mikes1531
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Post by mikes1531 on Jun 3, 2016 12:40:41 GMT
Mitigated does not mean eliminated. No, but it does imply that the provision fund could be used to pay at least some of the outstanding interest. Doesn't it all depend on the definition of 'repayments'? Does that refer only to capital? Or does it mean interest as well?
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goopy
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Post by goopy on Jun 3, 2016 13:35:28 GMT
No, but it does imply that the provision fund could be used to pay at least some of the outstanding interest. Doesn't it all depend on the definition of 'repayments'? Does that refer only to capital? Or does it mean interest as well? Yes it is very ambiguous. I took it to mean interest as it says repayments (plural) whereas the capital would be a single repayment. It could however be interpreted as capital repayments to multiple investors? My head is starting to hurt. 
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Post by geraldine1210 on Jun 3, 2016 16:42:46 GMT
why be lucky? isn't that what the 70% LTV is all about? to avoid "luck" I agree that it should only be used to top up the capital if required, not be used to pay interest.
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gurberly
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Post by gurberly on Jun 3, 2016 16:46:04 GMT
My view is capital only. It shouldn't be used to cover interest.
Geoff
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jimbob
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Post by jimbob on Jun 3, 2016 17:29:11 GMT
I don't see why not, the loan has default in big red letters - willing buyer, willing seller and all that 
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Post by dualinvestor on Jun 3, 2016 18:41:52 GMT
Administrative Receeivership (i.e appointment under a floating charge)) was largely made redundant under the Enterprise Act 2002, when Administration Orders were "beefed up". Fixed Charge receivership is alive and kicking and returning to your original question could Lendy sell this without the co-operation of the borrower they could have used the powers under the fixed charge to do so.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Jun 3, 2016 22:20:25 GMT
Administrative Receeivership (i.e appointment under a floating charge)) was largely made redundant under the Enterprise Act 2002, when Administration Orders were "beefed up". Fixed Charge receivership is alive and kicking and returning to your original question could Lendy sell this without the co-operation of the borrower they could have used the powers under the fixed charge to do so. Thanks. Any idea why they might not have done that?
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Post by harvey on Jun 3, 2016 22:36:04 GMT
The provision fund should not be used to pay people interest. It is there to protect people from Capital losses. If you gamble your money in a loan and it goes bad then you should be singing from the mountain tops if you get your capital back.
In my opinion if it was depleted even further to pay people 12% on a default loan that would be a bad thing and weaken the platform. It would also lull people into a false sense of security and make them think that they would still get 12% even if a loan defaulted. The provision fund needs to be used wisely and in a way to encourage more responsible lender activity and expectations.
The important headline here is for saving stream to be able to continue to say that nobody has lost any capital on this platform. That is the big strapline for me.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Jun 3, 2016 23:14:21 GMT
The provision fund should not be used to pay people interest. It is there to protect people from Capital losses. If you gamble your money in a loan and it goes bad then you should be singing from the mountain tops if you get your capital back. In my opinion if it was depleted even further to pay people 12% on a default loan that would be a bad thing and weaken the platform. It would also lull people into a false sense of security and make them think that they would still get 12% even if a loan defaulted. The provision fund needs to be used wisely and in a way to encourage more responsible lender activity and expectations. The important headline here is for saving stream to be able to continue to say that nobody has lost any capital on this platform. That is the big strapline for me. Agreed. I think it is important to remember that SS is no instant savings account. SS are sensible to provide a PF to protect the platform, but that doesn't give investors an out because they don't do any DD.
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Post by jackpease on Jun 4, 2016 5:32:46 GMT
The important headline here is for saving stream to be able to continue to say that nobody has lost any capital on this platform. That is the big strapline for me. Surely this won't be the last default, and the provision fund can't possibly cover this loss and future capital loss? Should SS even want to make the 'no capital lost' boast for reasons mentioned by others ie lull people into false sense of security? These are 12% loans ie high risk so surely the assumption we will lose no capital is misunderstanding what all this is about? Jack P
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Post by dualinvestor on Jun 4, 2016 6:05:56 GMT
Administrative Receeivership (i.e appointment under a floating charge)) was largely made redundant under the Enterprise Act 2002, when Administration Orders were "beefed up". Fixed Charge receivership is alive and kicking and returning to your original question could Lendy sell this without the co-operation of the borrower they could have used the powers under the fixed charge to do so. Thanks. Any idea why they might not have done that? The most likely explanation is they did not need to because either a) there was not an offer for the property, or if there was it was not considered sufficient, and/or b) the directors were co-operative and although more expensive an Administration Order is more preferable to a Fixed Charge Receivership as the Adminstrators have much more flexibility including powers to run the business whilst a buyer is sought.
