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Post by GSV3MIaC on Jun 29, 2016 10:32:04 GMT
Apart from anything else they are (or should be) sitting on £5M+ of retained (up front) interest, which is presumably available as a float for underwriting loans? It has to be somewhere ..
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goopy
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Post by goopy on Jun 29, 2016 10:42:50 GMT
The big -days loans, PBL25 + 35 are converting to DFL's. There's not that much in the rest of them. My own view is that the conversion of these to DFL's will only serve to exacerbate the position. Time will tell. I suspect that SS will have to hold the bulk of the loan; however, they will be able to comfortably do that. If SS don't go ahead with development funding then IMHO they may struggle to get finance in the current economic climate which would possibly/probably lead to a defaulted loan. That will just make things a lot worse.
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nick
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Post by nick on Jun 29, 2016 11:36:11 GMT
Apart from anything else they are (or should be) sitting on £5M+ of retained (up front) interest, which is presumably available as a float for underwriting loans? It has to be somewhere .. I hope they aren't using the retained interest (at least not our element) to underwrite loans. This would expose themselves to massive refinance risk and greatly increase platform risk.
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Post by GSV3MIaC on Jun 29, 2016 11:42:42 GMT
Apart from anything else they are (or should be) sitting on £5M+ of retained (up front) interest, which is presumably available as a float for underwriting loans? It has to be somewhere .. I hope they aren't using the retained interest (at least not our element) to underwrite loans. This would expose themselves to massive refinance risk and greatly increase platform risk. Like I said, it has to be somewhere .. where would you like it, UK Gilts, gold bars, oil futures, or XYZ Bank account (bearing in mind that £5m is slightly above the FSCS protection threshold)? If they have to find £5M to underwrite a new loan, I suppose they could borrow it, while simultaneously depositing the £5m retained interest, but I suspect that doesn't change things much.
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boble
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Post by boble on Jun 29, 2016 12:12:36 GMT
I hope they aren't using the retained interest (at least not our element) to underwrite loans. This would expose themselves to massive refinance risk and greatly increase platform risk. Like I said, it has to be somewhere .. where would you like it, UK Gilts, gold bars, oil futures, or XYZ Bank account (bearing in mind that £5m is slightly above the FSCS protection threshold)? If they have to find £5M to underwrite a new loan, I suppose they could borrow it, while simultaneously depositing the £5m retained interest, but I suspect that doesn't change things much. They will be underwriting loans from the pre-funding. Developments loans are financed on a draw down basis and so for the major life of the loan there will be un-drawn down funds sat in a protected account. There is also the expectation that plots will sell during the course of a development, which will produce an inward flow of cash to SS, thus reducing capital exposure. DFL's are very different animals to PBL's from a management and risk perspective.
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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 Jun 29, 2016 12:17:13 GMT
I hope they aren't using the retained interest (at least not our element) to underwrite loans. This would expose themselves to massive refinance risk and greatly increase platform risk. Like I said, it has to be somewhere .. where would you like it, UK Gilts, gold bars, oil futures, or XYZ Bank account (bearing in mind that £5m is slightly above the FSCS protection threshold)? If they have to find £5M to underwrite a new loan, I suppose they could borrow it, while simultaneously depositing the £5m retained interest, but I suspect that doesn't change things much. Given its not SS money but the borrower's as it is an adva nce payment which would have to be returned if the loan was repaid early, I hope it is in the segregated Client account. Could FCA rules be interpreted differently than has clearly been stated by another platform with regards to retained interest & buffers?
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Post by yorkshireman on Jun 29, 2016 12:53:17 GMT
I hope they aren't using the retained interest (at least not our element) to underwrite loans. This would expose themselves to massive refinance risk and greatly increase platform risk. Like I said, it has to be somewhere .. where would you like it, UK Gilts, gold bars, oil futures, or XYZ Bank account (bearing in mind that £5m is slightly above the FSCS protection threshold)? If they have to find £5M to underwrite a new loan, I suppose they could borrow it, while simultaneously depositing the £5m retained interest, but I suspect that doesn't change things much. Gold bars.
