will
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Post by will on Feb 14, 2017 15:57:00 GMT
I don't know of anyone has crunched any numbers on this - but does anyone know if renewed loans are marginally more likely to fail than initial loans?
In my head, I feel like they should be as something is dragging on for longer than the expected period.
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elliotn
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Post by elliotn on Feb 14, 2017 16:25:06 GMT
Depends on the loan. Renewals prove the borrower have paid funds up to date or the ltv is robust enough to roll up interest into the extension. For multi-tranche loans it is common to renew earlier loans as progress is signed off on developments where build (and exit) is still on course.
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09dolphin
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Post by 09dolphin on Feb 14, 2017 18:46:14 GMT
I think it depends on the security. If it's a loan on anything other than property it's a good bet. With property I now only invest in loans at a maximum of 60% LTV now because of the number that don't repay is getting a bit of a joke. Property loans seem to be allowed to exceed their redemption date by at least 30 days and it can be many months. If you check loans such as the boatyard you will see that there were numerous excuses that FS accepted - and it's now in default as the excuses have run out. FS seem to have concentrated on loans associated with property over the past 12 months and you have to make a judgement depending on your attitude to risk.
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09dolphin
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Post by 09dolphin on Feb 14, 2017 19:07:01 GMT
One further caution. Please check the LTV. FS often only express the LTV as the percentage of the loan they take as opposed to the actual LTV taking account of another 1st charge from another lender. If there is a 1st charge you need to add this to any charge FS state they have
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ashtondav
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Post by ashtondav on Feb 14, 2017 19:46:01 GMT
I thought FS always mention and quantify all other charges that take precedent.
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mikes1531
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Post by mikes1531 on Feb 14, 2017 20:03:25 GMT
I don't know of anyone has crunched any numbers on this - but does anyone know if renewed loans are marginally more likely to fail than initial loans? In my head, I feel like they should be as something is dragging on for longer than the expected period. Anyone doing a statistical analysis would have to be careful not to include loans that are renewed from the 'initial loans' category so as not to skew the results. My own feeling is that if a borrower puts up more money in order to renew -- as opposed to just signing up for a bigger loan in order to roll up the interest -- they really must want to redeem their security. If they didn't, wouldn't they give up on it before putting more money in? So I take a paid-for renewal as a positive sign. But I haven't a clue whether the track record supports this position.
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