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jonah
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Post by jonah on Jun 4, 2016 8:04:02 GMT
The provision fund should not be used to pay people interest. It is there to protect people from Capital losses. If you gamble your money in a loan and it goes bad then you should be singing from the mountain tops if you get your capital back. In my opinion if it was depleted even further to pay people 12% on a default loan that would be a bad thing and weaken the platform. It would also lull people into a false sense of security and make them think that they would still get 12% even if a loan defaulted. The provision fund needs to be used wisely and in a way to encourage more responsible lender activity and expectations. The important headline here is for saving stream to be able to continue to say that nobody has lost any capital on this platform. That is the big strapline for me. Up to SS of course. Personally, if the sale realised say 95% of the capital after fees, if I was SS in this case, I'd probably pay out the 'missing' 5% of capital for that strapline but also pay out the equivalent of 1/4 interest in 3%. If they paid out 0% interest when they could pay something then they could be challenged on why they didn't stop trading on the SM. If they pay 100% of interest it would deplete the PF too much. Just my opinion, and based on a totally random speculation on the sale realisation.... If it realises say 30% after fees my view would be very different.
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Post by earthbound on Jun 4, 2016 8:30:33 GMT
why be lucky? isn't that what the 70% LTV is all about? to avoid "luck" Looking at the (possible) outcome of some defaulted loans with ltv around this figure (not necessarily on SS), 70% is not a level I would be comfortable with anymore (in general) i agree with this, especially on commercial property. I'm pretty much ok with 70% on a straight forward residential bridging loan, but not much else.
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Post by dualinvestor on Jun 4, 2016 10:01:56 GMT
Looking at the (possible) outcome of some defaulted loans with ltv around this figure (not necessarily on SS), 70% is not a level I would be comfortable with anymore (in general) i agree with this, especially on commercial property. I'm pretty much ok with 70% on a straight forward residential bridging loan, but not much else. Companies in a formal insolvency procedure, liquidation, administration, receivership etc., very, very rarely achieve "book value" for any of their assets of whatever nature but that should be a largely irrelevent consideration in P2P lending as any asset will almost always have been the subject of a new valuation. The problems occur because of the basis of that valuation, as has been seen in the case of PBL20 the asking price compared to the 2014 OMV is c.78%, I doubt anyone seriously expects the asking price to be achieved. You then have the agents costs, the legal costs (both of sale and the Adminstration) and the Insolvency Practioners costs. These can add up to 25% of the realisation or even higher. Therefore although I tend to agree that straight forward residential property should be both more reliable in terms of valuation and easier to realise 70% of OMV is not necsessarily a "safe" figure. Especially when one takes into account loans in P2P at these rates are not straightforward "bankable" lending propositions otherwise the borrower could have taken it to a conventional lender and paid much lower interest and fees.
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Post by earthbound on Jun 4, 2016 11:36:46 GMT
j i agree with this, especially on commercial property. I'm pretty much ok with 70% on a straight forward residential bridging loan, but not much else. Companies in a formal insolvency procedure, liquidation, administration, receivership etc., very, very rarely achieve "book value" for any of their assets of whatever nature but that should be a largely irrelevent consideration in P2P lending as any asset will almost always have been the subject of a new valuation. The problems occur because of the basis of that valuation, as has been seen in the case of PBL20 the asking price compared to the 2014 OMV is c.78%, I doubt anyone seriously expects the asking price to be achieved. You then have the agents costs, the legal costs (both of sale and the Adminstration) and the Insolvency Practioners costs. These can add up to 25% of the realisation or even higher. Therefore although I tend to agree that straight forward residential property should be both more reliable in terms of valuation and easier to realise 70% of OMV is not necsessarily a "safe" figure. Especially when one takes into account loans in P2P at these rates are not straightforward "bankable" lending propositions otherwise the borrower could have taken it to a conventional lender and paid much lower interest and fees. fully agree, the only comfort i get from residential pbl,s is the fact that the loan is probably only here in the first place because they either have bad credit or they need the money very quick, generally when you see a straight forward resi pop up on the pipeline, it doesn't take long before its live.
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