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Post by GSV3MIaC on Sept 1, 2014 18:15:58 GMT
The 7423 auction is no longer visible (link sends you to Marketplace) - hiding the dirty deed? Edit: My colleague who placed a small bid CAN see it still. Others do not, like me. Smells fishy! Edit 2: Other auctions in my watchlist are still accessible, including failed ones. This one really is special! Actually that's the standard for FC - you can only view auctions you bid on (whether successful or not) or where there are parts on the secondary market. You don't get any sort of sensible error though - you get sent back to the auction page and you'll get a 'not allowed' type pop-up banner on the =next= auction page you view which you ARE allowed to look at. Been broken forever, FC either don't care or can't fix it. The new auction pages give you an equally unimpressive 'error 500' when you try to get to such a page, but at least you get the error at once.
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Post by davee39 on Sept 1, 2014 18:34:51 GMT
It certainly would be improper for FC to bid on an Auction, I have no issues with FC investing their own money on this excellent deal, which of course is not actually an auction, mine was going nowhere near it. I wonder if Autobid can be programmed to buy second hand loan parts from selected sellers?
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Post by GSV3MIaC on Sept 1, 2014 18:49:36 GMT
True this was not an auction, and FC were going to underwrite the rest of the tranches anyway (but I don't think they mentioned underwriting this one?!). However it's a real small sliippery-slope step to the 'Well this A+ won't be accepted at 12%, so lets have FC Solutions Ltd stick in a few £k at 6.5% and see if we can bring the rate down to what the borrower would like to see'.
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fasty
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Post by fasty on Sept 1, 2014 18:50:52 GMT
I see that there's a new property loan 7620 being requested by the same directors and management team as an earlier one 7220. Because a new company has been created as a vehicle for this loan, my loan parts listing doesn't show the symbol to warn that I have (effectively) already loaned to these people. In fairness to FC, they have mentioned the connection in the financial details. Would be interested to know what others feel about this practice.
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Post by GSV3MIaC on Sept 1, 2014 20:21:47 GMT
Well it will cause the autobidders to buy more, which they wouldn't if it was the same company, so 'fairly dodgy' would be my vote. It may be unavoidable given that all these property developments seem to involve one shot company vehicles just for that build .. presumably there is some tax advantage therein (or the ability to leave dirty laundry behind?).
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fasty
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Post by fasty on Sept 1, 2014 21:43:11 GMT
Well it will cause the autobidders to buy more, which they wouldn't if it was the same company, so 'fairly dodgy' would be my vote. It may be unavoidable given that all these property developments seem to involve one shot company vehicles just for that build .. presumably there is some tax advantage therein (or the ability to leave dirty laundry behind?). Same people behind property loan 7349, too, under yet another company name. I shall be scrutinising these more carefully in future.
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is
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Post by is on Sept 1, 2014 22:19:35 GMT
The 7423 auction is no longer visible (link sends you to Marketplace) - hiding the dirty deed? Edit: My colleague who placed a small bid CAN see it still. Others do not, like me. Smells fishy! Edit 2: Other auctions in my watchlist are still accessible, including failed ones. This one really is special! Actually that's the standard for FC - you can only view auctions you bid on (whether successful or not) or where there are parts on the secondary market. You don't get any sort of sensible error though - you get sent back to the auction page and you'll get a 'not allowed' type pop-up banner on the =next= auction page you view which you ARE allowed to look at. Been broken forever, FC either don't care or can't fix it. The new auction pages give you an equally unimpressive 'error 500' when you try to get to such a page, but at least you get the error at once. Pretty inconsistent though, I can see 7214 for example (didn't bid and it was cancelled) - though now you mention it it does tell me "you can't view this" as it is displaying it  In any case, absence of easily searchable/viewable loan db is a woeful, probably deliberate omission. Who knows what these pesky investors may find if they could view the data easily!
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markr
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Post by markr on Sept 2, 2014 8:10:48 GMT
I see that there's a new property loan 7620 being requested by the same directors and management team as an earlier one 7220. Because a new company has been created as a vehicle for this loan, my loan parts listing doesn't show the symbol to warn that I have (effectively) already loaned to these people. In fairness to FC, they have mentioned the connection in the financial details. Would be interested to know what others feel about this practice. I think it's perfectly normal to set up SPVs for this kind of development, and is a good thing from both sides because it ensures the risks and gains from each project are independent. For the borrower, failure of one project can't bring the others down, and for the lender, the developer can't legally "rob Peter to pay Paul". I guess it also makes accounting easier and may have tax advantages depending on the finances of the owners. Since they are totally separate legal entities, FC is working within the defined behaviour of Autobid by allowing it to bid on both.
