blender
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Post by blender on Oct 29, 2016 16:30:02 GMT
Casting nasturtiums at mrc is a bit out of order.
It is hard to understand what people think is good or bad without some numbers. The recovery rate on FC's loan book to date is 21% (from the statistics page and you have to be careful because their bad debt number is outstanding and not original). My own recoveries was 51% until recently, after a long period of property only, but after a couple of recent SME defaults is now 22%. I think if you withdrew all possible from a well diversified account in FC and waited a few years for recovery then it might creep up towards 40%. Perhaps some people think this unacceptably bad and others think it great performance. I think FC's current 21% is neither. What do people expect, what do other sites manage?
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rxdav
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Post by rxdav on Oct 29, 2016 17:32:37 GMT
blender,
It seems I have stumbled into something of a minefield here and have clearly upset at least two members of the Mrclondon supporters club?! I shall now have to definitely deny myself further Sauvignon as punishment - and it was looking such a promising evening!!
I confess I do not have detailed statistics at hand to empirically support my assertion/perception that FC's recoveries team did/do provide a poor service. However, I do clearly recall the trumpeting by FC of recoveries being brought 'in house' a couple of years ago - and being assured all would improve hugely. Well maybe I missed something - but I failed to notice the improvements as advertised?
I don't know who said it - but 'in business, perception can be more damaging than fact' (maybe it was me?) - and my extant negative perception of the recoveries team (and hence the chocolate frying pan analogy) remain unchanged.
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Post by GSV3MIaC on Oct 29, 2016 20:09:12 GMT
Well I for one am not upset, so don't let me stop you quaffing (although I gave it up, myself) .. it rather depends on your expectations. A realistic baseline for unsecured SME recoveries is probably nearer zero than 50%, and that likely to take many years, depending on how hard the borrower chooses to dodge. You can look at the overall FC recovery figures by downloading their loan book, although as blender stated they don't make it easy to generate unambiguous numbers ('percent of what' .. and do you discount to allow for the fact it comes back 'sometime/never', with missing interest .. and do you include the ones where FC themselves paid up, or where the borrowers never actually got their hands on the funds?).
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blender
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Post by blender on Oct 29, 2016 22:55:12 GMT
blender,
It seems I have stumbled into something of a minefield here and have clearly upset at least two members of the Mrclondon supporters club?! I shall now have to definitely deny myself further Sauvignon as punishment - and it was looking such a promising evening!!
I confess I do not have detailed statistics at hand to empirically support my assertion/perception that FC's recoveries team did/do provide a poor service. However, I do clearly recall the trumpeting by FC of recoveries being brought 'in house' a couple of years ago - and being assured all would improve hugely. Well maybe I missed something - but I failed to notice the improvements as advertised?
I don't know who said it - but 'in business, perception can be more damaging than fact' (maybe it was me?) - and my extant negative perception of the recoveries team (and hence the chocolate frying pan analogy) remain unchanged. I'm just going to agree that denying yourself further Sauvignon might be an appropriate course of action.
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rxdav
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Post by rxdav on Oct 30, 2016 8:02:57 GMT
blender,
Having denied myself further Sauvignon it is now morning and I have clear head and feel good - so a wise decision methinks.
However, my negative view/perception (and I am certainly not alone) of FC's recovery team remains extant - so not merely an aberration of the grape.
I certainly concur with you that 'A realistic baseline for unsecured SME recoveries is probably nearer zero than 50%...' - but such a resoundingly realistic view doesn't seem to feature very highly in the marketing/advertising elements of FC's web site - unless I'm missing something?
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blender
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Post by blender on Oct 30, 2016 9:29:19 GMT
I did not say that 'A realistic baseline for unsecured SME recoveries is probably nearer zero than 50%...', it was GSV who said that. I was suggesting that recoveries would be better than the 21% in the loan book (because recoveries lag losses) but not more than 40%. You are entitled to your personal view, rxdav, and to state it here even though it is based on no evidence. You have not withdrawn your suggestion that mrclondon, presumably because his opinion is different to yours, must be an agent for FC - even though he is site administrator and with a hundred times more history on this board than you. I also find FC's recoveries activity satisfactory, for a p2p operator, but then I serve the devil so I would say that.
