r00lish67
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Post by r00lish67 on Jun 7, 2017 16:28:53 GMT
I seem to find that for some downgraded/RBR loans that haven't had an update for a while, a brief email to chase up often seems to have the effect of shuffling along the status of the loan, often quite positively.
Whilst that's good, sort of, how many other loans are only being updated when FC are prodded? Do other users find this is the case?
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wysiati
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Post by wysiati on Jun 7, 2017 16:48:11 GMT
Not just downgraded/RBR loans, unfortunately.
Latest example - Loan # 35677. Failed to make first repayment and currently 25 days late.
Comment eventually made on 24/05/14 "We are currently waiting for the borrower to come back to us with a confirmed payment date. Once we have been notified we will update all investors".
Nothing further until prompted with today's follow-on consisting of "We are still currently waiting for the borrower to come back to us with a confirmed payment date, however, they have been unresponsive. We will continue to chase them for a payment update. Once we have been notified we will update all investors. We thank you for your patience".
So much for all loans requiring a payment instruction to be set up - no hint of that as an excuse this time. Beyond the communication issues, it is the lack of meaningful action which continues to grate. Being this late there are also some unhelpful incentives at play for lenders. One could argue that a single loan will not impair the overall statistics of the platform so, at this stage, by essentially doing nothing, the loan goes into a second late month and provided FC manages to get some form of repayment there will be no need to follow any precedent and pay out to investors where no payment has ever been received (e.g. FC loan 3696); saving some cash on another payout for a poorly screened loan, if it proves to be such, will surely trump any reputational considerations? Another loan which lenders may never get the chance to trade out of.
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metoo
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Post by metoo on Jun 7, 2017 17:44:28 GMT
So "we thank you for your patience" translates as "we might need a prod if you want this chased up, don't get too patient, we need reminding".
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sl125
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Post by sl125 on Jun 8, 2017 9:57:34 GMT
I think 35677 demonstrates quite well the "black swan" risk of a flipping strategy (ie. buying large stakes in loans that you are confident you can offload on the SM). 35677 was an E rated loan, so a good proportion was bought by "fastest fingers first" and placed on the secondary market. Given it will accrue at 21.9%, a flipper is playing a subtle game of Russian Roulette.... how long to hold an E rated loan at a lucrative rate before the risk outweighs the gain (they are rated E for reason at the end of the day)? 1 month? 2 months? 3 months? Clearly, anything beyond 1 month on any loan introduces the risk of a loan falling at the first repayment, but an E more so. Thankfully, those events are quite rare.... but given that in order to make any serious money out this strategy you would have to bid large, when that risk materialises you stand to lose big also.
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Post by GSV3MIaC on Jun 8, 2017 15:04:41 GMT
At least one E has become unsaleable (RBR) even before the first payment, iirc, so the best strategy is probably to get rid of it within a few days (at a fat premium). Of course there are not enough new ones in the pipeline to overcome the
cash drag effect if you do that, and you have to compete in the ever escalating bot-wars (refresh every HOW many seconds?? Make how many bids per second?? It was 5 minutes , and <2, or so when I started).
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Post by yorkshireman on Jun 8, 2017 19:33:08 GMT
I think 35677 demonstrates quite well the "black swan" risk of a flipping strategy (ie. buying large stakes in loans that you are confident you can offload on the SM). 35677 was an E rated loan, so a good proportion was bought by "fastest fingers first" and placed on the secondary market. Given it will accrue at 21.9%, a flipper is playing a subtle game of Russian Roulette.... how long to hold an E rated loan at a lucrative rate before the risk outweighs the gain (they are rated E for reason at the end of the day)? 1 month? 2 months? 3 months? Clearly, anything beyond 1 month on any loan introduces the risk of a loan falling at the first repayment, but an E more so. Thankfully, those events are quite rare.... but given that in order to make any serious money out this strategy you would have to bid large, when that risk materialises you stand to lose big also. 2 weeks maximum.
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r00lish67
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Post by r00lish67 on Jun 9, 2017 7:14:01 GMT
My slapped wrist with this was a recent D that was downgraded shortly after 1 payment with a large CCJ registered against it. Thankfully, as often seems to be the case, if they continue to make payments for 3 months (they did), FC will usually restore it. Especially when you chase them on the very day of 3 months elapsing, bringing us nicely back on topic  My reason for raising this was that I suspect the FC team are totally overwhelmed by keeping up with the ever expanding loanbook size. I had one loan which has bizarrely failed on it's very last payment, but then didn't have an update for 5 months - how long would they have left it without intervention? Key thing is , If you feel a troubled loan is due an update, ask! Shouldn't be that way, but it is. |
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wysiati
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Post by wysiati on Jun 14, 2017 11:33:46 GMT
Loan # 35677 now downgraded to NRB status having made neither of the first two repayments. It feels as though "Don't ask, don't get" might be a fitting description of the approach to repayments, and perhaps even recovery, where any given loan is effectively expendible from a platform stats perspective.
