copacetic
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Post by copacetic on Aug 11, 2017 15:03:33 GMT
To adhere to our regulatory responsibilities in not providing credit to cover shortfalls, Lendy will be introducing a new process within Available Loans (the secondary market), whereby unfunded loan availability will appear above loans parts that have been put up for sale by investors. This is to ensure loans are completely funded, prior to sales occurring. For example, DFLXXX has been funded 95% on a £250,000 loan leaving £12,500 unfunded. Lendy would place this unfunded £12,500 on the Available Loans in order to fulfill the loan ahead of any ‘For Sale’ loan parts. As soon as the loan is 100% filled, loan parts owned by investors that are 'For sale' will then be eligible to be sold. I call BS. To use their example, in order for Lendy not to expose themselves to any borrower credit risk they need an underwriter to fund the £12,500. It doesn't matter if it's only for a few days while the SM investors buy the underwriter out, if Lendy was funding the loan themselves they'd be in breach of the FCA rules by exposing themselves to borrower credit risk. Lendy's message in undiplomatic-speak actually reads: 'Due to our underwriters costing us a fortune for recent development tranches which aren't being filled quickly we have decided to allocate investor funds according to how it affects our bottom line. For example, DFLXXX has been funded 95% on a £250,000 loan leaving £12,500 unfunded. Lendy would place this unfunded £12,500 on the Available Loans in order to fulfill the loan ahead of any ‘For Sale’ loan parts which allows us to make a saving of the 30% APR charged to us by our underwriters and instead pay 0% to investors while we keep the interest paid by borrowers.'
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username
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Post by username on Aug 11, 2017 15:18:42 GMT
In the past, Lendy used underwriters to take up the slack in larger loans... "To adhere to our regulatory responsibilities in not providing credit to cover shortfalls" implies to me there was no underwriter and they were using company funds. I understand they have history of using company funds to invest/bail out other loans which would also fit the pattern.
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SteveT
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Post by SteveT on Aug 11, 2017 15:22:46 GMT
In the past, Lendy used underwriters to take up the slack in larger loans... "To adhere to our regulatory responsibilities in not providing credit to cover shortfalls" implies to me there was no underwriter and they were using company funds. Recently perhaps, but they were happy enough to use underwriters in the past (as other platforms are still)
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TonyL
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Post by TonyL on Aug 11, 2017 17:03:07 GMT
So two things...
1. I don't understand why Lendy can't just keep the new tranches on the pipeline until they're filled. That way they don't artificially clog up the SM...otherwise what's the point of the pipeline pre-filling...you'd skip that process altogether and just dump the tranche right at the head of the sales queue, wouldn't you?
2. Lendy have recently learned that increasing the rate on existing and pipeline loans has a dramatic effect on shifting that loan in both places. So why don't they just accept that their role in this game is that of market-maker. The rates could be a lot more fluid to keep everything balanced. They're providing a poor-man's version at the moment by offering bonus accruals for overrunning loans - and tinkering mid-term when it suits them. Instead they could provide a bid-offer spread on secondary market trading in order to take their cut and raise and lower the rate accordingly to keep the throughput ticking along nicely. ABL demonstrate something similar, but I'm not sure their model of it works particularly well.
Just a thought (or two)...
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Post by GSV3MIaC on Aug 11, 2017 17:06:27 GMT
Yes, paying interest reduced the dis-incentive to list parts, but OTOH there is no incentive to list them (no mark up) either .. I'm not going to rush off and list all my parts merely because doing so costs me nothing (or perhaps costs me 0.25% if they actually sell).
Interest is paid on parts for sale at FC, ABL, MT, etc and I don't usually see overflowing SMs at any of those places (even at ABL/FC where there is markup potential). If Ly are hoping to improve the exodus from the platform, they are headed the right way (and cashback-> strip -> sell does more damage to the SM, IMO, than ever paying 1%/month would).
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TonyL
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Post by TonyL on Aug 11, 2017 17:29:12 GMT
The real problem with nearly all these P2P platforms where you're allowed to sell loans is that they simply follow the 'Greater Fool Theory'. And that only stems from the uncertainty of whether or not the borrower will eventually pay up. I mean really, why should there be risk in what we're doing here? Someone needs money...we have money to lend...our reward is modeled by the interest rate set...and if the borrower should default then the collateral should more than cover the loan. Why do they not make it THAT simple? Why does there HAVE to be a risk? And the answer can't simply be "because we accept that there IS a risk".
