bg
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Post by bg on Aug 10, 2017 18:43:06 GMT
Security backed loans defaulting leave the lender with the security. It takes a bit of time (generally around 12 months, but in some cases even just few weeks) to sell the asset. All the cases concluded at Lendy have brought in 100% capital recovery for lenders (and the net recovery according to the data I gathered from Lendy comments are over 80% of the lent capital on average). I don't have a precise count with me, but I believe Lendy closed (finished recovery) about 10 loans. They have other loans which have been defaulted in the last 3-4 months (new default definition) and these will need to get to a sale. Wait before commenting on those. Only after the recovery you will judge the company (and the asset of course). Yes but the point is you can't say you have to give a secured lender time to make a recovery but then not say the same for an unsecured lender. It's not fair to say a loan that has just defaulted on FC has and will make zero recovery when recovery payments are coming in every month. You can't say you won't bring in individual cases when you are also saying people get "70+% MINIMUM RECOVERIES you are getting on secured backed assets". You do not get 70% minimum recovery on asset backed loans. There is no miniumum and there are numerous loans that have recovered less than 70%. Given time there will be loans that recover zero. I am giving an example of where I received <50% recovery on a secured first charge asset that disproves your assertion.
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Post by spiker on Aug 11, 2017 7:25:08 GMT
The only reason I chipped into this discussion was when hor1997 made the claim:
'Are you ready to take a bet? I would be ready to put a 5 figure sum that FC IS NOT RECOVERING 40% out of defaults.'
Analysis of the loanbook suggests that FC is indeed recovering 40%+ of defaults (given ample time for repayment) so it was important to correct him on this.
Hor1997 is now subtly moving away from his original false claim, and instead is changing the discussion to an asset-backed vs non asset-backed debate, and I don't think anyone is disagreeing with him that generally speaking asset-backed security is better than non asset-backed.
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adrian77
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Post by adrian77 on Aug 11, 2017 7:57:27 GMT
I have 4 defaulted loans of £20 each of which recovers between £0.02 and £0.1 per month - according to my maths the chance of these loans recovering 70% are slim. I just note one of these loans has ground to a halt as the PG has stopped paying. To me these recovery rates are pathetic - of course I may live to 142 when the 0.02 repayment will offer 100% recovery.
Ref the current defaulted property loan- I may be wrong but I can't see much more than 50% being recovered and that is after a minimum of 2 years - be interesting to see how the current and future defaulted property loans pan out. Well at least FC are working on a new font!
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dorset
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Post by dorset on Aug 11, 2017 9:12:50 GMT
The only reason I chipped into this discussion was when hor1997 made the claim: 'Are you ready to take a bet? I would be ready to put a 5 figure sum that FC IS NOT RECOVERING 40% out of defaults.' Analysis of the loanbook suggests that FC is indeed recovering 40%+ of defaults (given ample time for repayment) so it was important to correct him on this. Hor1997 is now subtly moving away from his original false claim, and instead is changing the discussion to an asset-backed vs non asset-backed debate, and I don't think anyone is disagreeing with him that generally speaking asset-backed security is better than non asset-backed. As at today I have had 147 defaults over five years and my recovery to date stands at 38.38% Given that 7 of these defaults took place last month I would expect final recover to settle at about 50%. Suggest contributors ignore hor1997. He has a bit of a thing going against FC. None of us love FC but it does what it says on the tin.
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Post by GSV3MIaC on Aug 11, 2017 9:20:02 GMT
Of course FCs (relative) expertise at recovery can be viewed in the same light at AA's expertise in finding lost/misrouted airline baggage .. 'well they get a lot of practise'. As to 'doing what it says on the tin', those of us who have been around for 5 or more years will remember that the product/packaging has been changed quite a lot since we first bought in (and I don't mean the dumb fonts and screen layouts).
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dorset
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Post by dorset on Aug 11, 2017 9:28:04 GMT
Of course FCs (relative) expertise at recovery can be viewed in the same light at AA's expertise in finding lost/misrouted airline baggage .. 'well they get a lot of practise'. As to 'doing what it says on the tin', those of us who have been around for 5 or more years will remember that the product/packaging has been changed quite a lot since we first bought in (and I don't mean the dumb fonts and screen layouts). Over six years with FC I have made a pretty consistent 7.5% or so pa on a heavily diversified loan book. This I recall is what has generally been suggested by FC as achievable. I don't do FC property loans which I agree are a bit of a joke. As an aside don't get too carried away with so called asset security. I am still in Assetz with Ipswich and Epping for example where we have seen nothing back for I think three years so far.
