rxdav
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Post by rxdav on Oct 23, 2016 9:10:13 GMT
Hi,
I'm interested in hearing views from anyone else currently in this bridging loan - or who wishes to express a relevant opinion. It was initially a six month, 8.5% interest, 75% LTV Tranche B loan commenced December 15 - but was extended for three months (only hours prior to maturity) in June 16, and again for yet another three months in September 16. Consequently, this loan will have a duration 100% longer than that I signed up for initially - that's some extension. It is still paying 8.5% interest (far better than the average now available on Lendinvest) - but I have a few general concerns:
Firstly, the proximity to the initial expiry before lenders were made aware that it would not repay (N.B. I emailed to ascertain what was the situation and was initially given a vague response - albeit promptly). If the team are up to speed (and if they aren't I will be out of here asap) then they must have known well before the event - and should have informed lenders soonest (it was actually formally promulgated only hours before the loan was due to expire). Many investors will have plans well in hand for anticipated cash flow - I certainly do.
Secondly, This loan was then extended yet again - and I don't believe anyone can be expected to have their funds tied up to this unanticipated extent - a 100% extension of initially contracted duration?
Thirdly, unlike with all the other P2P platforms I use there is no SM on Lendinvest (although it's been 'forthcoming' since Adam was a lad it seems) - consequently, there is no mechanism to exit a loan except on maturity (still awaited in this case) or early repayment.
As it happens I don't urgently need this cash - but I might have/may do - and it's beginning to feel that I am held hostage to the vagaries of Lendinvest loan team decisions. Furthermore, I'm now getting increasingly 'twitchy' about this loan - and I suspect I am not alone?
Given the continued absence of an SM I believe that if it transpires a loan needs extending beyond a certain point (let's say 50% of initial duration) then lenders should be given the option to exit the loan or the loan should be relisted.
Thoughts / Views / Opinions ?? 
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archie
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Post by archie on Oct 23, 2016 9:53:31 GMT
I'm in this loan too. I hadn't realised it was extended twice but I'm not unduly worried. Loan extensions are common but usually only for 3 months, notification is usually very close to expiry date.
It probably should have been relisted to give people a chance to opt out. I always assume property loans are likely to overrun so I wouldn't commit any money I might need back at a particular time.
I think it would be better if the emails actually contained information as to the reason a loan is extended, at the moment we are kept in the dark.
Communication from LI could certainly be improved, the most popular platforms are those that engage with lenders.
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Steerpike
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Post by Steerpike on Oct 23, 2016 9:58:03 GMT
I am invested in tranche A.
It seems that it is taking longer to sell the properties at the price that the borrower wants, we all know that many bridging loans repay early or late. If property values have dropped 10% or 15% in this area and the worst happens, tranche B should get repaid in full. I have no reason to believe that there has been a catastrophic fall in house prices in this area.
A quick search indicates that there are quite a few attractive multi-million pound houses for sale in this area and it may be that the market is a bit slow. I see one particular property that could be one of those providing the security that is listed as POA and so perhaps the vendor is now flexible on price. It would not surprise me if sales in this price bracket sometimes take a year or two.
Lendinvest allow you to give them your money and in return they grant you the right to receive interest, however, they do not provide much in the way of supporting information either before, during, or after investment.
It is difficult to judge when LI might assume control and initiate a sale at a price that repays the loan but does not necessarily net the borrower the profit that they planned.
I suppose that they get away with this because of their blemish free record and the fact that they are of course too big to fail.
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rxdav
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Post by rxdav on Oct 23, 2016 11:21:23 GMT
Archie: I appreciate that there's every chance a loan might overrun - happens quite often I know. However, where is the line to be drawn - this loan in already 100% longer than the initial contracted duration. Another three months, another year - never ??
Also, read this week's Moneyweek, page 26 -'Super-prime goes south'. This is with regard to properties £10m plus I accept - but gives the general idea of the direction of travel. The Guardian reports a fall of 86% of properties in this bracket sold in London over the last year and only three sold in the three months to August - down 35 during the same period in 2015. Outside London not a single property in this price bracket was sold (according to London Central Portfolio). Furthermore, the average sale price has fallen from £22m to £16.3m. That level of drop (26%) if applied to Tranche B of this loan makes it uncomfortably close to getting all one's money back under a forced sale.
