keystone
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Post by keystone on Jan 12, 2018 12:28:47 GMT
Once this one is all done and dusted, I’ll look forward to seeing a full post-mortem. With the original loan starting on 03 May and being put into default on 24 August, I do wonder how much interest the borrow actually serviced on this loan. About the Borrower The borrower is an experienced developer with over 15 years experience in both residential & retail projects within this area of Lancashire.I wonder if the borrower will include this little venture on their CV. That said, I am pleased that this does not look like turning into a protracted and drawn out affair and is being brought to a relatively speedy conclusion. Experience seems to be a byword for knowing how to game the system. Is there any information available about any other loans on other platforms this borrow has loans with? Need to look at trimming some way over the top risks.
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bugs4me
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Post by bugs4me on Jan 12, 2018 12:34:19 GMT
Another farcical VR - and there will be zero recourse against any individual and/or firm - that is the reality folks whatever future 'gloss and glitter' any platform cares to throw at lenders.
This yet again sums up those that claim to be 'professional'. Whatever they may claim, it is usually a self appointed title.
At this rate, lenders/investors are going to need to get their own VR's done!!!!
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jonno
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nil satis nisi optimum
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Post by jonno on Jan 12, 2018 12:41:44 GMT
I've been an investor with MT since the very early days but I have to say that this has shaken my confidence quite a lot. It's not that the loan has defaulted; it's not even that there will be a loss; it's the size of the loss and the reliance on what was clearly a negligent (at best) valuation. I sincerely hope that MT are working on a plan to bridge as much of this loss as possible or I fear I wont be the only investor who has had their confidence badly shaken.
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snowmobile
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Post by snowmobile on Jan 12, 2018 12:51:05 GMT
The Valuer is based in the same local area as the property (first three digits of postcode matches). This gave me some additional confidence in the valuation at the loan outset. I would have expected that they would be knowledgeable about achievable property sale values in their own local area. If this is the result how can we be expected to trust their valuations on projects at the opposite end of the country
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Brainer
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Post by Brainer on Jan 12, 2018 13:07:33 GMT
I have suffered many shortfalls in P2P over the years due at least in part to what in hindsight were unrealistically inflated valuations and I have received not a single penny as the result of a valuer being sued, indeed I do not recall a valuer actually being pursued. Has anyone? AC are currently pursuing one on a 'no win no fee' basis. It'll be very interesting to see the outcome.
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oldgrumpy
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Post by oldgrumpy on Jan 12, 2018 13:07:35 GMT
Ed, will you be accepting valuations from this company again? PS I wonder if I will be banned for naming a valuer on this forum. It could start quite a trend.
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justme
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Post by justme on Jan 12, 2018 13:21:28 GMT
you could do just first and last letters and use asterisks may be to spare others having to go into loan details and look for them
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elliotn
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Post by elliotn on Jan 12, 2018 13:21:31 GMT
I've been an investor with MT since the very early days but I have to say that this has shaken my confidence quite a lot. It's not that the loan has defaulted; it's not even that there will be a loss; it's the size of the loss and the reliance on what was clearly a negligent (at best) valuation. I sincerely hope that MT are working on a plan to bridge as much of this loss as possible or I fear I wont be the only investor who has had their confidence badly shaken. I still fondly remember that sunny day I pre-emptively introduced MT to this forum. And I have no problems with any of my MT defaults and their loan book to date - you could infer delays/problems with Birkenhead, Prestbury, Plymouth etc - and these are part of the high risk end of bridging and development loans that MT participate in. Except this one. Straight from no update to default. Straight from doubling my investment that month (with a rare sell off the night before). That is the exact opposite of what I expect from my lending agent. Nothing highlights better the inadequacy in MoneyThing 's model of servicing by borrower - to minimise ltv and therefore our losses - and providing no systematic transparency over borrower repayments unlike every other platform I invest in using this model. All my loans are now held at the prudent expectation of immediate default (except the rare loan where retained interest helps mitigate MT's interest repayment risk). Even Ly and FS have made whole some of their more egregious defaults. MoneyThing SophieThing LucyThing @everything
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Post by mrclondon on Jan 12, 2018 13:37:28 GMT
I think its worth considering at this point the fact that the valuation was not an as is valuation of the property (untentanted office accomodation) but a residual value valuation based on a development scheme given outline planning approval.
A residual value valuation is only valid for the exact proposed development scheme, alongside any assumptions on construction costs for that exact scheme available at the time of the valuation. If the new prospective purchaser of this property has other ideas for its future use, the residual value will be different. Even if the intent is still to proceed with the outline planning approved scheme they might not have access to as cost effective construction contractors. And if the intent is to simply refurbish the property as office accomodation, the residual value valuation is irrelevant.
The concept of challenging a residual value valuation as being negilgent seems to me to be a non starter.
What platforms should be providing is a worst case as is (or after demolition) fire sale valuation. They won't becasue it would destroy their buisness model. In this case demolition was to be part of the scheme, so the worst case valuation should have been for a plot of land with residential consent. Site area = 884 sqm = 0.09 hectare. Flyde residential land estimated as (government 2015 figures) £2.6m/hectare impling a land value of £234k.
