twoheads
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Programming
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Post by twoheads on Apr 16, 2017 8:57:30 GMT
If I understand correctly the issue that caused the death of INPL for SM purchases, the FCA have told LfSS that they have to act as agent/broker and not as principal. I believe the reason for the FCA position is to reduce platform risk. This means LfSS can't hold parts waiting for investors to pay up or, put another way, that only client funds can be used for lending. The implication of that for new loans is that they can't draw down until negative balances are cleared. I expect an exception can be made where investments are being rolled forward, such as in this case, because those client funds already are with the borrower. The upshot, however, is that PBL167 can't draw down until new investors have cleared their negative balances. And PBL122 can't be repaid until PBL167 draws down because that would mean LfSS would have to use their own funds to allow non-renewing PBL122 investors to be repaid. Good point and nicely explained. It would also imply that no loan could draw down until fully funded by investors; LfSS being not allowed to cover any shortfall, even temporarily.
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SteveT
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Post by SteveT on Apr 16, 2017 9:10:12 GMT
Good point and nicely explained. It would also imply that no loan could draw down until fully funded by investors; LfSS being not allowed to cover any shortfall, even temporarily.
That's unlikely to prove much of an obstacle. L have plenty of experience of using underwriters where needed in the past.
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grahamg
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Post by grahamg on Apr 16, 2017 9:18:37 GMT
If I understand correctly the issue that caused the death of INPL for SM purchases, the FCA have told LfSS that they have to act as agent/broker and not as principal. I believe the reason for the FCA position is to reduce platform risk. This means LfSS can't hold parts waiting for investors to pay up or, put another way, that only client funds can be used for lending. The implication of that for new loans is that they can't draw down until negative balances are cleared. I expect an exception can be made where investments are being rolled forward, such as in this case, because those client funds already are with the borrower. The upshot, however, is that PBL167 can't draw down until new investors have cleared their negative balances. And PBL122 can't be repaid until PBL167 draws down because that would mean LfSS would have to use their own funds to allow non-renewing PBL122 investors to be repaid. Good point and nicely explained. It would also imply that no loan could draw down until fully funded by investors; LfSS being not allowed to cover any shortfall, even temporarily.
Exactly and in fact LfSS have no way of knowing which investors want to roll their funds through even if that were possible, all they can see are negative balances on INPL which are at best a vague promise to pay.
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mikes1531
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Post by mikes1531 on Apr 16, 2017 22:37:08 GMT
... and in fact LfSS have no way of knowing which investors want to roll their funds through even if that were possible, all they can see are negative balances on INPL which are at best a vague promise to pay. In this case they could look at the pre-funding settings for current investors in PBL122 and that would give them a good idea of who wants to roll their investment forward, though adjustments would have to be made because there was going to be an allocation limit applied. (i.e. A BH with £50k in PBL122 who set their PBL167 pre-funding to £50k might not really have wanted to roll their whole investment forward, but set that large amount knowing that any setting above £5k was unlikely to make any difference.) If they had allowed automatic rollovers, they would have had a better picture of rollover interest, as investors could have been told to put on the SM any parts they didn't want rolled over. (LfSS have done that in the past.) Or they could have told people that everything would be rolled over and that anyone who didn't want that to happen could specifically ask to be repaid, which also would have given them a clear picture of the situation. The third thing they could have done would have been to say all investments would be rolled forward, and anyone who wanted out could sell their PBL167 parts on the SM afterwards. (There would be a risk of a lack of buyers, but the pre-funding info LfSS had could have told them whether or not that was likely to be an issue.)
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Post by GSV3MIaC on Apr 17, 2017 8:00:10 GMT
Or they could just get a 'roll me over' tick box, like the MT one. BHs could the keep their large lumps.
