cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 25, 2017 22:08:27 GMT
GeorgeT I think you may have the wrong idea what a default consists of. A default occurs when borrowers show an inability to provide repayment. As such, if any of those events arise, then SS should default the loan (whether they do or not is another question). You make valid points about the security, but that is to do with recovery, and if SS are looking to sell the security to settle the debt, then that also constitutes a default. Defaults should be expected, and not feared. If you have invested wisely (i.e. with adequate security covering the loan amount) then even defaults will result in full repayment of at least the capital.
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GeorgeT
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Post by GeorgeT on Feb 26, 2017 0:13:55 GMT
GeorgeT I think you may have the wrong idea what a default consists of. A default occurs when borrowers show an inability to provide repayment. As such, if any of those events arise, then SS should default the loan (whether they do or not is another question). You make valid points about the security, but that is to do with recovery, and if SS are looking to sell the security to settle the debt, then that also constitutes a default. Defaults should be expected, and not feared. If you have invested wisely (i.e. with adequate security covering the loan amount) then even defaults will result in full repayment of at least the capital. Thanks. You write "A default occurs when borrowers show an inability to provide repayment. As such, if any of those events arise, then SS should default the loan (whether they do or not is another question)." Far as I know, there are several loans in a county beginning with G where the borrowers have been declared bankrupt and the assets are having to be sold under supervision of the SS receivers. Latter info from SS updates. They must, by definition, be unable to provide repayment, otherwise that course of action would not have to be taken.However because SS has first charge over the assets and it is considered the prices achieved will cover the loans, it isn't a default situation. A default must occur where there is no prospect of repayment and doubt an asset can be sold and cover the debt. i.e. the garden centre. I may have a recklessly optimistic approach but I feel slightly default proof because 1. I try to avoid DFLs where the value of the security at time of loan is less than the loan (i.e. based on a hypothetical future gross development value that would not be realised if the borrower went bust and didn't finish the development) and 2. I make sure I don't hold any loans with less than about 50 days left to run. Feel free to ridicule me for being an idiot but that's my approach.
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registerme
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Post by registerme on Feb 26, 2017 0:15:18 GMT
GeorgeT I think you may have the wrong idea what a default consists of. A default occurs when borrowers show an inability to provide repayment. As such, if any of those events arise, then SS should default the loan (whether they do or not is another question). You make valid points about the security, but that is to do with recovery, and if SS are looking to sell the security to settle the debt, then that also constitutes a default. Defaults should be expected, and not feared. If you have invested wisely (i.e. with adequate security covering the loan amount) then even defaults will result in full repayment of at least the capital. Well.... that comes down to the (varying, by platform, dependent on circumstances) definition of "default", doesn't it. Maturer instruments / markets see default as any breach of the terms of the contract. But they also differentiate between technical defaults (breaches of covenant) and non-payment defaults (not making interest / capital payments). As a for instance the ratings agencies have already said that were there a Le Pen win in France, and were FN to follow through on their manifesto promise to leave the Euro and re-denominate all of France's debt in a new Franc, then France would default on all of their Euro-denominated debt. Fundamentally a bond or a loan is nothing more than a legal contract.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 26, 2017 0:26:37 GMT
GeorgeT I think you may have the wrong idea what a default consists of. A default occurs when borrowers show an inability to provide repayment. As such, if any of those events arise, then SS should default the loan (whether they do or not is another question). You make valid points about the security, but that is to do with recovery, and if SS are looking to sell the security to settle the debt, then that also constitutes a default. Defaults should be expected, and not feared. If you have invested wisely (i.e. with adequate security covering the loan amount) then even defaults will result in full repayment of at least the capital. Thanks. You write "A default occurs when borrowers show an inability to provide repayment. As such, if any of those events arise, then SS should default the loan (whether they do or not is another question)." Far as I know, there are several loans in a county beginning with G where the borrowers have been declared bankrupt and the assets are having to be sold under supervision of the SS receivers. Latter info from SS updates. They must, by definition, be unable to provide repayment, otherwise that course of action would not have to be taken.However because SS has first charge over the assets it isn't a default situation. A default must occur where there is no prospect of repayment and doubt an asset can be sold and cover the debt. i.e. the garden centre. I may have a recklessly optimistic approach but I feel slightly default proof because 1. I try to avoid DFLs where the value of the security at time of loan is less than the loan (i.e. based on a hypothetical future gross development value that would not be realised if the borrower went bust and didn't finish the development) and 2. I make sure I don't hold any loans with less than about 50 days left to run. Feel free to ridicule me for being an idiot but that's my approach. If that is your approach, that is fine. However, it is important to understand what defaults generally involves so that you know what a platforms job should be. Some platforms will report defaults and you may consider them (via your criteria) as a bad sign, but in reality, it is part and parcel of this world, and often results in full recovery IMO all the loans you note have defaulted, and I do think SS should have defaulted them. The reason SS defaulted the Garden centre was not because they felt the security wouldn't cover the debt, it was because they came to the conclusion that the borrower was unlikely to provide payment to clear the debt. Case and point is PBL007 where SS defaulted the loan, but the security covered both the capital and interest. Edit : crossed with registerme who makes some valid points.
