dovap
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Post by dovap on Feb 22, 2018 20:45:50 GMT
it's a confusing old world this p2p lark - so the latest tranche takes it to ~ 2mill on something bought for 1.8mill but within 6 months there'll be an exit due to cheaper lenders gagging to fund further works presumably apart from these groundworks
these old holiday parks always seem a bit erm hopeful
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stub8535
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Post by stub8535 on Feb 22, 2018 21:34:38 GMT
The platforms could all do as assetz do with multiple drawdown loans. Don't tell investors. They list the whole loan for funding and wait for it to fill. It is then accepted and the initial drawdown goes to them in accordance with the now visible sequence. Where the residual goes and how it gets interest goodness knows. When the next tranche is due its already there to be drawn upon. Everyone gets the quoted interest rate so all is hunky dory. No waiting anxiously for last tranches to fill in order to complete a project. Except that's not how AC do it, each tranche is announced (supported by IMS report) & funded by the QAA and then released to the SM for MLIA to fund or not. The QAA is the defacto underwriter that allows the DFLs to work Ah, the light goes on then. The qaa is a cheap source of underwriting cash then except it's oversubscribed.
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ilmoro
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Post by ilmoro on Feb 22, 2018 22:01:51 GMT
Except that's not how AC do it, each tranche is announced (supported by IMS report) & funded by the QAA and then released to the SM for MLIA to fund or not. The QAA is the defacto underwriter that allows the DFLs to work Ah, the light goes on then. The qaa is a cheap source of underwriting cash then except it's oversubscribed. over scribed? That implies you can't get cash in which isn't correct
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stub8535
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Post by stub8535 on Feb 22, 2018 22:13:13 GMT
Ah, the light goes on then. The qaa is a cheap source of underwriting cash then except it's oversubscribed. over scribed? That implies you can't get cash in which isn't correct I was not trying to say anything bad about QAA. I don't understand I am confused. Let me get evidence and ask again when I have it with an example please. It will help me greatly. Thanks for now ilmoro.
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bugs4me
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Post by bugs4me on Feb 22, 2018 23:02:40 GMT
<snip> It would be informative to know what clauses (if any) there are in borrower agreements covering the situation that subsequent tranches can't be filled by the platform. I'd hope that the platforms do have something in them covering their own backsides (i.e. that they aren't promising something which may turn out to be impossible to deliver). In the extreme if a borrower can't finance the later tranches from the p2p platform, or refinance the whole loan elsewhere, the loan would essentially be in default but through no direct fault of the borrower. And we all know that having to realise a partially completed development is bad news. mrclondon - these are very relevant points raised and do not fall into the frivolous category. The problem is that many platforms have ceased to engage with the forum community so they will struggle. This failure to engage coupled with what appears to be an increasing list of defaults is simply resulting in a loss of confidence. Platforms in general fail to realise IMO that lenders do not have a bottomless pit of money to throw at loans whilst funds are held up in those defaults. Also in the case of MT, they suddenly changed the rules whereby loans could be extended for whatever reason. Their answer was to simply offload them on the SM but with £3.7m already there..... very poor PR again IMO. So this loan expiry date is <insert date here>. It will be interesting if the points you raised are answered but don't hold your breath. Shame as MT seems to have gone from being top of the league to just another P2P platform almost overnight. I'm sure that's not what they intended. They could easily resolve this but the longer it drags on then......
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Post by eascogo on Feb 23, 2018 0:17:54 GMT
<snip> It would be informative to know what clauses (if any) there are in borrower agreements covering the situation that subsequent tranches can't be filled by the platform. I'd hope that the platforms do have something in them covering their own backsides (i.e. that they aren't promising something which may turn out to be impossible to deliver). In the extreme if a borrower can't finance the later tranches from the p2p platform, or refinance the whole loan elsewhere, the loan would essentially be in default but through no direct fault of the borrower. And we all know that having to realise a partially completed development is bad news. mrclondon - these are very relevant points raised and do not fall into the frivolous category. The problem is that many platforms have ceased to engage with the forum community so they will struggle. This failure to engage coupled with what appears to be an increasing list of defaults is simply resulting in a loss of confidence. Platforms in general fail to realise IMO that lenders do not have a bottomless pit of money to throw at loans whilst funds are held up in those defaults. Also in the case of MT, they suddenly changed the rules whereby loans could be extended for whatever reason. Their answer was to simply offload them on the SM but with £3.7m already there..... very poor PR again IMO. So this loan expiry date is <insert date here>. It will be interesting if the points you raised are answered but don't hold your breath. Shame as MT seems to have gone from being top of the league to just another P2P platform almost overnight. I'm sure that's not what they intended. They could easily resolve this but the longer it drags on then...... bugs4me. I agree, MT is going through a rough patch for the reasons you mention. Also as has been said in an earlier post P2P money may go instead into S&S to take advantage of the price dip. Unfortunately I was caught putting a fair whack in S&S just before prices dropped. Hurts a bit. Would like to hear what "easy" steps you think MT could take to redress the situation.
