mikes1531
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Post by mikes1531 on Sept 5, 2016 21:42:59 GMT
The most likely cause would be the borrower's company entering administration during the term. Besides this, there could be; > a death (if the borrower is an individual) > the borrower going AWOL with the money > dramatic devaluation of the security, such as a fire or flood (this may not default the loan, but will make it impossible to get rid on the SM) > Many others I can't think of  wow... now we are entering into the realms of fantasy ... again CD where has this ever happened? There's also the example of PBL081. OK, it may not have defaulted during the term, but the breach of the PP did show up during the term. In this case, the borrower -- and SS investors -- got very lucky IMHO with the retrospective PP approval. If the planning authority had decided that the building had to be reworked so as to comply with the original PP, the valuation might well have been perceived to have dropped well below the loan value -- from a combination of a lot more work/investment/time/interest being required and the end product being smaller than the property that was valued in the first place. In that case, there wouldn't technically have been a default if the borrower didn't abandon the project immediately but it would have been difficult, if not impossible, to sell parts on the SM and the impact on SS investors would have been virtually the same as an in-term default.
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Post by martin44 on Sept 5, 2016 22:07:00 GMT
wow... now we are entering into the realms of fantasy ... again CD where has this ever happened? There's also the example of PBL081. OK, it may not have defaulted during the term, but the breach of the PP did show up during the term. In this case, the borrower -- and SS investors -- got very lucky IMHO with the retrospective PP approval. If the planning authority had decided that the building had to be reworked so as to comply with the original PP, the valuation might well have been perceived to have dropped well below the loan value -- from a combination of a lot more work/investment/time/interest being required and the end product being smaller than the property that was valued in the first place. In that case, there wouldn't technically have been a default if the borrower didn't abandon the project immediately but it would have been difficult, if not impossible, to sell parts on the SM and the impact on SS investors would have been virtually the same as an in-term default. this loan is not in default... not sure where you are coming from. not relevant.
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Post by moonshine on Sept 5, 2016 22:25:11 GMT
Thank you cooling_dude - that makes sense (and also makes for quite terrifying reading). Whilst it is good to know that it hasn't happened so far, and that the likelihood is relatively slim, I would suggest that it is not at all in the realms of fantasy. I would say the chances of it happening are still far higher than a plane crash - and flying still makes me plenty nervous... I would be astounded if SS didn't have contractually specified contingency plans for many of these outcomes (especially death regarding PBLs), but I do certainly think that SS should address this exact question here on the forum - including all of CDs examples (and the ones he couldn't think of) - to put investors' minds either at rest or in no doubt about what would happen. This is slightly more than idle forum chatter; it significantly affects investment strategy and decision making, not to mention the fact that we have a right to know. Over to you savingstream ... |
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Post by pepperpot on Sept 5, 2016 22:31:23 GMT
Ahem, whereas I agree with you martin44, DEATH is most definitely in the realms of fantasy  . But to think that no loan will ever run into problems mid term is arguably naive, it's just it's not yet happened on one of the few bridging loans to go through SS. YET!  "Death isn't cruel, merely terribly good at his job." RIP TP. |
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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 Sept 5, 2016 22:57:17 GMT
And leaving the realms of fantasy, the most obvious reason - a second charge loan being called in by the first charge holder.
If anyone wants examples of loans going pop during term then look at AC, all depends om what covenants form part of loan agreement, bridging loans tend to have very few.
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bababill
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Post by bababill on Sept 6, 2016 0:23:51 GMT
Realms of fantasy......
a) I have a non-property loan on FK, where the director has just been diagnosed critically ill; the platform has moved the loan to non-performing (also non-paying in my opinion).
b) Above same platform I have a property loan in recovery. Interest was not taken in advance on no-payment was ever made. The administrator is now saying the original valuation was all wrong and we will be receiving less then what we loaned. So this loan did default during term. However to repeat no interest was taken out in advance unlike SS.
c) Again on the same platform a trading business has gone into administration. However that same business took out a property based loan on T.C. Basically, as I understand it the TC lenders are in an uproar because second charges were taken out and their first charges were never properly secured so their property backed loan might not have any security. In this instance best to read the TC forum because I only invested in the loan with FK not TC so I am not privy to all information.
