ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Mar 13, 2017 15:43:27 GMT
What is the interest situation with overdue loans on FS? Does it continue to accrue, or does it stop once the loan passes term? It still continues. When it comes unredeemed (defaulted) then interest stops. I don't believe this is correct. AFAIK, interest continues to accrue until the security is liquidated. Whether lenders receive all their accrued interest depends, of course, on the proceeds from the liquidation. I also believe that you are correct mikes1531, FS operate the "Pawn" model which means interest accrues up until the date of sale of the Asset. The Sale Price of course dictates how much Interest & Capital you receive; if anything is left over it has to be returned to the Borrower. This is also why no interest is Paid monthly and you only receive at Redemption, it's the "Pawn" model. Happy to be corrected if my understanding is wrong.
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elliotn
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Post by elliotn on Mar 13, 2017 16:04:37 GMT
Correct altho I prefer Coll's pawn model with interest retained as a buy back fee so that we're paid monthly and the ltv is protected  |
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
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Likes: 4,859
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Post by ozboy on Mar 13, 2017 17:14:19 GMT
A Moste Excellente Pointe elliottm, Sir!
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Post by savgeax on Mar 19, 2017 15:45:01 GMT
What is the interest situation with overdue loans on FS? Does it continue to accrue, or does it stop once the loan passes term? It still continues. When it comes unredeemed (defaulted) then interest stops. I don't believe this is correct. AFAIK, interest continues to accrue until the security is liquidated. Whether lenders receive all their accrued interest depends, of course, on the proceeds from the liquidation. You are right. I do not know where I read that it would stop, but it is indeed continuing to generate interest.. Apologies.
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