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mikeb
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Post by mikeb on Sept 2, 2014 17:38:44 GMT
It would be nice if these SPVs existed though. Companies House and at least a couple of other Due Diligence check sites show NO trace of "M*****th Man**s V LTD" or ".... VI LTD" so where are they?
"VI LTD" has already borrowed from FC (7220)
"V LTD" is the current (7620) one ...
"Gold B**** Prop**** LTD" (same people) (7349) is back for (7647)
When 7620 first listed, it was listed as "Borrower name: M****h Man****s V Ltd" and "Type: Non-Limited" and "Years trading: More than 2 years"
How can a limited company have been trading for 2 years, yet not exist? And be non-limited?
Which is bunk. Now changed to "Type: Limited/0 Years" -- so that's the listing error sorted but FC will not explain exactly why they are lending to companies that don't seem to exist. If there was a legitimate explanation, they would surely give it.
As to the exposure overlaps, I wish FC would sort this out properly. I've been dissuaded from buying/bidding in auctions it says I have exposure to in the past, where it turns out I don't have exposure at all. The loan they think I'm exposed to is one I sold the loan part in MONTHS before. Now we have the opposite, where exposure to same borrower team, under multiple companies, running in parallel -- is not flagged up.
I also will be taking much closer note from now on.
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Post by GSV3MIaC on Sept 2, 2014 21:07:17 GMT
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blender
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Post by blender on Sept 2, 2014 21:56:35 GMT
Yes, still fuming about that. Following the 'skin in the game' metaphor, it's rather as if the referee, unhappy with how the game is going, re-writes the rules in mid game without notice and starts kicking the ball into the net.
So the neutral introducer, the platform operator, can act as a clandestine lender as and when its suits without notice, and can override the market test of the loan which the operator has previously established as the basis of a successful loan application. Clearly FC wants to be the mortgage lender, to make a deal to fund a project, to guarantee it and shield the borrower from the whims of the lenders, and then just to flog off as much of it as they can to 'investors'. Not my idea of P2P. Plenty of regulatory issues here.
Next they might possibly answer why instead of announcing their intervention - which I do not see permitted in the terms and conditions (yet, but they may rewrite them unilaterally and retroactively tomorrow) - and rather than making a purchase of 15 off £2k loan parts, they quietly buy 1500 off £20 flipperesque loan parts. The only reason for that IMO is to be able to compete with real lenders on the secondary market, a market which FC can manipulate in a non-transparent way.
Next - FC runs out of cash through underwriting property loans which lenders will no longer touch, and decides to become an anonymous borrower on its own site.
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markr
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Post by markr on Sept 3, 2014 10:12:14 GMT
Apart from it being handled in FC's usual cackhanded way, I don't see a big problem with this, certainly not anything to fume about.
FC have always intended to underwrite the later tranches of loans, so underwriting the last few % of the first tranche is not a major stretch (since the splits into tranches are fairly arbitrary anyway). AC regularly uses underwriters on the first tranches of loans and gives them priority on the aftermarket, and "to make a deal to fund a project, to guarantee it and shield the borrower from the whims of the lenders, and then just to flog off as much of it as they can to 'investors'" pretty much sums up SS and Wellesley's model; are they also not P2P?
FC certainly aren't the first platform to rewrite the rules to "override the market test". AC recently introduced after-the-fact cashback offers on struggling loans, and when that failed reduced the loan amount to match the amount bid, ReBS arbitrarily changed the risk band of a loan to encourage bidding, and both regularly extend auction deadlines to try to get loans to fill. I don't have an issue with any of these decisions, because they only affect those for whom the loan has already passed the "market test" (i.e. they chose, or allowed the site's automatic chooser, to bid).
Personally, I think FC should have "done an Assetz"; i.e. reduced the loan amount and added the balance to the second tranche, which would maybe have seemed less "underhand", although the effect would have been much the same, moving about £30k of the loan into the tranches which FC are "allowed" to underwrite, the report only says the borrower needs £600k in 3 tranches so the exact amounts and timing probably aren't crucial.