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Post by mrclondon on Oct 30, 2016 9:55:44 GMT
I'm currently on holiday, so just a brief response to set my earlier post into context. Virtually all my FC loans have been unsecured or all asset secured. The latter even if its a first debenture is likely to recover minimal value unless there is realisable tangible assets on the balance sheet (the value of raw materials, wip, stock, debtors and cash on the balance sheet will likely be minimal if the company has failed). Hence in the majority of cases the recovery is dependent on enforcing the personal guarantee(s) on a loan. There is a whole legal industry geared to helping directors minimise their liabilities under PG's. The recovery process for a loan can easily take upto 8 years after the loan defaults - 1 year for the liquidation of the comapny and realising any value in debentures, then 2 years of legal action against the guarantors, then a 5 year court specified payment plan. A loan with specific asset security might typically take 2 to 3 years to complete the recovery if there is no need to chase up a PG, otherwise again 8 years plus might be expected. As a starting point, given the numerous legal loopholes, it should be assumed that most PG's will yield zero. And as I have said most all asset security will only yield minimal amounts. And yet, of my 2010-12 loans that defaulted 2012-13 recoveries are now well in excess of 50%. (It is pointless considering the % recovery of loans that have defaulted more recently than 2013 as the recovery process on those loans is still in their infancy. rxdav , you imply you have been with FC for 3 years - you'll need to wait until at least 2020 to be able to take a considered view of the recoveries on those loans you wrote in 2013) "And yet, of my 2010-12 loans that defaulted 2012-13 recoveries are now well in excess of 50%" and, yes, that is a figure that leaves me VERY impressed with FC's recovery efforts. Perhaps the more interesting question is whether this is sustainable - the effort needed to make such recoveries is substantial in both FC manpower and third party legal and court costs. FC are not profitable. The big question is the extent to which FC need to make an effort "above and beyond" on recoveries to keep retail lenders on board. If I was a FC shareholder I would wonder whether the effort is really worth while given the short-termism attitudes displayed by some (most ?) retail lenders. I have been a p2p lender since shortly after zopa launched in 2006, but it is worth reminding ourselves, that only zopa traded through the 2008-09 banking "crisis". I'm also a lender on Funding Knight to act as a benchmark for FC, and largely the performance on FC/FK mirror each other. I'm not a lender on ReBS or LC the other notable players in the essentially unsecured SME loan space. I am absolutely not a fan of FC, but for reasons outside of their core business of facilitating p2p loans. My forum signature (see below) makes it clear I have an equity position in one p2p platform ( and it isn't FC). |
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Post by davee39 on Oct 30, 2016 10:00:03 GMT
FC are very clear that some of their loans will result in losses and they indicate the expected return after losses. In my time with FC some loans were fully recovered from the guarantor others became a total loss due to bankruptcy. I think the change to in house recovery was positive and the process worked as well as could be expected. My problem with FC was the promotion of risky loans to A and A+ ratings, I liked the idea that I could invest in C loans, sell them quickly and maintain an above average return, this stopped due to the lack of higher yielding loans and the rise of the bots.
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rxdav
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Post by rxdav on Oct 30, 2016 11:06:02 GMT
I've just checked to be sure - and it does definitely say this is an 'independent' forum. Consequently, I am somewhat puzzled as to why the generally supportive and positive tone on this forum (specifically with regard to FC's recoveries team) is so clearly opposed to many (most?) of those views actually expressed by lenders on the FC forum? I'm sure FC would be delighted to have many of the comments articulated above posted on their own web site.