"This loan has been downgraded as we have received notification of a winding up petition filed against the business. We will be contacting the borrower to determine their position and will update you with any further developments".
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kt
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Post by kt on Jun 14, 2017 13:12:23 GMT
Hi,
What was the loan?
KT
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am
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Post by am on Jun 14, 2017 20:33:54 GMT
FC is funded by venture capital, and these funds always focus on the exit with the profit. The value of FC depends mostly on its ability to project profits from the 1% charge on the loan book, and the people we discuss here are an overhead to be minimised - however good they are as individuals, which I think they are. As the loan book grows, the fee-based origination works ever harder just to maintain the size of the book, and collections/recoveries/customer service are under increasing pressure to keep their total overhead cost down to a budget as a tiny percentage of book value. Collection/recovery cost is related to loan risk, but FC's fees are not risk related. To maximise loan book size and profitability what they need is large five years loans which are A+ rated, they last longer and cost less to manage, and that is what we get - unsecured and often dubious. The target that matters is the loss rate, and individual loans do not matter, still less the routine updating of information for the few manual bidders who look.
So yes, standards which require people effort will slip, and if you want something done then increasingly you will have to ask. It is the nature of the beast they wish to become. Both Wysiati and sl125 are giving good advice, imo. A while back some of use decided that the loans to buy were those where the borrower did not have to make any repayments, until the end, and so we were not at risk from a combination of decreasing standards caused by band drift and a squeeze on human overheads. Even that free ride is coming to an end, as they have been forced to focus on the core SME business and to optimise its performance. It was fun.
Don't forget that FC has income from arrangement fees as well. That's about the same order as the income from the charge on the loan book.
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fasty
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Post by fasty on Jun 14, 2017 20:42:13 GMT
Loan # 35677 now downgraded to NRB status having made neither of the first two repayments. It feels as though "Don't ask, don't get" might be a fitting description of the approach to repayments, and perhaps even recovery, where any given loan is effectively expendible from a platform stats perspective. "This loan has been downgraded as we have received notification of a winding up petition filed against the business. We will be contacting the borrower to determine their position and will update you with any further developments". Indeed; borrowers making no repayments whatsoever really doesn't fit in with my strategy. I wonder if there is evidence that this company was "broken" before FC actually gave the loan?
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metoo
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Post by metoo on Jun 14, 2017 22:58:57 GMT
Loan # 35677 now downgraded to NRB status having made neither of the first two repayments. It feels as though "Don't ask, don't get" might be a fitting description of the approach to repayments, and perhaps even recovery, where any given loan is effectively expendible from a platform stats perspective. "This loan has been downgraded as we have received notification of a winding up petition filed against the business. We will be contacting the borrower to determine their position and will update you with any further developments". Indeed; borrowers making no repayments whatsoever really doesn't fit in with my strategy. I wonder if there is evidence that this company was "broken" before FC actually gave the loan? Without even the first repayment made, the platform's credit analysis and proper due diligence in loan origination is in question here. Their reputation is at stake. I feel FC should take responsibility and make good the loss to lenders on this one. Again, don't ask, don't get?
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fasty
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Post by fasty on Jul 11, 2017 22:40:00 GMT
Borrower of 35677 already in administration and not a single payment made.
Looks like the loan was, at best, a last-gasp attempt to keep it afloat.
I hope that FC are not surprised that I am reducing my investment with them!
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wysiati
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Post by wysiati on Jul 12, 2017 3:39:54 GMT
The winding up petition was presented back on 19/05/17. These things do not happen overnight, as is ably demonstrated by your typical FC 'recovery' commentary!
For those winding down on this platform in particular there is even less downside to gathering evidence to see whether a case of potential negligence can be substantiated.
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blender
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Post by blender on Jul 12, 2017 7:59:12 GMT
The winding up petition was presented back on 19/05/17. These things do not happen overnight, as is ably demonstrated by your typical FC 'recovery' commentary! For those winding down on this platform in particular there is even less downside to gathering evidence to see whether a case of potential negligence can be substantiated. This is true. And we should remember that, however much FC would like its 'investors' to just look at the overall numbers, in fact, under the model it created, FC has a duty towards every contract, every loan part, made between a lender and a borrower. Both in origination of individual loans, and under compulsory novation on default, where FC works as agent and is answerable to lenders individually.
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