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GeorgeT
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Post by GeorgeT on Feb 26, 2017 0:54:36 GMT
cooling_dude Well, with the greatest respect to you CD (and I actually mean that - I find your input here to be very helpful indeed - many thanks!), how you define a default and what loans you think should be defaulted is irrelevant, is it not? After all you don't make the SS default policy or sit on the SS credit committee as far as I know. What is relevant to me is how SS define a default and in what circumstances SS decides to default. History suggests they have a different, more lenient approach to defaults than you - and as investors are we not best informed by what we see SS doing in practice and not by what you think they should be doing - and I agree with you about the G loans and, say, the footballers house in Surrey where SS have propped the loan up with their own cash when it would have seemed a candidate for default. Your point about PBL007 is a good one and it suggests to me some inconsistency in the SS approach to defaulting which is of some concern to me. For what it's worth I am confident they will repay all capital on the garden centre (but no interest from date of default) so there will remain no capital losses on the SS platform. I wish investors in that a good outcome and I believe they will not be disappointed (unless they are expecting interest). In fact I will go further and say, in my opinion, no investor will suffer any capital loss in the next 6 months. However my aim/strategy is to achieve a better outcome than that - and to strive towards achieving no loss of interest either. That's why I limit my exposure to DFLs and sell out of PBLs at around the 50 day mark, with a few exceptions. People like us here on the forum are well informed. Fortunately for us, and unfortunately for them, most SS investors are less informed and some are mugs. We have the edge with our own personal investment strategies and with the way we study the formbook.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 26, 2017 1:07:42 GMT
cooling_dude Well, with the greatest respect to you CD (and I actually mean that - I find your input here to be very helpful indeed - many thanks!), how you define a default and what loans you think should be defaulted is irrelevant, is it not? After all you don't make the SS default policy or sit on the SS credit committee as far as I know. What is relevant to me is how SS define a default and in what circumstances SS decides to default. History suggests they have a different, more lenient approach to defaults than you - and as investors are we not best informed by what we see SS doing in practice and not by what you think they should be doing - and I agree with you about the G loans and, say, the footballers house in Surrey where SS have propped the loan up with their own cash when it would have seemed a candidate for default. <SNIP> As you note, it is SS that set the default policy, but the FCA will have a large say in the matter, and some would suggest that the inconsistency (that is a word used a lot with SS!) is akin to misleading investors Something that I can say for sure (and where I would recommend you change your approach); a default relates to the borrower's ability to pay, not the securities ability to cover the debt. AFAIK, this basic principle is followed by all platforms, although they will have different policies to define when the borrower's ability to repay is unlikely.