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hantsowl
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Post by hantsowl on Sept 6, 2016 0:40:59 GMT
Realms of fantasy...... a) I have a non-property loan on FK, where the director has just been diagnosed critically ill; the platform has moved the loan to non-performing (also non-paying in my opinion). b) Above same platform I have a property loan in recovery. Interest was not taken in advance on no-payment was ever made. The administrator is now saying the original valuation was all wrong and we will be receiving less then what we loaned. So this loan did default during term. However to repeat no interest was taken out in advance unlike SS. c) Again on the same platform a trading business has gone into administration. However that same business took out a property based loan on T.C. Basically, as I understand it the TC lenders are in an uproar because second charges were taken out and their first charges were never properly secured so their property backed loan might not have any security. In this instance best to read the TC forum because I only invested in the loan with FK not TC so I am not privy to all information. Don't forget that FK themselves went into administration earlier this year which is why I bailed out. I know they have new backers now and continue to trade but i decided to cut and run. Shame really because I actually liked FK as a p2p lender.
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Post by brokenbiscuits on Sept 6, 2016 5:52:53 GMT
With my diversification approach I will be in this one and will early stages top load it due to the length. Will wind down as time goes on.
Still interesting to hear the contrasting opinions from the "doom sayers" and the "fingers in their ears, la la la, there is no risk" gang.
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arbster
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Post by arbster on Sept 6, 2016 6:42:50 GMT
While it's attractive, based on SS's track record, to pre-fund this with the intent of selling after 6-8 months, I don't think I will this time. As PBL081 has showed, things can come to light which can cause the SM to become effectively unavailable for certain loans. It's also my opinion that SS needs to have an approach, much like FC, to (temporarily) suspend SM sales for loans where information becomes available that might cause the value of the asset to be compromised. In this latter case, there is a risk that, due to the traditional liquidity of the SM, people in the know might offload the compromised loans to those not in possession of the facts - this is particularly the case given SS's patchy track record with loan updates, and might lead to the FCA taking a dim view of SS's claim to treat all customers fairly.
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Post by martin44 on Sept 6, 2016 7:35:40 GMT
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adrianc
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Post by adrianc on Sept 6, 2016 9:42:53 GMT
Unfortunately there is a platform which recently put a live loan into default as a related loan was defaulted on by the borrower. That seems perfectly fair to me. I wouldn't be AT ALL happy if I bought a loan part on the SM, then found out that the borrower had another loan which had defaulted.
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Post by Deleted on Sept 6, 2016 10:55:49 GMT
The decision to allocate this £4.8m loan "bottom up" suggests that the days of the BHs gaming the pre-funding system are firmly behind us! On this particular occasion I think everyone including the Bh's will get everything they want.
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SteveT
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Post by SteveT on Sept 6, 2016 11:20:51 GMT
The decision to allocate this £4.8m loan "bottom up" suggests that the days of the BHs gaming the pre-funding system are firmly behind us! On this particular occasion I think everyone including the Bh's will get everything they want. I agree, but I don't see SS going back to the "% of pre-fund request" model again. Not least because the "bottom up" model was their original suggestion, only changed in the face of opposition from BHs (some of whom have since been caught abusing INPL by playing pass-the-parcel, failing to pay, etc.)
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am
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Post by am on Sept 6, 2016 11:50:49 GMT
CD i agree the sooner or later scenario .... but .... it has not happened , and it is highly unlikely that it ever would, no loan has ever defaulted mid term. A default hasn't occured during the term, and the chances of it happening are far less likely than if interest is being sent on a rolling basis. It doesn't mean we shouldn't weight the risk of that scenario occurring on these loans. For example, bridging loans could be used for speculative buying of land without PP ( not talking about this loan); if things don't go our borrower's way with the council, they simply wipe their hands of the SPV. This could easily happen within term. For example the proposed landfill loan, where the security was here estimated to have negative value if the hope value was stripped out.
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Post by Deleted on Sept 6, 2016 12:33:54 GMT
On this particular occasion I think everyone including the Bh's will get everything they want. I agree, but I don't see SS going back to the "% of pre-fund request" model again. Not least because the "bottom up" model was their original suggestion, only changed in the face of opposition from BHs (some of whom have since been caught abusing INPL by playing pass-the-parcel, failing to pay, etc.) Personally I think SS needs both types of investors, if too many of Bh'rs leave when/if bottom up funding is applied to all loans, the site will be worse off because of it.
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. But to think that no loan will ever run into problems mid term is arguably naive, it's just it's not yet happened on one of the few bridging loans to go through SS. 