I see no evidence that FC "wants" to be a lender, in fact I suspect it would rather not (and that includes underwriting the subsequent tranches), but understandably it is prepared to be a lender to avoid spoiling a ship, that it has presumably spent some time and money on, for a ha'porth of tar.
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blender
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Post by blender on Sept 3, 2014 14:51:03 GMT
Thanks Markr for responding with a different viewpoint, which of course many lenders may agree with. I would say that yours is the pragmatic view, focussed on this loan, 7423, while I am more concerned with principles and knowing the operator I am using. If principles are breached then I worry for the future, yes on the slippery slope principle. The areas are principally:
Knowing what FC will or will not do based on the T&C’s previous practice and statements given. FC has never bid on a loan before and has previously let loan requests fail. FC has told us that it will underwrite subsequent tranches of these property loans, and this is the only circumstance where we have expected FC to fund a loan. On this loan they stated ‘A number of loans to be listed according to cash flow needs of the project. Loans will be underwritten by Funding Circle if the 1st loan fills’. They did not say that they would fill the first loan if necessary and that they had given a de-facto guarantee that the money would be forthcoming. I imagine that the record of having funded 100% of property loans was too valuable to lose, and they should have told the lenders of these intentions up front. If I had bid a large sum on this loan I might have wanted it to complete or I might have wanted my bids back to place on something better. Also if I had taken the incentive of 2% with the intention of selling on the SM I would have expected to know that FC might be locking me in and then buying and dumping some portion of the loan in competition. Now we have no idea when and in what circumstance FC will bid on any loan, except to get it filled ‘exceptionally’, and probably with no notice, and in contradiction to what it has said in its investor report.
Being a P2P operator. I note your comments about some other operators Markr and I believe that they are sailing too close to the boundaries of P2P and I am not with them. Others will have different views on how much of a relationship there should be between lenders and borrowers and how the operator may intervene. On these property loans in my view FC is corroding the principles which could be seen in the business loans. [Edited]An example which did not apply before:
1.2 … Nothing Funding Circle does and nothing on the platform is intended to operate or be construed as advice or recommendation by Funding Circle to enter into a particular loan. 1.3 … Funding Circle does not edit the information submitted or uploaded by a borrower. For the property loans the borrower supplies nothing to us directly, but from the information supplied by the Borrower, FC or its agents supplies the prospectus or investor report and then takes it upon itself to answer all the questions addressed to the Borrower, gathering further information from the Borrower as necessary.
A deliberate disconnection.
Others may think these points pedantic, but they make me wonder where FC is heading. And then there is the contingent liability for all those loans underwritten which must total well past £10m by now, but that’s just a problem for their backers.
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Post by transo on Sept 3, 2014 19:54:39 GMT
It would be nice if these SPVs existed though. Companies House and at least a couple of other Due Diligence check sites show NO trace of "M*****th Man**s V LTD" or ".... VI LTD" so where are they? According to FC's answer on 7620 (to "M******th Man**s V Ltd") it's because it's an Isle of Man registered company. I'm not sure whether FC's lenders were expecting to lend to IoM companies. I'm never sure how much these fall under UK law or something different.
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blender
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Post by blender on Sept 3, 2014 20:29:47 GMT
It would be nice if these SPVs existed though. Companies House and at least a couple of other Due Diligence check sites show NO trace of "M*****th Man**s V LTD" or ".... VI LTD" so where are they? According to FC's answer on 7620 (to "M******th Man**s V Ltd") it's because it's an Isle of Man registered company. I'm not sure whether FC's lenders were expecting to lend to IoM companies. I'm never sure how much these fall under UK law or something different.
Every country and jurisdiction has its distinct forms of business. The Isle of Man is no exception having been legally and politically distinct for over a thousand years, and in modern times becoming one of the leading centres of the world for offshore financial services. Companies and other forms of business organisation established under the law of the Isle of Man have been widely used internationally. It is no accident that business organisations established in the Isle of Man have become so widely used. It is arguable that the Isle of Man has the most sophisticated law relating to forms of business organisation of any centre for ‘offshore ’ work, and is among the leading jurisdictions of the world in this respect. " Official gov website. The T&C's were changed to exclude property limited companies from the need to register at Companies House. Best to read them every morning.
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