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GeorgeT
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Post by GeorgeT on Feb 26, 2017 1:19:25 GMT
cooling_dude Well, with the greatest respect to you CD (and I actually mean that - I find your input here to be very helpful indeed - many thanks!), how you define a default and what loans you think should be defaulted is irrelevant, is it not? After all you don't make the SS default policy or sit on the SS credit committee as far as I know. What is relevant to me is how SS define a default and in what circumstances SS decides to default. History suggests they have a different, more lenient approach to defaults than you - and as investors are we not best informed by what we see SS doing in practice and not by what you think they should be doing - and I agree with you about the G loans and, say, the footballers house in Surrey where SS have propped the loan up with their own cash when it would have seemed a candidate for default. <SNIP> As you note, it is SS that set the default policy, but the FCA will have a large say in the matter, and some would suggest that the inconsistency (that is a word used a lot with SS!) is akin to misleading investors Something that I can say for sure (and where I would recommend you change your approach); a default relates to the borrower's ability to pay, not the securities ability to cover the debt. AFAIK, this basic principle is followed by all platforms, although they will have different policies to define when the borrower's ability to repay is unlikely. I will and I thank you for your well intentioned advice. My position is really about being able to sleep soundly at night feeling that my Investments on SS are reasonably safe. Of course we all have our own strategies in place to achieve our good night's sleep and our strategies will differ. Some of our strategies will be better than others and I quite accept that your approach to investing here may be better and more realistic to achieve the best outcome than mine. I think the most important thing is that everybody knows what they are getting into and understands that their capital is at risk and proceeds accordingly and with that in mind. Unfortunately there is no golden solution to ensure no losses of capital or interest ever occur and I am a realist and I realise that it all looks rather too good to be true on the surface and inevitably in the longer term there will be losses that will reduce the net return somewhat. However for now I am confident enough to remain at the table although I am not buying any more chips at the moment until I have seen how a few loans in difficulty are resolved. Have a good night.
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dawn
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Post by dawn on Feb 26, 2017 10:23:30 GMT
I would like to say that the recent 'conversation' between cooling_dude and georget is an example to be held up as the way discussions between two people with different views should be done. Over the last few months there have been a number of discussions on a number of the P2P forums here that have degenerated into slanging matches, becoming quite rude at times. This one is an exemplary example of 2 people clearly explaining their views and positions whilst politely listening to the other persons advice, views and opinions. Thank you cooling_dude and georget - it has been a pleasure to read this exchange, as well as being useful and informative. |
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twoheads
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Programming
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Post by twoheads on Feb 26, 2017 10:59:32 GMT
Particularly appropriate that GeorgeT's sign off 'Have a good night' was followed by dawn in the morning.
P.S. Fully agree with her comments... a good read this morning.
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stevio
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Post by stevio on Feb 28, 2017 7:29:38 GMT
So what is going to happen about negative balances tomorrow savingstream? Lots of people might already have a negative balance and expecting the interest to pay this off, will you allow this? |
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will
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Post by will on Feb 28, 2017 8:36:12 GMT
So what is going to happen about negative balances tomorrow savingstream ? Lots of people might already have a negative balance and expecting the interest to pay this off, will you allow this? A balance that doesn't cover SM purchases prevents SM purchases from tomorrow - that's all. This also has nothing to do with the new default policy, which is what this thread is about.
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Post by richardb67 on Mar 1, 2017 8:47:41 GMT
not sure if it's been mentioned elsewhere but a new column seems to have appeared "interest status". Values include IOA (interest on account), SBL (serviced by Lendy), IA (Interest accruing) and DEF (default). PBL0734, 74 and 75 showing as default but not in default tab (yet?).
R
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dawn
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Post by dawn on Mar 1, 2017 8:51:28 GMT
not sure if it's been mentioned elsewhere but a new column seems to have appeared "interest status". Values include IOA (interest on account), SBL (serviced by Lendy), IA (Interest accruing) and DEF (default). PBL0734, 74 and 75 showing as default but not in default tab (yet?). R It is 74, 75 and 81 showing as DEF. 73 is SBL
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Tunny
Sometimes it is the people no one imagines anything of who do the things that no one can imagine
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Post by Tunny on Mar 1, 2017 8:57:57 GMT
Sounds like 50 shades of default to me. They should make a film out of it.  |
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SteveT
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Post by SteveT on Mar 1, 2017 8:58:59 GMT
Interesting. I assume: SBL (serviced by Lendy) - is for older loans under the previous T&C (hence should disappear sooner or later as a category) Did they not announce they would be servicing interest for loans up to 3 months overdue from their own resources?
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