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bugs4me
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Post by bugs4me on Feb 23, 2018 8:39:17 GMT
eascogo - it’s all about communication in my book. I’m not suggesting that any platform engages in frivolity as I would prefer they concentrated on the business. The points raised by mrclondon are extremely relevant and need answers. Simply adding an additional 1% CB to a loan offering does not reduce the risk although it may act as an incentive. Sooner or later though this marketing ploy starts to wear off. The way AC present loans or at least used to is IMO an excellent example of presentation - covering in detail both the rationale for investing together with many of the risks. Most platforms seem to have scaled back their disclosure when listing a loan. Whilst everything was being funded they had zero incentive to do anything else but that appears to be coming to a halt. The need for a platform to 'pop on' here and state they have posted an update to a loan opportunity, often in response to questions that have been raised in these parts should not be necessary if the loan had been presented correctly in the first place. Personally I would prefer to see a loan listed at lower than 12% but with more comprehensive information including but not limited to - monthly on-going monitoring and reporting those results back to the involved investors, promptly reporting to investors where a material change had taken place, etc, etc. In other words - loan management. The decision by MT to disengage with this forum whilst understandable appears to be total. Many of the questions asked were again IMO frivolous and there is no way they could be expected to answer them all. But the skill is to recognise the relevant ones and ignore the others - not total radio silence. Many platforms are currently carrying (or is it the lenders) record levels of defaulted loans. Investors need to know what is happening. It doesn’t need to go onto the forum but direct to the lenders concerned. At the moment one could be forgiven for thinking nothing is happening but obviously that is not the case. Nonetheless the feeling that the platform, any platform, is unable to manage a default simply knocks lenders confidence in the platform. Only when a platform changes will the appetite for these larger loans reappear without the need to add CB. Enough of my ramblings.
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Post by mrclondon on Feb 23, 2018 10:57:13 GMT
The way AC present loans or at least used to is IMO an excellent example of presentation - covering in detail both the rationale for investing together with many of the risks. Most platforms seem to have scaled back their disclosure when listing a loan I agree with pretty much everything in bugs4me's post, but feel the bit I've re-quoted is worth expanding on. To fill large loans a p2p platform needs to engage as many lenders as possible from small retail lenders right through to the "big hitters". Too many platforms, and I include MT here, seem to "dumb down" the level of detail they present to lenders and one platform has said to me directly that any greater level of detail would be off putting to most potential lenders. Unfortunately many of the "big hitters" are professional investors who will not invest without being able to complete a detailed analysis themselves. Looking at this loan, there are lots of things that MT could present to allow larger professional investors to gain confidence in the offering. - A promise of full unabridged monthly QS reports - Expenditure breakdown for this tranche and the next one that's waiting in the wings - Timescale breakdown for the component works in this tranche - Evaluation of how the expenditure in this tranche will affect the value of the site, and why there is a belief it will improve the firesale value of the land above what could be achieved today. (The groundworks are possibly predicated on a particular development scheme proceeding at some future date) - A copy of the head of terms (OK to redact the signatures, as long as its still obvious the document has been signed) with the holiday park operator (we have seen a similar document on another platform contain conditions that could not be met by the current planning consent) - A statement from MT that their legal advisers have seen offers of development finance at lower rates - An explanation from MT as to why the loan details says borrowers plural, when the borrowing company has a single director / shareholder shown at CH - An explanation as to how the existing holiday lets business fits into the overall picture (the reviews are somewhat mixed), given it is still connected to the director who has resigned from the borrowing company. - A business case from a reputable leisure sector analyst detailing the demand for such holiday accommodation in that part of the UK. 444 units is a huge number, there are multiple similar schemes being developed via p2p funding. - An honest risk analysis detailing risks and mitigation. The p2p sector is predominately aimed at the mass retail market (dumb money) but the take up has not been as strong as many platforms anticipated. Some platforms predicted a wall of IFISA money would flood into the sector ... OK, many of the IFISA offering have not arrived this financial year or have arrived too late for many, but I don't get a sense that there is pent up demand from outside the existing pool of p2p lenders. If I understood it correctly, yesterday Sophie's team update hinted that part of her role is going to be seeking institutional funding. Whilst an obvious strategy, I wonder if this will usher in a two tier disclosure regime where institutional investors ask for and get the level of detail I've outlined, but large and small p2p lenders have to make do with the "dumbed down" analysis. For the avoidance of doubt, a one page FAQ is not what I need to make investment decisions (and I'm not a big hitter), something more like a 12 page pdf would be the minimum to adequately cover the issues on most loans.
