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Post by rahafoorum on Mar 25, 2016 11:49:16 GMT
After the additional details were published by Pärtel yesterday evening, I dug into the data to see what the expected result of this new "send all 7 days overdue loans to DCA" could be. In short, I find this new service to be directly harmful to Bondora's investors and violating investors' rights, by automatically deducting money from their account for a service that's not in their best interests, that they don't want, that was implemented in secrecy prior to any announcements or updates to Terms of Use (which has been updated on 22.03.2016 after the new process was already implemented) and that will almost certainly cause financial loss for the investors based on the information available. For the reason why I think so and why you should be pissed off, if not suing, look at the analyses in the post below:
rahafoorum.ee/en/bondora-wasting-your-money/Edit: The title should actually be, giving away, because I don't think they actually take the money, but give it to DCAs instead. Update 26.03.: There was one more blog post from Bondora on the topic in June 10th, that I previously didn't find nor highlight and have now added to the post. There it is mentioned that there'll be an experiment of 3-6 months testing the efficiency of sending defaulted loans to DCAs. There's no mention that this process would be paid for by the investor. |
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Post by rahafoorum on Mar 25, 2016 13:37:50 GMT
Pärtel has shared some additional info on the process (mind you, in a non-official communication channel). Will update the post a bit accordingly. The additional information actually brought in only more questions than answers  |
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Post by rahafoorum on Mar 25, 2016 19:11:03 GMT
Had a small realization, that the reperforming rate and recovery rate from defaulted loans can't be compared directly that easily, so have updated this part of the blog post.
The issue being that a loan that has been overdue for 7+ days, will only repay the 1-2 overdue payments and will be considered as a full prevention of default, even though it could just as easily go overdue again with the next payment and still default.
With recovery from defaults however, we only account for the payment made and this won't affect the status of the rest of the defaulted loan, even if the borrower has restarted paying according to the previous schedule or even more per every month.
This also highlights the meaningless of a one time increase in the reperforming rate from 7 days overdue, which one would get by doing a short-term experiment to test the effect of this type of interventions, as this tells us nothing about the actual size of the effect if we don't know how lasting this reperformance actually is.
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duck
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Post by duck on Mar 26, 2016 8:11:16 GMT
What an excellent blog! On first inspection I realised it would take some time to read but well worth it. I was very surprised to read the new 7 day process on the Bondora Email and reached the same conclusion as you. Back in 2013 when I was new to isePankur (now Bondora) I used to analyse all my 7 day late loans and mark them on my spreadsheets. Within a few months I realised that I was wasting my time since most recovered. 14 days (at a minimum) was a far more sensible timescale to work with. The introduction of DCA's (and associated fees) at 7 days can only be seen as an extra cost to me. As I posted in another thread p2pindependentforum.com/post/97983 I have been noticing payments being made but capital outstanding not reducing. My suspicion is that the DCA fees are the cause - but of course I can't prove this! |
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Post by rahafoorum on Mar 26, 2016 8:26:46 GMT
What an excellent blog! On first inspection I realised it would take some time to read but well worth it. I was very surprised to read the new 7 day process on the Bondora Email and reached the same conclusion as you. Back in 2013 when I was new to isePankur (now Bondora) I used to analyse all my 7 day late loans and mark them on my spreadsheets. Within a few months I realised that I was wasting my time since most recovered. 14 days (at a minimum) was a far more sensible timescale to work with. The introduction of DCA's (and associated fees) at 7 days can only be seen as an extra cost to me. As I posted in another thread p2pindependentforum.com/post/97983 I have been noticing payments being made but capital outstanding not reducing. My suspicion is that the DCA fees are the cause - but of course I can't prove this! The post is not perfect, but judging by what Pärtel has been saying on the Facebook, it seems I've done a lot more analyses on the topic and it's possible effects on investors than Bondora did prior to implementing this. I mean, really? You calculate the effects and don't realize that a 7 day overdue can become 7 day overdue again after starting to reperform and you implement it anyway? What was the decision to implement this based on in reality? Tea leaves or patterns in the toilet water? About your topic, I don't think it's related to DCAs if the money arrived? With DCAs it should be the other way around, that money doesn't arrive as much as you were hoping for, but outstanding principal is dropping. Of course, with today's system it isn't dropping. Did you receive payment from those loans? Should be able to check from your cashflow/my investments page. If however there's a payment made, outstanding principal didn't drop and you also didn't receive any money, then there are 3 possibilities that I can think of: - Bondora is just buggy again (wouldn't be too much of a surprise)
- The payment was too small so it was spread around, but nothing left for you (there are apparently cases where the spreading around the cash is very uneven)
- The payment was used to cover Bondora's management fee, although Bondora has stated it won't be and management fee will only be taken once all principal has been recovered.
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duck
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Post by duck on Mar 26, 2016 8:34:46 GMT
Yes I've made a mental note to check against cashflow more often - the couple I have check showed nothing incoming but the 'Accounts List' when filtered showed a date so something doesn't tie up. why do I find that frightening but not surprising  |
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Post by rahafoorum on Mar 26, 2016 9:47:12 GMT
Yes I've made a mental note to check against cashflow more often - the couple I have check showed nothing incoming but the 'Accounts List' when filtered showed a date so something doesn't tie up. Just thought of one more possibility you could check. If the loan is on the grace period, it would pay only interest payments. That ought to be more popular with the B Secure now.