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spyrogyra
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Post by spyrogyra on Aug 11, 2017 19:18:53 GMT
There are various risks and you should know them well - market sentiment, wrong valuations, shoddy building work, abuse of funds, to name only few. I clicked I liked your previous comment but I should clarify I liked paragraph 2 only - the liquidity is greatly influenced in any market when discounts and premiums are applied. Someone who really needs their money quickly would be grateful if he can sell at a 5% discount. Some will jump in with larger amounts if they are confident that they can offload parts later. New investors looking for diversification would consider buying at a sensible premium for quick diversification. Some lenders may up their stake in loans that indicate good progress.
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Post by martin44 on Aug 11, 2017 19:53:19 GMT
There are various risks and you should know them well - market sentiment, wrong valuations, shoddy building work, abuse of funds, to name only few. I clicked I liked your previous comment but I should clarify I liked paragraph 2 only - the liquidity is greatly influenced in any market when discounts and premiums are applied. Someone who really needs their money quickly would be grateful if he can sell at a 5% discount. Some will jump in with larger amounts if they are confident that they can offload parts later. New investors looking for diversification would consider buying at a sensible premium for quick diversification. Some lenders may up their stake in loans that indicate good progress. I couldn't agree more with the risk analysis, but over my last 3yrs of investing with Lendy, they have always tended to put to us (the lenders) a positive (outcome) attitude, and a somehow grateful persona, me personally? i do not feel the same as i did Pre-Garden centre, maybe i am being over nostalgic or unrealistic, but i am now starting to feel as though Lendy are taking the P**s out of me.
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stevio
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Post by stevio on Aug 11, 2017 21:47:52 GMT
Funny how it comes immediately after Lendy Cowes week, someone get the bill and have to think quickly how to pay for it?
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Post by lendinglawyer on Aug 12, 2017 7:42:05 GMT
I can see why they made a change here to be fair (on the older dfls they would effectively never fill if they were stuck at the back) but I think they went too far - these bits should simply join the back of the queue at go live and move through as sales and de-listings occur, like all other parts listed for sale.
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fp
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Post by fp on Aug 12, 2017 7:51:23 GMT
I think whatever is in the queues come 1st September should be exempt from being pushed to the back of the queue, anything else would be frowned upon should someone decide to make a complaint. I know I wouldn't be happy and would most definitely take legal advice on principle.
I also believe that any loans which are in default and un-tradeable as a result should automatically be taken off the SM, again this is taking liberties, and praying on those who are more of a passive investor and don't realise how the system works.
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twoheads
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Programming
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Post by twoheads on Aug 12, 2017 8:47:02 GMT
I think whatever is in the queues come 1st September should be exempt from being pushed to the back of the queue, anything else would be frowned upon should someone decide to make a complaint. I know I wouldn't be happy and would most definitely take legal advice on principle. I also believe that any loans which are in default and un-tradeable as a result should automatically be taken off the SM, again this is taking liberties, and praying on those who are more of a passive investor and don't realise how the system works. Absolutely agree with you and @leopardcat. I posted a month ago here and last week here on the same subject.
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kaya
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Post by kaya on Aug 12, 2017 9:03:24 GMT
Perhaps it should be illegal or at least against regulatory rules for a platform to withhold interest for loans listed for sale. The investor still holds that loan and the investor still holds all the risk, so is due all the interest by right. How has any platform the right to 'steal' it? But then I don't even know what ''INPL''means, be grateful if someone could enlighten me to what that is and how it justifies interest retention.
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Post by martin44 on Aug 12, 2017 9:34:49 GMT
Perhaps it should be illegal or at least against regulatory rules for a platform to withhold interest for loans listed for sale. The investor still holds that loan and the investor still holds all the risk, so is due all the interest by right. How has any platform the right to 'steal' it? But then I don't even know what ''INPL''means, be grateful if someone could enlighten me to what that is and how it justifies interest retention. INPL Invest Now Pay Later ... Prefund a loan in the pipeline and when it goes live you have 48hrs (or maybe 24hrs) to deposit the cash in your Lendy account.
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kaya
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Post by kaya on Aug 12, 2017 9:52:23 GMT
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