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Post by jackpease on Feb 23, 2018 11:14:33 GMT
>>>>all about communication I know i've said this before but i do think 'good communication' is conflated with 'good news'. For as long as a new and emerging platform can deliver good news then it is deemed to be a good communicator. Once i has little or no good news to offer it becomes castigated as a bad communicator.
Given a platform's progression from darling to devil seems to be inevitable I do think that 'bad communication' is a feature of P2P that we are going to have to get over along with the inevitable losses that come with high-% lending. So many have lamented the downward movement of rates - egged on by the false sense of security offered by 'good communication' - if development tranches are not being filled then this is a very clear signal that the bottom has been hit which is good news going forward. Jack P
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r00lish67
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Post by r00lish67 on Feb 23, 2018 11:46:51 GMT
The way AC present loans or at least used to is IMO an excellent example of presentation - covering in detail both the rationale for investing together with many of the risks. Most platforms seem to have scaled back their disclosure when listing a loan Unfortunately many of the "big hitters" are professional investors who will not invest without being able to complete a detailed analysis themselves. Looking at this loan, there are lots of things that MT could present to allow larger professional investors to gain confidence in the offering. Well said. On a similar note, the forthcoming 2nd advance loan being launched today (MTBC932) needs exactly this sort of detail also. We're asked to accept a circa 43% uplift in value of the site as a solid basis to extend further funding (and indeed maintain current funding,as the 1st tranche's value is affected too of course) on the basis of what amounts to a one-liner letter. I would want to see both a breakdown of expenditure and evidence as to how the activities performed have not only added cost but also residual value if no further work was to be performed. The fact that money has been expended is a side-note - has it changed the price someone is prepared to pay by +43%?
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Post by MoneyThing on Feb 23, 2018 13:45:26 GMT
Afternoon, Now that MrsThing has very kindly taken a few things off my desk, I can devote some more time to this forum. A few interesting general points on this thread which I am keen to discuss over time. Development Loans (with multiple drawdowns)With regards to more mainstream finance (balance sheet lenders), firms are able to provide borrowers with facility agreements for the entire build program which sets down the expected schedule of drawdowns to complete the project. These firms then set aside/allocate the full loan amount to be able to 'guarantee' the full funding for the borrower. At MoneyThing, we are simply unable to do this and make no such promises to borrowers that they will be able to rely on sufficient appetite from our lenders to fund the project in its entirety. As such, whilst we assess the viability of projects in their entirety, each drawdown is undertaken on separate discrete loan agreements rather than facility agreements to for the whole project. As such, our borrowers are fully aware of the risks at the outset. In addition, because of this limitation, we have to approach things slightly differently whereby we look at the viability and LTV covenants at each drawdown which often means that the borrower gets less funding during the build than they would have otherwise got from a facility agreement. Because the LTV profile of development projects is not linear (whereby for example the value part way through the development does not simply reflect what has been spent on the build), we advance less. Under a facility agreement, by having the full funding ring-fenced at the start, they can simply look at the initial position and the end position and so long as the scheduled drawdown conditions are met the LTV profile is allowed to increase during the build before coming down again towards the end of the project. I have seen facility agreements offered to borrowers within the P2P sector, however I have assumed that they in effect have some sort of underwriting in order to commit to the full funding requirement. Whilst this factor makes us a little less attractive to borrowers, one of the positive consequences is that many of our development borrowers need to inject their own funds into a development and this have more 'skin in the game'. Extensions rather than RolloversWe have set out our rationale for this recent change, however I would just like to add that fundamentally our approach hasn't changed. Up until now, lenders have been able to exit a loan should they wish at a time of extension and all rollover loans have then subsequently been filled by existing/new lenders. Because of the recent high Secondary Market availability, there was the risk that the rollover loan would not be filled, and we would then have to roll everything back to the previous participants. This would then have resulted in the loan going into default and recovery unnecessarily. We only extend loans where appropriate and I think we have demonstrated that we are not shy about putting loans into default when warranted (rather than 'kicking the can down the road' in order to help our loan performance statistics). Had we not extended some of the loans recently and ended up having to put them into default simply due to insufficient lender appetite at the time, then the positive conclusion of the loan exit would have been put at risk unnecessarily. I have some other thoughts to give on other topics raised such as premiums/discounts, forum engagement, balance of loan information presented, institutional funding, blackbox/pick your own loans, etc. which I discuss in due course. Kind regards, Ed
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Post by GSV3MIaC on Feb 23, 2018 13:54:00 GMT
Interesting thread, which is applicable to a lot more than this one loan .. I see the issue for many platform as 'upscaling failure' .. trying to move from 10 x £200k loans to 10 x £2m loans, without appreciating they probably need 10x the number of lenders (eventually) to get them over the line. Yes, you can sell out the tranche1's PDQ .. that just looks like another 10 x £200k loans, no big deal, and at that point you have enough 'fresh loans' to please all the lenders. But, as someone said, the appetite for courses 2-n declines rapidly, even more rapidly when lenders discover that the 10 new 'DFL' type loans are actually to only 3 or 4 really separate borrowers. mrclondon has highlighted the 'funding risk', which has sunk many a company (and even country), so I do hope MT really has a backup plan. At this point the MT problem is containable - there are not that many future commitments which must be met 'or else' .. I am not sure the Ly problem actually is, given the number of half-eaten whales they are currently trying to deal with.