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duck
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Post by duck on Mar 29, 2016 17:10:47 GMT
Yes I've made a mental note to check against cashflow more often - the couple I have check showed nothing incoming but the 'Accounts List' when filtered showed a date so something doesn't tie up. .... Well I've just checked 6 defaulted loans that when filtered from the 'investments' download showed a date of 24/03/2016 against 'LastPaymentOn' Checking against cashflow showed none of them had made a payment to me. Checking against the individual loans showed no payments had been made by 5 out of 6. The 6th showed 0.01 capital paid to me but the total capital outstanding remains the same - which suggests no payment was made and this would tie up with cashflow. So the question remains, why are loans appearing on the 'investments' download stating payments have been made when checking shows nothing has been paid off the debt. Either no payment has been made and the investments list is incorrect - however when payments have been made for other defaulted loans the investments list, individual loan and cashflow all report correctly - so this would appear strange. or A payment has indeed been made but it has been diverted elsewhere. I've not got a clue what the answer is.
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carlos
I'm short Bondora and long p2p.
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Post by carlos on Mar 29, 2016 21:06:12 GMT
Maybe "LastPaymentOn" means now payment for DCA ... On a serious note, you should definitely ask support about it... It doesn't sound good. |
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carlos
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Post by carlos on Mar 29, 2016 21:10:23 GMT
Thanks for your analysis... It just confirms my suspicion and adds more arguments for the need of proper transparent accounting of recovery fees (which I'm pointing to for months already). Bondora has been known for data transparency but unfortunately in 2015 this has turned in really bad direction... Possibility of trading ghosts on secondary market worries me a lot. I've wrote about it to support (and also spoke personally to Rein Ojavere /CFO/), no answer yet.. I've asked them this simple question (and everyone of you should ask too): "Do you have any means to provide me with exact amount deducted from my account cash (or outstanding amounts) to DCAs?" Back in September 2015, I've asked support: "I need clear and transparent overview of all deducted fees in case that you would force me to pay something that previously borrower (by contract) agreed to pay." and received this Solomon's answer: In other words, no clear answer and mixing apples and oranges (law changes and DCAs)... I'm sick of it..
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shimself
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Post by shimself on Mar 29, 2016 21:32:36 GMT
.... Checking against the individual loans showed no payments had been made by 5 out of 6. The 6th showed 0.01 capital paid to me but the total capital outstanding remains the same - which suggests no payment was made and this would tie up with cashflow. quote format gone wrong anyway MIGHT IT BE ROUNDING?
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duck
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Post by duck on Mar 30, 2016 5:52:19 GMT
Maybe "LastPaymentOn" means now payment for DCA ... On a serious note, you should definitely ask support about it... It doesn't sound good. I will be asking support about this, I need to check a larger batch and make note of the loan numbers (didn't do it when I had a previous larger batch) yes shimself it could well be rounding for that case but it seems 'strange' all the same. On a couple of the loans I looked at the last payment was made over a year ago so something appears not to tie up here ..... or perhaps I am misunderstanding 'LastPaymentOn'
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duck
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Post by duck on Mar 30, 2016 17:10:48 GMT
On the subject of the 7 day DCA involvement
From Email
DCA fee structure for the 7 days overdue loan
Last week we announced the change in our debt collection and recovery process. We have received questions about the DCA fee structure as we started to use a more aggressive approach towards the loans after 7 days overdue. We gladly provide additional information since this subject can be interpreted in many ways.
Let's say a borrower misses one scheduled payment for 7 days. What happens next is that we send this one missed payment to a local debt collection agency. If the collection is successful the investor will only be liable for the collection cost of this specific overdue payment. Just to clarify, the investor is not charged for the entire loan amount but only for the overdue monthly payment.
There are no charges if the borrower recovers on its own or repays the overdue amount before we send it to the DCA or if the borrower continues paying off the loan directly to Bondora through a normal servicing process after the borrower has paid the debt. Best practice shows that the sooner you act more aggressively the more likely you will receive the payment within 30 days and therefore avoid defaults. The average collection fee has been around 15% and can fluctuate based on market costs.
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Post by rahafoorum on Apr 5, 2016 8:40:41 GMT
Took another look at this from a bit different angle after some more info came in. rahafoorum.ee/en/decide-if-debt-collection-good/A bonus question that I haven't yet managed to figure out though. Maybe someone knows: How will the overdue loans become current again if the DCA payment is not accounted for in UI and the payment that arrives into the system is lower than the overdue amount? |
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duck
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Post by duck on Apr 6, 2016 16:51:28 GMT
Took another look at this from a bit different angle after some more info came in. rahafoorum.ee/en/decide-if-debt-collection-good/A bonus question that I haven't yet managed to figure out though. Maybe someone knows: How will the overdue loans become current again if the DCA payment is not accounted for in UI and the payment that arrives into the system is lower than the overdue amount? Another excellent blog  In answer to your question I wonder if it is anything to do with the strange behaviour I noticed yesterday p2pindependentforum.com/post/106046/thread Whilst I have not to the end of my 'sorting' (no time today) I have found +20 loans that have reverted from 2 'Recovery' to 1 'Collection' yet have no update, show no payment having been made to me* and are still in arrears. This is over 1.5 days maximum that these changes have happened. *Nothing showing on the loan itself or the 'cash flow'.
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