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Post by GSV3MIaC on Jun 29, 2016 14:33:03 GMT
Like I said, it has to be somewhere .. where would you like it, UK Gilts, gold bars, oil futures, or XYZ Bank account (bearing in mind that £5m is slightly above the FSCS protection threshold)? If they have to find £5M to underwrite a new loan, I suppose they could borrow it, while simultaneously depositing the £5m retained interest, but I suspect that doesn't change things much. Given its not SS money but the borrower's as it is an adva nce payment which would have to be returned if the loan was repaid early, I hope it is in the segregated Client account. Could FCA rules be interpreted differently than has clearly been stated by another platform with regards to retained interest & buffers?Yes, good point - and the borrower can get it back if they decide to repay early .. although it'll cost them the full value of the loan to do so, so maybe SS can argue that the money retained is part of the security. The other point from boble about them "underwriting loans from pre-funding" - the point is 'underwriting' is what you need when there isn't enough pre-funding (as apparently on PBL106, as well as the London Loans). On 106 someone (not retail borrowers) has had to stump up £600k or more (the loan now being drawndown). We suspect it is SS (well we know it wasn't us).
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boble
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Post by boble on Jun 29, 2016 16:53:23 GMT
Given its not SS money but the borrower's as it is an adva nce payment which would have to be returned if the loan was repaid early, I hope it is in the segregated Client account. Could FCA rules be interpreted differently than has clearly been stated by another platform with regards to retained interest & buffers?Yes, good point - and the borrower can get it back if they decide to repay early .. although it'll cost them the full value of the loan to do so, so maybe SS can argue that the money retained is part of the security. The other point from boble about them "underwriting loans from pre-funding" - the point is 'underwriting' is what you need when there isn't enough pre-funding (as apparently on PBL106, as well as the London Loans). On 106 someone (not retail borrowers) has had to stump up £600k or more (the loan now being drawndown). We suspect it is SS (well we know it wasn't us). You are entirely correct as to the literal meaning of underwriting. There are two factors which come into play with SS; if necessary, SS will cover the shortfall; also, there are usually if not always two dates - "Go Live" and "Draw Down". Probably no need to get too bogged down, as I will be amazed if the FCA regulations aren't more than sufficiently stringent as to the protection of investors funds. I am guessing it is probably also the case that Lendy's most recent accounts are available for download on the Companies House Web Site (for a fee) which should answer all of these questions and more.
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david42
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Post by david42 on Jun 29, 2016 20:19:38 GMT
I am guessing it is probably also the case that Lendy's most recent accounts are available for download on the Companies House Web Site (for a fee) which should answer all of these questions and more. Companies House documents are availabale for free, here: beta.companieshouse.gov.uk/company/08244913/filing-historyCan be a useful inormation source for due diligence on loans. In the case of Lendy Ltd, they have chosen to publish only a balance sheet because they come under the small companies exemption. In December 2014 the company was worth £270k, and they were sitting on a cash pile of £3.7M. A surprisingly large cash float to have borrowed but not lent out.
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Post by GSV3MIaC on Jun 29, 2016 22:02:29 GMT
Not if that's the retained. Interest on their then loan book.
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boble
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Post by boble on Jun 30, 2016 0:35:05 GMT
I am guessing it is probably also the case that Lendy's most recent accounts are available for download on the Companies House Web Site (for a fee) which should answer all of these questions and more. Companies House documents are availabale for free, here: beta.companieshouse.gov.uk/company/08244913/filing-historyCan be a useful inormation source for due diligence on loans. In the case of Lendy Ltd, they have chosen to publish only a balance sheet because they come under the small companies exemption. In December 2014 the company was worth £270k, and they were sitting on a cash pile of £3.7M. A surprisingly large cash float to have borrowed but not lent out. Very Helpful. Thank you.
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boble
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Post by boble on Jun 30, 2016 0:38:05 GMT
Not if that's the retained. Interest on their then loan book. That's interesting. I would have thought that as the retained interest is effectively for the benefit of the investors, that this would have to show somewhere. Perhaps just not required by Companies House.
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