I take mrclondon's point that recoveries from defaulted loans may well take many years - and perhaps I am being overly optimistic with regards to my expectations? Nevertheless, it does seem (at least anecdotally) from perusing the weekly list of defaults (which have not impacted on me for a considerable time - so I have no specific axe to grind here) and the angst expressed in many FC forum posts, that the overall situation with regard to defaults and associated recoveries, and particularly early defaults, is deteriorating.
With regard to blender's barb about my lack of detailed evidence and micro analysis - I do not need to put a thermometer in the fire and empirically ascertain its precise temperature to know that it will burn my hand if I put it in the flames.
Taking a macro perspective for a moment I err on the side of pessimism and think we are currently heading for choppy waters economically. Be it global debt, a Bond bubble bursting, European Banks going belly up, US election results, a deteriorating geopolitical situation - or whatever many prove a catalyst - I believe it is now time to adopt a defensive strategy. Consequently, I am reducing the overall proportion of my deployed assets in P2P (and retaining only well secured loans) and moving into precious metals and defensive stocks etc.. I don't want to find out the hard way if P2P can indeed endure difficult times - or not.
I thank you for your considered responses which I read with interest - and I in turn will maintain my own 'independent' opinions.
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Post by GSV3MIaC on Oct 30, 2016 11:19:13 GMT
I think the point you may be missing is that folks on here are generally much more experienced (in time and number of platforms) than those on the FC forum (although there is some overlap) and thus we have rather more realistic expectations than you might find over there. Fc is often the first port of call for P2P SME lending newbies (or property lending newbies for that matter), who have very rosy views (which FC doesn't manage to dispel). FC have lots and lots of problems afaiac, but recovery is not in the top 10 (setting lender expectations might well be).
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SteveT
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Post by SteveT on Oct 30, 2016 11:19:27 GMT
I've just checked to be sure - and it does definitely say this is an 'independent' forum. Consequently, I am somewhat puzzled as to why the generally supportive and positive tone on this forum (specifically with regard to FC's recoveries team) is so clearly opposed to many (most?) of those views actually expressed by lenders on the FC forum? I'm sure FC would be delighted to have many of the comments articulated above posted on their own web site.
I take mrclondon's point that recoveries from defaulted loans may well take many years - and perhaps I am being overly optimistic with regards to my expectations? Nevertheless, it does seem (at least anecdotally) from perusing the weekly list of defaults (which have not impacted on me for a considerable time - so I have no specific axe to grind here) and the angst expressed in many FC forum posts, that the overall situation with regard to defaults and associated recoveries, and particularly early defaults, is deteriorating.
With regard to blender's barb about my lack of detailed evidence and micro analysis - I do not need to put a thermometer in the fire and empirically ascertain its precise temperature to know that it will burn my hand if I put it in the flames.
Taking a macro perspective for a moment I err on the side of pessimism and think we are currently heading for choppy waters economically. Be it global debt, a Bond bubble bursting, European Banks going belly up, US election results, a deteriorating geopolitical situation - or whatever many prove a catalyst - I believe it is now time to adopt a defensive strategy. Consequently, I am reducing the overall proportion of my deployed assets in P2P (and retaining only well secured loans) and moving into precious metals and defensive stocks etc.. I don't want to find out the hard way if P2P can indeed endure difficult times - or not.
I thank you for your considered responses which I read with interest - and I in turn will maintain my own 'independent' opinions. Sorry, but what have early loan defaults got to do with the performance of the Recoveries team? One is about the due diligence that FC's credit assessment team apply to new loan applications, which is truly appalling IMHO, one of the reasons why I no longer lend there. Risk band allocation is equally dire. The other is about the legal debt recovery processes that are undertaken after a loan has been defaulted. I only have a handful of defaulted FC loans, mostly 12-24 months ago so far too early to judge definitively but my current assessment is that their Recoveries team is doing a decent job of pursuing the avenues available to them and I've already had some worthwhile sums returned. [ps. Most of the repetitive howling on the in-house FC forum is about over-running property loans which is another kettle of fish altogether. AFAIK, no FC property loan has yet been defaulted so no-one can yet have any idea how well they'd manage recovery on a defaulted property loan]
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rxdav
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Post by rxdav on Oct 30, 2016 12:10:34 GMT
SteveT,
I was endeavouring to maintain brevity - but clearly should have expanded my thoughts.