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elliotn
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Post by elliotn on Feb 23, 2018 15:40:52 GMT
The way AC present loans or at least used to is IMO an excellent example of presentation - covering in detail both the rationale for investing together with many of the risks. Most platforms seem to have scaled back their disclosure when listing a loan I agree with pretty much everything in bugs4me's post, but feel the bit I've re-quoted is worth expanding on. To fill large loans a p2p platform needs to engage as many lenders as possible from small retail lenders right through to the "big hitters". Too many platforms, and I include MT here, seem to "dumb down" the level of detail they present to lenders and one platform has said to me directly that any greater level of detail would be off putting to most potential lenders. Unfortunately many of the "big hitters" are professional investors who will not invest without being able to complete a detailed analysis themselves. Looking at this loan, there are lots of things that MT could present to allow larger professional investors to gain confidence in the offering. - A promise of full unabridged monthly QS reports - Expenditure breakdown for this tranche and the next one that's waiting in the wings - Timescale breakdown for the component works in this tranche - Evaluation of how the expenditure in this tranche will affect the value of the site, and why there is a belief it will improve the firesale value of the land above what could be achieved today. (The groundworks are possibly predicated on a particular development scheme proceeding at some future date) - A copy of the head of terms (OK to redact the signatures, as long as its still obvious the document has been signed) with the holiday park operator (we have seen a similar document on another platform contain conditions that could not be met by the current planning consent) - A statement from MT that their legal advisers have seen offers of development finance at lower rates - An explanation from MT as to why the loan details says borrowers plural, when the borrowing company has a single director / shareholder shown at CH - An explanation as to how the existing holiday lets business fits into the overall picture (the reviews are somewhat mixed), given it is still connected to the director who has resigned from the borrowing company. - A business case from a reputable leisure sector analyst detailing the demand for such holiday accommodation in that part of the UK. 444 units is a huge number, there are multiple similar schemes being developed via p2p funding. - An honest risk analysis detailing risks and mitigation. The p2p sector is predominately aimed at the mass retail market (dumb money) but the take up has not been as strong as many platforms anticipated. Some platforms predicted a wall of IFISA money would flood into the sector ... OK, many of the IFISA offering have not arrived this financial year or have arrived too late for many, but I don't get a sense that there is pent up demand from outside the existing pool of p2p lenders. If I understood it correctly, yesterday Sophie's team update hinted that part of her role is going to be seeking institutional funding. Whilst an obvious strategy, I wonder if this will usher in a two tier disclosure regime where institutional investors ask for and get the level of detail I've outlined, but large and small p2p lenders have to make do with the "dumbed down" analysis. For the avoidance of doubt, a one page FAQ is not what I need to make investment decisions (and I'm not a big hitter), something more like a 12 page pdf would be the minimum to adequately cover the issues on most loans. My goodness, I need a lay down - retail summary as now, publishing of platform dd separately (with necessary redaction for commercial sensitivity) for those that like it a la AC/TC. Oh, and loan servicing history, just to keep us on top of what our borrowers are up to .
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7d7
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Post by 7d7 on Feb 23, 2018 20:06:02 GMT
Good to see some of the points outlined by Ed above. This is the sort of communication required to ensure investors get the full picture of what is going on. Lenders feed on information to make investment decisions and if it isn't provided, they are forced to presume or postulate. Consequently, the conclusions drawn may be on or off the mark.
It goes to show that a thread focussing on pertinent topics where platform reps and borrowers share their views and current practices with lenders is invaluable.
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Jeepers
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Post by Jeepers on Feb 24, 2018 8:56:08 GMT
AFAICS this is a good loan and a good rate so why is it not filling ?
Has confidence in P2P gone in general ?
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