Overdue loans

As interest is not taken upfront FS cannot control how promptly repayment of the loan and its interest are made, if at all. This seems to be the risk we take for 12-15% plus the occasional cashback. I'm afraid it comes down each individuals decision to invest or not.

If the loan is for less than 50K and it is not property I invariably let it auto-renew.  Larger non-property loans (unless the restriction is less than my current investment) I turn off auto-renew and bid manually (so as to get double interest for a little while).  With property I can't keep up with DD so always turn auto-renew off and manually bid the minimum.

To address your OP my view is that non-property can almost always be recovered at auction so long as it is not something obscure (like domain names or grand pianos or parking spaces or carpets) so I am not particularly worried about late payers.  With property, as previously said by others, the chances of things going according to plan are minimal, and as I only bid the minimum it doesn't worry me.

With property loans, if I had more at stake then any borrower paying interest late would be added to my naughty list and I wouldn't renew.  If it was possible to identify the borrowers for new loans then where one was on my list I wouldn't invest.

It may be double interest, but it's also double investment, so it's not the bonanza it might sound like at first glance.  But it's only single exposure to the risk of default so it does have a small advantage.

If FS become consistent with arranging underwriting very early in the renewal process, then yes, this opportunity will disappear. 

Whether or not they do that obviously depends or what proportion of 'old' investors choose to renew a loan.  If the percentage is very high, then not a lot of underwriting would be required and they might be able to do it themselves rather than having to pay someone else to provide that service.  If they expect a loan to be fully funded quickly, there's no point.  It's only for loans with low renewal rates that they expect to take some time to fund that underwriting makes sense, as those are the loans where they end up paying out double interest and where they have a lot of money trying to exit the old loan.  Underwriting those loans should make the exiting investors happy, and some of the funds released probably would end up being reinvested in other loans FS are trying to fund at the time.

peteuk:  You did mean borrowers, didn't you?

Of course, that won't help you unless the loan actually gets to renewing. I never had the Scottish Boatyard ticked at any point, yet I'm still stuck with it 547 days later...