The link between a default and a recovery is clear and well known - when one happens the other commences. In my opinion the recoveries team in not doing as well as I would like or had hoped - even you only go as far as saying they do a 'decent' job - damned by faint praise one might argue? Let us take a view and say the recoveries team are currently outstanding solely for their mediocrity - at the current rate of defaults and consequent/subsequent recoveries team workload. If defaults are increasing then the load on the recoveries team will also increase - let's say they are directly proportional for general purposes. Now FC are currently making a serious loss and burning cash at an alarming rate (my research tells me). Consequently, one must then ask will the additional resources required by the recoveries team due to any increased workload be forthcoming? If so, then the status quo will likely be maintained (at this juncture I make no comment on whether the status quo is satisfactory or not) - however, if additional resources are not forthcoming in proportion to any increase in defaults then it is reasonable to assume the situation with respect to recoveries will deteriorate.
I take your point about any increase in defaults being most likely due to inadequate DD (however defined). My extrapolation from defaults to the recoveries team is hopefully clarified above.
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blender
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Post by blender on Oct 30, 2016 12:15:56 GMT
I've just checked to be sure - and it does definitely say this is an 'independent' forum. Consequently, I am somewhat puzzled as to why the generally supportive and positive tone on this forum (specifically with regard to FC's recoveries team) is so clearly opposed to many (most?) of those views actually expressed by lenders on the FC forum? I'm sure FC would be delighted to have many of the comments articulated above posted on their own web site. ...
With regard to blender's barb about my lack of detailed evidence and micro analysis - I do not need to put a thermometer in the fire and empirically ascertain its precise temperature to know that it will burn my hand if I put it in the flames.
...
I'm not sure you appreciate what 'independent' means. You will find plenty of criticism of FC recoveries on this forum, if you look.
I did not criticise your 'lack of detailed evidence and micro analysis'. I criticised your complete lack of any evidence at all, not even your own experience, other than an opinion which has much to do with repeating the opinions of others.
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sl125
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Post by sl125 on Oct 30, 2016 12:26:02 GMT
Rxdav:
Just to add to the points raised by others, I too have no affiliation with FC other than being an investor who is very satisfied with the returns I make.
I find it interesting reading many of the forum entries where people think that they should receive, say, 10% per annum without accepting the risk that goes with such returns. To put into perspective, last time I checked a Bank of England yield curve, zero risk interest rates was about 1%, so it follows that anything netting the sort of rates P2P aims to deliver will involve a degree of acceptance that defaults will occur .. or rather, that some of your investment will go south.
I think it was you that mentioned that FC should be seeking to improve its recovery rates through more pro-active recovery procedures, and if necessary the courts. You then say "FC are currently making a serious loss and burning cash at an alarming rate.". Clearly, collections / recoveries costs money. I've worked with many finance departments over the years, and the collections teams usually have to accept that if the cost of chasing debt exceeds the expected recovery, then they accept to cut their losses.
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SteveT
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Post by SteveT on Oct 30, 2016 13:23:00 GMT
I take your point about any increase in defaults being most likely due to inadequate DD (however defined). My extrapolation from defaults to the recoveries team is hopefully clarified above.
Nope, not even vaguely clarified I'm afraid. AIUI, you're cross about defaults on FC loans (with good justification, I suspect) but extrapolating your criticism to include FC's recoveries process despite having little or no direct personal experience of it. My suggestion would be that you stick for now to criticising the credit assessment processes that led to your loans entering early default, and wait until you've more experience yourself of how recoveries are handled before jumping to conclusions.
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