With regard to communication I concur - and have told them so directly. In all fairness they are quite prompt to answer queries - but you will get nothing without asking.
Steerpike: I appreciate they currently have a blemish free record - but if you just continually extend loans (which continue to pay interest) you will never have a default - but you're then providing an interest only mortgage of infinite duration - not a bridging loan?!
As far as 'too big to fail' - I really don't think so - they are relative minnows and if they go under they will sink. Can't see UK PLC coming to the rescue (of private investors) here - certainly not given current public opinion in this regard. The FCA providing official supervision of it's demise is the best on offer I suspect - same as all other P2P platforms.
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bababill
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Post by bababill on Oct 23, 2016 12:41:26 GMT
I have feeling Steerpike was being tongue in cheek reference too big to fail.
Anyhow, I sympathise with your post... I dislike extensions and don't believe they should be par for the course.
You are earning 8.5% on this trance B; out of curiosity what is LI earning on this particular loan?
You can find this by logging on, viewing your portfolio, then download your contract.
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rxdav
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Post by rxdav on Oct 23, 2016 12:57:25 GMT
Hi bababill,
I looked at the contract but can only see the interest I'm receiving - not LI - am I missing something?
Didn't consider Steerpike might be tongue in cheek about 'too big to fail' - however, you're likely correct though thinking on it !!
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archie
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Post by archie on Oct 23, 2016 13:02:41 GMT
Extensions are fine but you shouldn't be forced to keep the loan.
No other option at the moment.
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bababill
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Post by bababill on Oct 23, 2016 13:06:07 GMT
On the contract there should be two rates
Gross Rate
and
Investor Interest Rate Receivable.
I have only noticed this gross rate on the contracts relatively recently, so maybe as your loan is a bit older it doesn't show....
If you have any newer loans have a look at them. If you can't find the gross rate on any newish loans then you are doing some wrong and we will revisit this....
:-)
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rxdav
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Post by rxdav on Oct 23, 2016 13:15:15 GMT
Hi bababill,
On my latest contract you're correct - it shows both. The 8.5% loan referred to in my initial post had a contract with a different format which only shows my interest rate - hadn't noticed this change so thanks for that.
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Steerpike
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Post by Steerpike on Oct 23, 2016 14:43:37 GMT
Tongue in cheek? Moi?
Some might say that Moneyweek predicting a housing price crash is not news.
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rxdav
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Post by rxdav on Oct 23, 2016 14:55:05 GMT
Steerpike: The article from Moneyweek wasn't actually predictive (although I take your point about their general view on London property) - were that the case I would be more sanguine. It was more a statement of relevant information (I couldn't say how selective) garnered from generally respected sources - e.g. The Guardian, London Central Portfolio. Even vectoring in an error for margin and bias it still doesn't augur well for the sales prospects of multi-million properties in the South-West of England.
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Steerpike
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Post by Steerpike on Oct 24, 2016 14:40:56 GMT
On the website tranche A shows as LTV 29.87% but I calculate this as 59.97% (3.988/6.665).
The security section states that "this loan has a first charge security against 1 property" however the loan description mentions two properties.
I have raised these points with LI and await their response.
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rxdav
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Post by rxdav on Oct 24, 2016 15:52:11 GMT
Hi Steerpike,
Grateful you keep me in the loop when you get a response from LI.
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Steerpike
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Post by Steerpike on Oct 24, 2016 16:36:04 GMT
Hi Steerpike,
Grateful you keep me in the loop when you get a response from LI. will do
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littleoldlady
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Post by littleoldlady on Oct 24, 2016 20:44:45 GMT
Given the continued absence of an SM I believe that if it transpires a loan needs extending beyond a certain point (let's say 50% of initial duration) then lenders should be given the option to exit the loan or the loan should be relisted.
Thoughts / Views / Opinions ?? This would be very nice for us, but where would the cash come from? The only option I can think of is to relist the loan, but not repay the original until the relist had filled by a combination of lenders saying they wanted to roll over and new money.
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