a figure for 'loans downgraded or untradable' but not (yet) losses. RBR is not lost. Loans do come back from credit events and there is the period between missing a payment date and missing sufficient payments to be judged in default. But this is invisible to lenders in the summary, until you go to loan comments, and it is too easy for FC to RBR loans and keep them that way. Visibility is required - on the same basis as 'accrued interest'.
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kt
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Post by kt on Mar 14, 2016 11:05:24 GMT
Let me understand this. FC have a rate per band. In order to maintain the high return rates per band they are completely removing bands from loans?
Can someone break this down for me as it sounds remarkable that they are allow to change the band on the loan AFTER the loan has been given.
kt
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Post by GSV3MIaC on Mar 14, 2016 11:21:04 GMT
No, that's not it. They RBR (remove band) to stop a loan being sold. Underneath it still has the original band, which you can see in the downloaded loan book - you just can't sell it (and it doesn't affected the defaults numbers for that risk band, or the overall number, since it isn't yet actually defaulted). Personally I track 'late' as well as 'defaulted', and always have, but RBR doesn't even always mean 'late'/
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Post by davee39 on Mar 14, 2016 11:25:24 GMT
Let me understand this. FC have a rate per band. In order to maintain the high return rates per band they are completely removing bands from loans? Can someone break this down for me as it sounds remarkable that they are allow to change the band on the loan AFTER the loan has been given. kt These are for loans which are in trouble but have not defaulted. Removing the rate band stops the loan being traded. Sometimes the band is restored following investigation. FC are not alone. I have a loan with AC where about 1/3 has been recovered and the rest looks like being lost, but the value still shows in my totals. I do not think RBR is used to manipulate defaults, FC has to follow due process before a loan can be defaulted which appears to be either a set value of arrears or a major event such as company liquidation.
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Post by Deleted on Mar 14, 2016 11:26:42 GMT
Let me understand this. FC have a rate per band. In order to maintain the high return rates per band they are completely removing bands from loans? Can someone break this down for me as it sounds remarkable that they are allow to change the band on the loan AFTER the loan has been given. kt No. FC is not actively changing bands. They simply use an intermediate stage between a live loan and a defaulted loan, in which they 'investigate' matters or explore consequences of happenings (like CCJ or dissolution requests for companies). The problem is that this intermediate RBR stage is totally arbitrary and can be used to manipulate stats at will. A loan entering the RBR stage can end up in default, but can recover at the end (some will do).
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Post by Deleted on Mar 14, 2016 11:30:28 GMT
Let me understand this. FC have a rate per band. In order to maintain the high return rates per band they are completely removing bands from loans? Can someone break this down for me as it sounds remarkable that they are allow to change the band on the loan AFTER the loan has been given. kt These are for loans which are in trouble but have not defaulted. Removing the rate band stops the loan being traded. Sometimes the band is restored following investigation. FC are not alone. I have a loan with AC where about 1/3 has been recovered and the rest looks like being lost, but the value still shows in my totals. I do not think RBR is used to manipulate defaults, FC has to follow due process before a loan can be defaulted which appears to be either a set value of arrears or a major event such as company liquidation. Well, the process by which FC declares a loan in default is pretty arbitrary. With the exception of urgent cases where they need to default the loan to represent their positions at creditors meetings, the timings and decisions are pretty much arbitrary. And the same is valid for RBR. FC can keep loans in RBR stage for months or years (I remember one which returned to the normal stage only after a year of consecutive regular repayments) if they wish so...
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markr
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Post by markr on Mar 14, 2016 13:10:19 GMT
The trouble is, RBR is the only way FC have of preventing loans from being sold. The RBR can be for many reasons, ranging from happy (loan is about to be repaid) to sad (borrower is about to sail off into the sunset with our cash). FC could argue that presenting a lumped "total amount RBRed" figure would be misleading, as without considering the comments on each loan it might give an overly pessimistic view.
FC tend to default loans more readily since they took recoveries in-house, and their recoveries aren't too bad, really (I have about 25% including those where FC dipped into their own pocket). Since the RBRed but not defaulted loans are usually making some sort of payments, defaulting them and treating the payments as recoveries would improve FC's recovery performance figures, so I don't think they are doing this to be deliberately misleading. I believe they, mainly, are doing as they claim, i.e. treating each RBR on a case-by-case basis and doing what they think is best to try to help the company trade out of their problems if possible, or to maximise recoveries otherwise.
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Post by Deleted on Mar 14, 2016 15:21:45 GMT
Just while discussing RBR and defaults:
Any loans which is defaulted seems to have a parameter, "defaulted, exposure xxx", associated with it in the comments list.
The amount 'Exposure' is the amount a lender is exposed to that loan when this is defaulted.
Is there any way to see the current exposure to each single defaulted loan?
Some will have payments (which are regulars or not and sometimes of varying amounts) so I lost track for most of them of where we stand.
Any easy way to check the 'current exposure' for each defaulted loan?
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Post by GSV3MIaC on Mar 14, 2016 16:19:25 GMT
Short answer is 'no' although it has been asked for several times.
You have to trawl through all your transaction reports and add up recoveries, and then net them off yourself. The exposure number never changes.
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blender
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Post by blender on Mar 14, 2016 16:52:37 GMT
Short answer is 'no' although it has been asked for several times. You have to trawl through all your transaction reports and add up recoveries, and then net them off yourself. The exposure number never changes. You seem to have ascended to the stars, GSV. I hope it was painless and I see it is retroactive. Anyway it is good to see you volunteering to support the board in this way. It is good news.
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fasty
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Post by fasty on Mar 14, 2016 17:12:14 GMT
Short answer is 'no' although it has been asked for several times. You have to trawl through all your transaction reports and add up recoveries, and then net them off yourself. The exposure number never changes. You seem to have ascended to the stars, GSV. I hope it was painless and I see it is retroactive. Anyway it is good to see you volunteering to support the board in this way. It is good news. Deserving for someone with such a considerate and well-trained bot 
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Post by GSV3MIaC on Mar 14, 2016 17:36:56 GMT
Short answer is 'no' although it has been asked for several times. You have to trawl through all your transaction reports and add up recoveries, and then net them off yourself. The exposure number never changes. You seem to have ascended to the stars, GSV. I hope it was painless and I see it is retroactive. Anyway it is good to see you volunteering to support the board in this way. It is good news. Just mind your manners now, or I'll set the bots on you (or as IMB fans would know, more likely a knife missile or a drone with delusions of sentience). Hopefully this won't turn out to be a big chore and I'll still have time to have a moan (oops .. 'offer constructive criticism' I meant) about FC, SS, ReBS, LC, Zopa, RS, AC and maybe some others
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blender
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Post by blender on Mar 14, 2016 22:20:17 GMT
You seem to have ascended to the stars, GSV. I hope it was painless and I see it is retroactive. Anyway it is good to see you volunteering to support the board in this way. It is good news. Just mind your manners now, or I'll set the bots on you (or as IMB fans would know, more likely a knife missile or a drone with delusions of sentience). Hopefully this won't turn out to be a big chore and I'll still have time to have a moan (oops .. 'offer constructive criticism' I meant) about FC, SS, ReBS, LC, Zopa, RS, AC and maybe some others Clearly some sort of spirit has now entered your being, and you can now speak and moan in the language of many p2p sites, while I can still manage just one and a half, FC and Ablrate. I have never had a post moderated, but will now try harder. Is it possible to break all the forum rules in a single post and break the moderator bot?
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