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Post by Butch Cassidy on Aug 11, 2017 9:32:19 GMT
As at today I have had 147 defaults over five years and my recovery to date stands at 38.38% Given that 7 of these defaults took place last month I would expect final recover to settle at about 50%. Suggest contributors ignore hor1997. He has a bit of a thing going against FC. None of us love FC but it does what it says on the tin. I have never used FC for property loans, which I understand many are unhappy with, but my SME default recovery currently stands at 44%. I have been with FC since the early days, even had a few NF loans (no fees) initially recovery procedures were a bit unreliable but a couple of years ago a new guy (can't remember his name!) took over & they improved dramatically & those standards have been maintained. Nearly all the SME loans are now just PG's so recovery ranges from zero (1213, 3298, 21795) to 100% or very close to it (1358, 1724, 3115, 17573) but the majority of genuine business failure defaults, as opposed to piloted & fraudulent ones, are now paying at least something each month.
FC has changed over that time from where early closing solid businesses gave investors higher than anticipated rates for the risk they represented to fixed rate bands where lots of solid loans pay rates that I wouldn't want to accept; so I play exclusively in bands D & E now, which whilst generally riskier propositions, pay rates upto 21.9% to compensate. Overall I am satisfied that FC take all reasonable steps to chase errant SME borrowers & am happy with the recovery rates.
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Post by charliebrown on Aug 12, 2017 1:46:21 GMT
You do seem to be very happy to regularly openly contradict yourself. Maybe you do not even realise you are doing it. If you want to say that FC only make 26% recovery on defaults how can you ignore the current defaulted loans on Lendy (as an example)? Lendy currently have £23m in loans that are defualted with zero recovery so far. You can't just take the loans where a recovery has occured but not do the same for FC. Thats £23m out of a total loan book of £186m and theres another £25m of that that has not yet been defaulted but is not paying any interest. It is also nonesense to say you get a minimum 70%+ recovery with a secured asset. There are plenty of people on FS and L who would snap your hand off for a 70% recovery on a number of loans they are holding. I personally have lost 50%+ on secured loans that have defaulted. I would happily sign for FC to give me back 40% on my losses in 12 months. Unfortunately FC is simply recovering those cases where the borrower is collaborative (and maybe signs for a different much longer contract, which is never approved by the lenders BTW...) and if you take 5 years as normal, then be happy with it. Security backed loans defaulting leave the lender with the security. It takes a bit of time (generally around 12 months, but in some cases even just few weeks) to sell the asset. All the cases concluded at Lendy have brought in 100% capital recovery for lenders (and the net recovery according to the data I gathered from Lendy comments are over 80% of the lent capital on average). I don't have a precise count with me, but I believe Lendy closed (finished recovery) about 10 loans. They have other loans which have been defaulted in the last 3-4 months (new default definition) and these will need to get to a sale. Wait before commenting on those. Only after the recovery you will judge the company (and the asset of course). FS has many more defaults (probably over 50) so you can gather much more precise stats. But I can ensure you I have over 85% recovery on my subset. I would not bring in discussion on individual specific loans, as I could easily mention 4 high-ranking cases on my book where the nice FC team recovered ZERO from nice lawyers defaulting after very few loan repayments (piloted defaults, case closed with IVAs, nice houses sold by wifes, lawyers disqualified for a very short period but studios reopened a few months later).... So I lost close to 100% on those 4 FC cases with zero recovery past or coming.... We investors need to cut through the marketing and "statistics". Lendy can proudly say no investor ever lost a penny on their platform. Wait a minute, have you visited their defaults tab. There's lots and lots (and growing fast) of defaulted loans, some have been in default for well over 1 year and the updates provided are laughable. As for asserting that minimum recovery would be 70%, I don't agree. The latest loan to go bad at Lendy is the Exeter loan, good luck in even recovering anything from that, it's a disaster. My conclusion is that all p2p platforms have issues. They're all sloppy and badly run IMO. I also believe they're a very soft touch for borrowers (unscrupulous ones), a risk free goldmine for the platform owners and something to be very carefully of for investors. It's true that most p2p-ers are enjoying better returns than they'd get from a savings account, but keep your eyes open, p2p risk is way higher than a savings account.