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sl75
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Post by sl75 on Apr 17, 2017 19:35:58 GMT
If I understand correctly the issue that caused the death of INPL for SM purchases, the FCA have told LfSS that they have to act as agent/broker and not as principal. I believe the reason for the FCA position is to reduce platform risk. This means LfSS can't hold parts waiting for investors to pay up or, put another way, that only client funds can be used for lending. The implication of that for new loans is that they can't draw down until negative balances are cleared. I expect an exception can be made where investments are being rolled forward, such as in this case, because those client funds already are with the borrower. The upshot, however, is that PBL167 can't draw down until new investors have cleared their negative balances. And PBL122 can't be repaid until PBL167 draws down because that would mean LfSS would have to use their own funds to allow non-renewing PBL122 investors to be repaid. ISTM that for PBL122 to be repaid, even under such an interpretation, they "only" need the first £923k of funds from PBL167 to have been provided. Edit: another thought - until PBL122 is properly marked as repaid, the effective LTV of the funds held by and/or on behalf of the borrower would seem to be 81.6%
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vmail
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Post by vmail on Apr 17, 2017 19:45:52 GMT
What's ISTM?
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sl75
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Post by sl75 on Apr 17, 2017 19:53:32 GMT
It Seems To Me > Unless he means "The International Society of Travel Medicine". Maybe sl75 is warning us to take precautions before PBL122 repays,.. Should have known the dude would beat me to a response, while I was trying to find the thread I've lost where a whole bunch of other acronyms are also explained/expanded. vmail - apologies, it's one of the ones that (at least within certain circles) has been so widely used, I sometimes type it without thinking.
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vmail
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Post by vmail on Apr 17, 2017 19:55:28 GMT
And INPL, seen it loads of time on here. I think I know what it is/was in regards to the SM. But I have no idea what it stands for.
Maybe someone can create an acryonm sticky.
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dzo
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Post by dzo on Apr 17, 2017 19:59:47 GMT
And INPL, seen it loads of time on here. I think I know what it is/was in regards to the SM. But I have no idea what it stands for. Maybe someone can create an acryonm sticky. Invest Now Pay Later.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Apr 17, 2017 20:02:08 GMT
It Seems To Me > Unless he means "The International Society of Travel Medicine". Maybe sl75 is warning us to take precautions before PBL122 repays,.. Yeah, Travel Medicine, wot U take when Lendy tell you to go on a Sexual Journey! 
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mickj
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Post by mickj on Apr 17, 2017 20:03:02 GMT
Invest Now Pay Later you could buy on the SM and still have 24hrs+ to get funds to SS, seems to me it helped keep the SM liquid, I know I would impulse buy/nvest. Edit : see I get beaten to the draw again............ just like when I tried to use INPL on the SM  |
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fp
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Post by fp on Apr 17, 2017 21:07:47 GMT
If I understand correctly the issue that caused the death of INPL for SM purchases, the FCA have told LfSS that they have to act as agent/broker and not as principal. I believe the reason for the FCA position is to reduce platform risk. This means LfSS can't hold parts waiting for investors to pay up or, put another way, that only client funds can be used for lending. The implication of that for new loans is that they can't draw down until negative balances are cleared. I expect an exception can be made where investments are being rolled forward, such as in this case, because those client funds already are with the borrower. The upshot, however, is that PBL167 can't draw down until new investors have cleared their negative balances. And PBL122 can't be repaid until PBL167 draws down because that would mean LfSS would have to use their own funds to allow non-renewing PBL122 investors to be repaid. ISTM that for PBL122 to be repaid, even under such an interpretation, they "only" need the first £923k of funds from PBL167 to have been provided. Edit: another thought - until PBL122 is properly marked as repaid, the effective LTV of the funds held by and/or on behalf of the borrower would seem to be 81.6% ISTM that they are Waiting To Fund this then.
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mikes1531
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Post by mikes1531 on Apr 18, 2017 3:08:53 GMT
Edit: another thought - until PBL122 is properly marked as repaid, the effective LTV of the funds held by and/or on behalf of the borrower would seem to be 81.6% Except that none of the PBL167 funds should be in the borrower's hands -- it ought to still be in the LfSS client account.
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Post by jackpease on Apr 18, 2017 6:06:51 GMT
Or they could just get a 'roll me over' tick box, like the MT one. BHs could the keep their large lumps. I think the 'roll over' boxes makes it easy to forget that it is rolling over and each time it does might become more of a risk. I think many of MT's 'rolled over' loans would be classified as overdue on Lendy/SS, which flatters one's MT portfolio. Jack P
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