Liz
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Post by Liz on Apr 4, 2016 21:34:50 GMT
"16. Back-up servicer arrangements
If our platform were to fail or we and/or Saving Stream Security Holding become insolvent we would transfer our obligations under the Terms and the Loan Contract to a third party back up servicer, with whom we have entered into a back up servicing arrangement."
Any more info on this? Platform risk is a real worry to many members; Has this third party been funded for say 12 months to unwind the loan book or would this need to be paid for from proceedes of loan repayments?
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Liz
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Post by Liz on Apr 4, 2016 21:37:13 GMT
Moderator please move this the SS board, sorry posted in wrong place.
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homes119
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Post by homes119 on Apr 4, 2016 21:51:23 GMT
"16. Back-up servicer arrangements If our platform were to fail or we and/or Saving Stream Security Holding become insolvent we would transfer our obligations under the Terms and the Loan Contract to a third party back up servicer, with whom we have entered into a back up servicing arrangement." Any more info on this? Platform risk is a real worry to many members; Has this third party been funded for say 12 months to unwind the loan book or would this need to be paid for from proceedes of loan repayments?
Hello Liz, I've asked myself the same question. My guess is that it will need to be paid for from proceeds of loan repayments. Which is why when people say LTV will hold up in case of crash etc. they often forget the additional costs that would be incurred in case of platform failure.
I think it's perfectly fine (or even ideal I should say) for them to be paid from the proceeds of loan repayments. As it will incentivise the servicers to collect as much as possible. The key question is has the fee been agreed in advance? Because once there is platform failure, lenders could be held hostage unless many different servicers are requested to compete for the claims and rundown of the loanbook.
It's in Sweden but checkout the Trustbuddy case info, at the very least it would make for interesting reading
www.lindahl.se/se/kampanj/trustbuddy-faq-en/
www.treasurers.org/node/315885
www.lindahl.se/media/1073179/information_to_trustbuddy_s_lenders_dec_2015.pdf
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Post by chris on Apr 4, 2016 22:18:40 GMT
"16. Back-up servicer arrangements If our platform were to fail or we and/or Saving Stream Security Holding become insolvent we would transfer our obligations under the Terms and the Loan Contract to a third party back up servicer, with whom we have entered into a back up servicing arrangement." Any more info on this? Platform risk is a real worry to many members; Has this third party been funded for say 12 months to unwind the loan book or would this need to be paid for from proceedes of loan repayments?
Hello Liz, I've asked myself the same question. My guess is that it will need to be paid for from proceeds of loan repayments. Which is why when people say LTV will hold up in case of crash etc. they often forget the additional costs that would be incurred in case of platform failure.
I think it's perfectly fine (or even ideal I should say) for them to be paid from the proceeds of loan repayments. As it will incentivise the servicers to collect as much as possible. The key question is has the fee been agreed in advance? Because once there is platform failure, lenders could be held hostage unless many different servicers are requested to compete for the claims and rundown of the loanbook.
It's in Sweden but checkout the Trustbuddy case info, at the very least it would make for interesting reading
www.lindahl.se/se/kampanj/trustbuddy-faq-en/
www.treasurers.org/node/315885
www.lindahl.se/media/1073179/information_to_trustbuddy_s_lenders_dec_2015.pdf
It's a requirement of FCA regulation to have a standby operator in place. In AC's case we've paid a set up fee (and I believe an annual renewal fee) and then the actual costs of running down the loan book would be taken from what would have been AC fee payments made via loan repayments. The way our loans tend to be structured there is sufficient income to cover costs from those fees so it's only in the event of a default and recovery where fees could impact lender returns. Where SS are different is that all their loans have interest retained up front, whereas only some of ours do, so the standby operator would need to manage the loan book through to completion for every loan in order for them to get paid. SS's terms state that their fees are paid before lenders (which isn't uncommon) so presumably the company providing the standby mandate would run down the loan book, take their fees, and pay whatever's left to lenders. Given the nature of the lending you would expect SS to have a relatively high default rate and be reliant on the security taken to make recoveries on those loans. SS will hopefully provide you with an expected default rate if you ask nicely. TrustBuddy appears to be a different class of issue, with what looks like willful fraud on behalf of the platform. They were in effect using new lender's funds to hide defaults and losses on underperforming loans, making the platform look better via an ever growing pyramid scheme. One would hope that by the time all the platforms are fully FCA regulated, and none of the larger platforms are for Article 36H (peer to peer) loans, that the FCA's scrutiny would have detected any such instance within the UK market.
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Post by oldnick on Apr 5, 2016 5:45:54 GMT
Moderator please move this the SS board, sorry posted in wrong place. You're wish is our command 
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geoff
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Post by geoff on Apr 5, 2016 7:29:32 GMT
"16. Back-up servicer arrangements If our platform were to fail or we and/or Saving Stream Security Holding become insolvent we would transfer our obligations under the Terms and the Loan Contract to a third party back up servicer, with whom we have entered into a back up servicing arrangement." Any more info on this? Platform risk is a real worry to many members; Has this third party been funded for say 12 months to unwind the loan book or would this need to be paid for from proceedes of loan repayments? have previously stated
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boundah
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Post by boundah on Apr 5, 2016 13:52:05 GMT
TrustBuddy appears to be a different class of issue, with what looks like willful fraud on behalf of the platform. They were in effect using new lender's funds to hide defaults and losses on underperforming loans, making the platform look better via an ever growing pyramid scheme. One would hope that by the time all the platforms are fully FCA regulated, and none of the larger platforms are for Article 36H (peer to peer) loans, that the FCA's scrutiny would have detected any such instance within the UK market. I have no interest in TB but this could be taken as a tad libellous! Mods?
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Post by bracknellboy on Apr 5, 2016 14:17:09 GMT
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homes119
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Post by homes119 on Apr 5, 2016 18:58:41 GMT
Has anyone ever pleaded 'unwillful' fraud? 
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adrianc
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Post by adrianc on Apr 6, 2016 10:08:17 GMT
Has anyone ever pleaded 'unwillful' fraud? aka "Loss-making incompetence".
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mikes1531
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Post by mikes1531 on Apr 7, 2016 16:29:19 GMT
I think it's perfectly fine (or even ideal I should say) for them to be paid from the proceeds of loan repayments. As it will incentivise the servicers to collect as much as possible. The key question is has the fee been agreed in advance? Because once there is platform failure, lenders could be held hostage unless many different servicers are requested to compete for the claims and rundown of the loanbook. It will incentivise the servicers to collect as much as possible only if the fee is a function of the amount collected. It may be that the fee is a percentage of the loan book, and in that case there's no incentive for the servicer to increase collections unless the fees are paid only after investors receive all of the capital and accrued interest they are owed -- and I can't imaging that any servicer would agree to a fee structure so favourable to investors. The bottom line is that it all depends on the exact agreement the platform has put in place -- and we're rather unlikely to find out about that until it's too late.
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