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Post by df on Aug 12, 2017 2:32:04 GMT
Exactly, it would be very immature to assume that there is no risk in any p2p platform. In case of FC, I expected many defaults when I signed up so I don't get upset when it happens. Diversification (both, loan and platform) is the key strategy to minimise this risk. It is great when loans are secured on assets and a proper DD is in place. AC is very good at it, but still have defaults. FC is failing on many points, but it's strength is the mass production of loans, which gives the opportunity to diversify. If you have initial £20 in 650 loans you would probably be at around 0.2% diversification. Can't think of any other platform that can offer the same  Some of SME loans annoyingly collapsing after one or two repayments, I bought one on LC that collapsed before the first repayment, but if your losses are very small part of your portfolio you are still earning a decent interest. FC was my first P2P experience & I must say it was a good point of entry. You are correct regarding diversification, I am now at; You are currently lending to 619 businesses (660 loan parts) totalling £*****.**. Your maximum exposure to any one business is 1.7% of your current amount lent.It is easy to try & chase big returns but I try to resist the extra risk that can be involved. That is not to say I don't have any 12% loans with another platform. I do, but they are just a small part of a balanced platform portfolio. I continually battle the investors Achilles heel....greed! It was greed that allowed Bernard Madoff to pull off one of the biggest financial frauds in history. I sometimes think the the whole P2P industry is like one huge Ponzi scheme waiting to collapse at the first sign of a financial crisis....only time will tell how robust the P2P industry will prove to be! The odd loan failure is nothing compared to a complete platform failure. In the meantime, it's down to caveat emptor.... & the good fortunes of the UK & global economies. I'm at: "You are currently lending to 300 businesses (300 loan parts)... Your maximum exposure to any one business is 0.4% of your current amount lent." I currently invest with 15 p2p platforms - trying to spread the risk as much as I can In terms of proportion FC is always in my "top 5". Complete collapse of platform is the biggest risk and FC is not likely to collapse. I'm quite optimistic about the future of p2p industry, but of course, anything new raise concern. So far it's only Zopa who survived through credit crunch, the others are not old enough
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markr
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Post by markr on Aug 12, 2017 13:50:04 GMT
A guarantor is liable for the entire amount of the loan and interest and can be chased through the courts until they either pay up or are bankrupted. If security has been overvalued, or a developer throws in the towel leaving a property unfinished, or your warehouse full of jeans/shop full of furniture turns out to be missing or worthless, then tough. Assetz takes a personal guarantee as well as security and in some cases, it's the guarantee that's recovered the loan, not the security.
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Post by charliebrown on Aug 12, 2017 14:37:17 GMT
A guarantor is liable for the entire amount of the loan and interest and can be chased through the courts until they either pay up or are bankrupted. If security has been overvalued, or a developer throws in the towel leaving a property unfinished, or your warehouse full of jeans/shop full of furniture turns out to be missing or worthless, then tough. Assetz takes a personal guarantee as well as security and in some cases, it's the guarantee that's recovered the loan, not the security. Interesting point this as I've always thought a personal guarantee would be pretty powerful, however, I've seen some people (more knowledgeable than me) commenting that a personal guarantee is not worth the paper it's written on. So, which is it?
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Post by GSV3MIaC on Aug 12, 2017 14:52:40 GMT
"It depends".
If the borrower actually has any assets, and is playing with a straight bat, then the PG effectively nullifies the extra protection of being a limited company (rather than just a sole trader, where the owner is liable anyway). However if there are no assets, or the borrower is a bad-un who conspires to hide everything (sell to wife, lie, flee to Bangladesh, etc), then you are wasting your time, the PG is not going to help. We have seen examples of both (or 'all three') on all the platforms I have dealt with. Safest to assume 'worthless' and be surprised on the upside occasionally.
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justme
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Post by justme on Aug 12, 2017 14:58:52 GMT
I suppose it is common sense that it depends on a particular case. For borrowers who are not professional crooks and who have something on a platform that bothers chasing them up it is valuable. For professional fraudsters it is not.
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justme
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Post by justme on Aug 12, 2017 15:24:02 GMT
I do not buy lawyers at all having heard about it. I am sure at some point there will be some other occupation that I will lose money to organised fraud by. I suppose it is unavoidable in this p2p thing ..
Hor, I am afraid what should happen and what does happen in reality are ywo very different things
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justme
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Post by justme on Aug 12, 2017 16:37:49 GMT
I wish. I have seen grievances with all the platforms discussed on here so I do not see any safeheaven
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Some of SME loans annoyingly collapsing after one or two repayments, I bought one on LC that collapsed before the first repayment, but if your losses are very small part of your portfolio you are still earning a decent interest. 
