blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on May 30, 2014 18:43:50 GMT
But if the auction doesn't fill, they get offered on the whole-loan market. And loans of this kind of size don't get filled without flippers, and flippers don't buy at 7% with no cashback.
Maybe there's a different type of lender lurking out there - more the Assetz type - who will take up these loans if they hang around long enough. But Assetz uses underwriters.
FC have said they'll underwrite the later tranches of multi-tranche loans. But I don't think they've said what they'll do next.
I see what you mean now - but wonder if the whole loan market lenders will take rejected £250k property loans where FC take the fee and 1% of the repayments. Generally I think FC will try to find the interest rate at which the loans will be taken up without cashback. I would worry if FC started underwriting on its own account - that should be external if needed to replace flipping. FC should not be a lender, and not have a finger in the loanbook.
|
|
agent69
Member of DD Central
Posts: 6,036 
Likes: 4,434
|
Post by agent69 on Jun 1, 2014 8:08:25 GMT
Just had a quick flip through the secondary market and there are 4 property deals with over 4500 loan parts on offer (over 2000 for R*m*g**e alone).
Somebody must be making a few quid on the cash back.
|
|
|
|
Post by davee39 on Jun 1, 2014 9:22:54 GMT
The flippers ARE the underwriters. The reward comes through the cash-back or the secondary market premium. The risk comes from the loans failing to sell due to competition from other flippers or market saturation. I watched the 7% loans first appear at a 0.6% discount, increasing to 1.1%. For the latest 12 month loan I took 5 x £20 parts, offering them at between 0.6 and 0.9% discounts, they all went quickly. My 90p or so profit hardly sets the world on fire, but its what passes for entertainment up north.
Without cash-back these loans will take a good bit longer to fill, even with the cash-back the overhang of loan parts will probably slow down filling of the follow up tranches.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jun 1, 2014 9:53:05 GMT
The flippers ARE the underwriters. ... Not quite, rather used instead of underwriters. My understanding is that a true underwriter would agree to take unsold parts of a loan at a particular rate or fee before the loan is offered to the lenders, so as to underwrite the offer. (Tell me if I am wrong - no expert). Flippers have the same choice at the same time as any other lender. Any loan can remain unfunded - but you are right that the one which did remain unfunded recently seemed to rattle FC and lead to the 1% premium to attract flippers (and non-Autobid lenders). It worries me that FC might underwrite loans themselves in any way. If that is necessary they should do it transparently using a third party. FC should not be a lender, even contingently, (nor a borrower).
|
|
