What happens to the interest on loans on sm

Jun 19, 2017 21:09:24 GMT shirehorse said:

Jun 19, 2017 19:53:35 GMT Companion Cube said:

I predict that the SM will temporarily significantly reduce at the end of the month. People will claim back the interest for the month in exchange for going to the back of the queue. The people already at the back will have nothing to lose and find themselves much further up. It will be a game of how early they do it to get ahead of the pack. I have no loans for sale and don't feel particularly concerned at the moment, this is just a matter of not enough lender funds available across all platforms. I will be interested to observe the gaming as we approach month end. Finally, I would like to think that all the lost interest would at least partially be used shore-up the PF.

My impression is a lot of people are, after a good run, taking the view of just getting out even at the loss of a month or two of interest.  The amount on the SM is unprecedented.

I could be wrong...

Of course the amount on the SM is unprecedented, it is a new growing company and industry. The amount on loan is unprecedented, the amount of new loans being made is unprecedented everything is unprecedented because Lendy it entering new territory for itself.

The same is happening at Money Thing which for the first time actually has a secondary market similar to the way that Lendy now has one rather than FFF.

The other sites I lend on are P2P sites so a lot smaller loans so aren't comparable, maybe someone else can comment on how the other similar sites stand. I can remember seeing similar comments about other sites previously so it isn't unprecedented in P2P or unexpected as when people reach their preferred risk level they will always want to reduce their exposure.

What would you have happen to this interest? If loans for sale were to keep getting the interest then the SM would be a hell of a lot higher as there would be no downside to putting a loan up for sale.

Other sites charge for selling loans but Lendy don't do this so I don't see the problem with them keeping the interest of people who are trying to game the system as believe me that is what most of the loans for sale are, lenders who didn't do DD but just want to hold a loan until a certain point then sell it or those following others DD and have missed the change in circumstances until it was too late.

Jun 22, 2017 16:31:31 GMT adrianc said:

Jun 22, 2017 15:54:46 GMT toffeeboy said:

Personally I wish they would just get rid of the PF as it gives a false sense of security.

"False"?

I wonder how much would have been lost on the various paid-in-full-honest defaults without it? 20, 46, 75...

Normally I argue against the PF. However you make a valid point. Without the PF, it would be hard for Lendy to justify paying back (e.g.) PBL020 in full.

I guess the PF gives Lendy some license to pay back in full, or not - keeping everyone happy, or not. In short, it gives Lendy some sort of discretionary power. It makes good business sense to pay back smaller loans in full, even if they default with insufficient security - providing they have enough reserved in the PF. Without the PF, if Lendy paid out on a lossy loan then it would be a payment from their own cash fund (i.e. not 'reserved for such eventualities'), diminishing their profit and possibly knocking confidence in platform stability.

However: if the current batch of 19 defaulted loans all go through the protracted receivership route then the PF will be completely insufficient to cope with 'repaid in full' and investors must lose out.

I'm still hoping that in the six weeks before the next default appears, there will be some repayments - particularly in the default tab.