Assumed capital return = 0.7 x £455,000 = c. £319,000 (after costs)
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Post by Deleted on Jan 12, 2018 13:44:03 GMT
When investing in P2P secured lending, there are obviously no guarantees of success and it can be expected that there will be defaults from time to time. Having said that, much of the risk of this type of lending should be mitigated by having sensible valuations and sensible loan to value ratios. One would not expect, therefore, default losses either on the scale that we are experiencing here or so soon after the inception of the loan. To lose 30% on a loan that only started at the end of August 2017 is not acceptable. The LTV ratio was 70%. If lenders are to receive 70% of that 70%, we will be receiving only 49% of the original property valuation. How can MT explain the loss of the other 51% of the original valuation? It means that there are likely to have been significant failings either in the original valuations or in the way that the default situation was handled or both. Before MT went down the administration route for failure to pay interest, they should have taken a realistic view of likely proceeds of sale. If such a large capital loss was likely, they should instead have arranged to step in and make arrangements for themselves to complete the construction. Speaking as an accountant, the most valuable asset that any company has is the one asset that does not appear on the Balance Sheet – reputation. Something has gone very wrong here and this situation is not going to be good for the MT reputation. As for me, I cannot have any confidence in MT now and have put all my loans up for sale and will withdraw funds as loans are repaid. Fortunately I did not have a lot of money invested with MT. I will never invest with MT again.
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hazellend
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Post by hazellend on Jan 12, 2018 14:15:35 GMT
Was there a PG on this one?
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snowmobile
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Post by snowmobile on Jan 12, 2018 14:17:53 GMT
I think its worth considering at this point the fact that the valuation was not an as is valuation of the property (untentanted office accomodation) but a residual value valuation based on a development scheme given outline planning approval. A residual value valuation is only valid for the exact proposed development scheme, alongside any assumptions on construction costs for that exact scheme available at the time of the valuation. If the new prospective purchaser of this property has other ideas for its future use, the residual value will be different. Even if the intent is still to proceed with the outline planning approved scheme they might not have access to as cost effective construction contractors. And if the intent is to simply refurbish the property as office accomodation, the residual value valuation is irrelevant. The concept of challenging a residual value valuation as being negilgent seems to me to be a non starter. What platforms should be providing is a worst case as is (or after demolition) fire sale valuation. They won't becasue it would destroy their buisness model. In this case demolition was to be part of the scheme, so the worst case valuation should have been for a plot of land with residential consent. Site area = 884 sqm = 0.09 hectare. Flyde residential land estimated as (government 2015 figures) to be £2.6m/hectare impling a land value of £234k. Assumed capital return = 0.7 x £455,000 = c. £319,000 (after costs) In Section 6 of the VR (page 8) the Valuer stated that they were also asked to provide the market value in present condition and utilised as offices. It appears this part of the brief may not have been carried out satisfactorily. Section 42 provides the valuation for both scenarios. The first scenario is based upon the residual value of the proposed development. It has not been made clear how the valuation has been calculated for the second scenario. It does seem somewhat of a strange coincidence that both valuations are the same. This second scenario valuation is stated as being with the benefit of the current lease of £60k pa. The Valuer was aware that the property was vacant and the tenancy was due to end in February 2018. Section 38 suggests a new tenancy of £50k pa could be achievable with some redecoration work. Presumably this should have been reflected in the valuation.
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SteveT
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Post by SteveT on Jan 12, 2018 14:18:00 GMT
I think its worth considering at this point the fact that the valuation was not an as is valuation of the property (untentanted office accomodation) but a residual value valuation based on a development scheme given outline planning approval. Certainly that is one of the market values the Valuer was instructed to assess, but the other was "Market value of freehold interest in present condition and utilised as office investment". His assessment of the market value on this basis was the same figure, £650k, based on his estimated market rent of £50k pa (which he observed was lower than the current rental income of £60k pa). I took some assurance from the fact that, if the development did not proceed, there was an alternative use for the building that should support a similar valuation. The truth appears very different and, although we've no insight into why no-one sees anything like this value in the building as an office investment, it is this valuation that I think should be challenged. (crossed with snowmobile)
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james100
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Post by james100 on Jan 12, 2018 14:19:08 GMT
As a general point, and not specifically directed to this loan, I'd like to see all platforms demonstrating sufficient confidence in the accuracy of the VRs they submit to borrowers that they actually put their money where their mouth is by underwriting it ie. committing to make the shortfall in any sale price in the event of default and associated sale.
VR accurate? No problem!
If a platform doesn't have sufficient faith the VR is accurate, they have absolutely no business putting it forward as a valid component of any borrowing proposal...and if they choose to do so anyway, I'd like to see them cough up any valuation "gaps" as required (rather than me).
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rocky1
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Post by rocky1 on Jan 12, 2018 14:36:39 GMT
at least MT have put their cards on the table and we should hope that in future all gdv and valuations are not to please the borrowers. we all know there is risk involved but we are being seriously misled by p2p forums who at the end of the day i believe do not lose anything and are making a lot of money out of using our money.it is about time now that other platforms L***Y defaults stretching to 3and 4 hundred days started to be honest with us. i am also in this loan and will continue to invest with MT who i believe are still 1 of the the better platforms
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