sussexlender
Member of DD Central
Cheat seeking missile
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Post by sussexlender on May 1, 2017 17:50:21 GMT
Good to see we get an answer even on a Bank Holiday.
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ben
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Post by ben on May 1, 2017 18:06:12 GMT
Hi, it is important that we stress this in the general instruction letter to put the valuer on notice that we rely more on the security value than a normal high street lender would. The valuer is therefore reminded to bear this in mind and to be additionally cautious when putting a value on a property. Our DD is no less than a mainstream lender would carry out, given that the companies undertaking the DD are from mainstream lenders. I think maybe you are overselling yourselfs a bit, the reason why the borrowers are using you and not a mainstream lender are usually that the main stream lenders will not lend to the borrowers due to their history or that in a forced sale it is unrelastic that the property would actual achieve its valuation. So to suggest that you are doing the same/better is pretty misleading. Prime example one tenanted office block (it might not even be the worst loan on Lendy), if any employee in a bank had lent on that they would have soon found themselfs out of a job or a pretty big demotion, alarm bells were ringing after about 1 min with google without having any access to finacial reports. I would actually be pretty suprised if Lendy gets 30% of the orgianl loan back on that.
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on May 1, 2017 18:09:40 GMT
Hi, it is important that we stress this in the general instruction letter to put the valuer on notice that we rely more on the security value than a normal high street lender would. The valuer is therefore reminded to bear this in mind and to be additionally cautious when putting a value on a property. Our DD is no less than a mainstream lender would carry out, given that the companies undertaking the DD are from mainstream lenders. I think maybe you are overselling yourselfs a bit, the reason why the borrowers are using you and not a mainstream lender are usually that the main stream lenders will not lend to the borrowers due to their history or that in a forced sale it is unrelastic that the property would actual achieve its valuation. So to suggest that you are doing the same/better is pretty misleading. Prime example one tenanted office block (it might not even be the worst loan on Lendy), if any employee in a bank had lent on that they would have soon found themselfs out of a job or a pretty big demotion, alarm bells were ringing after about 1 min with google without having any access to finacial reports. I would actually be pretty suprised if Lendy gets 30% of the orgianl loan back on that. Touché ben!
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registerme
Member of DD Central
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Post by registerme on May 2, 2017 9:19:11 GMT
I find it quite hard to reconcile the commentary about due diligence in the latest Lendy general update (28th April 2017) with the reality of some of the loan book.
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n
Member of DD Central
Yet another Nick
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Post by n on May 2, 2017 10:16:59 GMT
I find it quite hard to reconcile the commentary about due diligence in the latest Lendy general update (28th April 2017) with the reality of some of the loan book. Perhaps Paul was talking about their due diligence policy from now on, not what it was before last week.
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Post by masquedefer on May 2, 2017 10:29:55 GMT
Following on from a similar conversation on DD, particularly the reliability of valuations (see Glos Props thread), I have sent an email to LL today (see below). We can only hope and see.
I also said that I would look at the the Leatherhead default. I don't know the local area, but based on the comps that I have gleaned for a 10 mile radius, I am struggling to get anywhere near the £4.75 million sale tag. The best I can see it acheiving is in the £3.75m to £4.25m range. So fingers crossed on that one too. However as the loan is only £2.975m + whatever LL/SS took out of the reserve fund to finance the unauthorised works (which I understand will rank below the main loan), there should be adequate equity to cover the loan plus any repo costs plus unpaid interest. The valuation appears to be in the bracket for this type of property (what a relief). So this (hopefully) is a good example of LL's lending policy working well.
On another DD related issue, I am concerned that LL's average loan over-run period is rather long (13.4 months on average). What does the forum think of LL's current policy which causes this, i.e. allowing loans to over-run for six months without any renegotiation/penalty or classing them as default. Surely as soon as a loan runs over the deadline period a penalty rate should apply and if the loan is not repaid or formally extended/renegotiated within the following 2 months month it should pass into default.
Also should Lendy appoint an investor's representative onto their board of directors, in accordance with good corporate governance?
Email Sent to Lendy today:
Further to my recent communication (your ref ####) and following a LL/SS lender discussion on the P2P forum site about the accuracy of valuations, LL/SS are requested to achieve improved valuation confidence by confirming that they:
• Ensure that all Valuers are selected, appointed and paid directly by SS/LL and not by borrowers or intermediaries such as brokers.
• Ensure that all Valuers carry adequate PI cover for the scope and scale of valuations undertaken.
• Ensure that they will not reuse firms whose valuations are subsequently found to be outside the normal valuation range/bracket for defaulted loans.
• Incorporate the following or a similar clause in future valuation instructions……..When carrying out valuations the Valuer must bear in mind that LL/SS mainly lend to borrowers who are unable to obtain loans from larger mainstream lenders who operate higher loan eligibility tests. Consequently, there is a greater risk of loan default and likelihood that the valuation will be subject to real-world testing via repossession/disposal of the asset. It is essential therefore that valuations are undertaken with this in mind and err on the conservative side particularly where there is wider valuation bracket due to e.g. lack of information, assumptions such as quality of planned building works, local variations in market conditions, etc. Furthermore, the Valuer must not rely on financial information or projections provided solely by the borrower. The Valuer must also appreciate that (s)he is the lender's eyes and ears on the ground and in accordance with the RICS Red Book, (s)he must report on all factors that may impact on the valuation or its reliability and the suitability of the asset for secured lending.
PS Does anyone know why my preview page does not work? Apologies for typos.
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Post by masquedefer on May 2, 2017 11:41:53 GMT
Hi, it is important that we stress this in the general instruction letter to put the valuer on notice that we rely more on the security value than a normal high street lender would. The valuer is therefore reminded to bear this in mind and to be additionally cautious when putting a value on a property. Our DD is no less than a mainstream lender would carry out, given that the companies undertaking the DD are from mainstream lenders. Your reply is a bit disingenuous. I am sure you have access to national mainstream secured lending default figures which show that repos are miniscule in comparison to LL's default figures (both in % ge of number and value). This variance is due to borrowers with mainstream lenders having a greater ability to service the loan (higher credit rating). The likelihood of default is much higher with LL borrowers due to their lower credit rating. Therefore, LL must apply greater DD when valuing the secured asset. I refer you to my recent email on this sent to LL (see also above).
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mikes1531
Member of DD Central
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Post by mikes1531 on May 2, 2017 13:56:00 GMT
Surely as soon as a loan runs over the deadline period a penalty rate should apply... The fact that LtPP do not pass any penalty rate interest along to their investors does not mean they do not apply such a penalty to their borrowers.
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ozboy
Member of DD Central
Mine's a Large One! (Snigger, snigger .......)
Posts: 3,168
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Post by ozboy on May 2, 2017 14:01:23 GMT
Surely as soon as a loan runs over the deadline period a penalty rate should apply... The fact that LtPP do not pass any penalty rate interest along to their investors does not mean they do not apply such a penalty to their borrowers. Correctimundo!
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