jlend
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Post by jlend on Jan 13, 2018 8:48:47 GMT
In my experience there are always going to be some challenging distressed sales.
We have seen the flip side of this,where developers have picked up plots on the cheap and then raised funds via p2p to refinance the site and develop it. For.example I remember the following
"Please note that the site was purchased out of a distressed sale for £331,000. The borrower was able to act quickly and had the appropriate contacts to be able to secure a substantial discount from the site’s true value."
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madpierre
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Post by madpierre on Jan 13, 2018 9:41:04 GMT
In my experience there are always going to be some challenging distressed sales. We have seen the flip side of this,where developers have picked up plots on the cheap and then raised funds via p2p to refinance the site and develop it. For.example I remember the following "Please note that the site was purchased out of a distressed sale for £331,000. The borrower was able to act quickly and had the appropriate contacts to be able to secure a substantial discount from the site’s true value." Yes we are seeing this increasingly in P2P land. But if this property returns for funding again the VR will be at the same "True" value, not the "Real" value
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toast
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Post by toast on Jan 13, 2018 11:05:18 GMT
Lets just hope the Personal Guarantee has some legs I didn't think there was a personal guarantee for this loan - just the building/site security. Maybe I missed something?
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elliotn
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Post by elliotn on Jan 13, 2018 12:03:07 GMT
Lets just hope the Personal Guarantee has some legs I didn't think there was a personal guarantee for this loan - just the building/site security. Maybe I missed something? Then we are all toast.
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Post by Badly Drawn Stickman on Jan 13, 2018 12:25:14 GMT
Lets just hope the Personal Guarantee has some legs I didn't think there was a personal guarantee for this loan - just the building/site security. Maybe I missed something? I seem to recall Moneything saying they always have a PG but as we all hold them in such low regard don't mention them, if there isn't, I can't see what the part of the update referring to ongoing recovery attempts could apply to.
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rick24
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Post by rick24 on Jan 13, 2018 12:26:31 GMT
I didn't think there was a personal guarantee for this loan - just the building/site security. Maybe I missed something? Then we are all toast. Only 30% toast if the current offer is accepted (c. 70% recovery).
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madpierre
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Post by madpierre on Jan 13, 2018 12:32:25 GMT
Only 30% toast if the current offer is accepted (c. 70% recovery). Dry toast then - so not very palatable
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rxdav
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Post by rxdav on Jan 13, 2018 18:58:39 GMT
Well it looks like my first significant hit on P2P after a number of years (perhaps it was inevitable sooner or later) - I can only hope that as a figure has been alluded to (i.e. a 30% loss of capital) that this will be the worst case scenario? I've looked at my involvement in this loan and quite frankly, given the same scenario I would likely do the same again based on information provided at the time - but it does seem that something was seriously awry here from day one? The loan seemed to be filled, drawn down and defaulted in little more than the blink of the proverbial eye. Furthermore, it appears that MT have no intention of offsetting any loss to lenders even given it has been fundamentally caused by a seriously inaccurate VR - which MT accepted and put to lenders as the basis of their security?
I have just reduced my exposure to MT (I doubt I'm alone) - and henceforth will lend to nobody on any proposal whatsoever at an LTV of greater than 60%. Funnily enough, (actually maybe not so funny) one of my initial criteria on P2P (back in 2014) was to not lend to any proposal with LTV greater than 60% - but I clearly wasn't disciplined enough. It's not just MT - I'm aware of that - but as others have already suggested, it seems P2P is becoming an increasingly risky and fragile enterprise as more platforms chase limited business opportunities - and seemingly erode their already slim margins of safety (for lenders ostensibly) in the process.
I'll give this serious thought before I make a decision about P2P overall - but all the evidence suggests the good times are well and truly over. Is it worth persevering henceforth - I'm really not sure at this juncture. The stock market is also becoming increasingly frothy - but it may be a while yet before that bubble bursts? One thing is for sure - I'll be holding onto my gold - whilst the opportunity cost may be significant it could yet prove a saviour in the next few years.
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bababill
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Post by bababill on Jan 14, 2018 0:07:23 GMT
I didn't think there was a personal guarantee for this loan - just the building/site security. Maybe I missed something? I seem to recall Moneything saying they always have a PG but as we all hold them in such low regard don't mention them, if there isn't, I can't see what the part of the update referring to ongoing recovery attempts could apply to. Yes, I also do recall MT mentioning they always have a PG. Anyone else recall the same? Recently FK paid out XX on the £ as a result from a windfall on a PG. So even if we can get something back its worth exploring.
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trevor
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Post by trevor on Jan 14, 2018 10:30:16 GMT
I suspect the only winners from chasing PG's are the lawyers.
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johni
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Post by johni on Jan 14, 2018 10:33:40 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). P2P platforms aren't able to guarantee losses (unlike FSCS) and FCA would look askance at the platform risk. Timely, transparent data for any non-performance should help provide investor protection under the current regulations (ie to encourage innovation whilst investors are kept up to date with risks). This in no way solves the problem of dodgy valuation reports this just allows for the loan to be quickly passed off to someone else at the first sign of trouble. If all loans had to be held to the end a lot more people would care about the valuation reports. In fact I believe people are buying loans on all platforms knowing it has a dodgy valuation because they will pass it off at the first sign of trouble or well before the end leaving someone else to pick up the loss. Platforms and investors both should be looking at this. If th VR report looks inadequate let the platforms know but more importantly don't invest, if platforms can't get loans away they then have to look at the valuation reports they cant survive unless we invest.
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IFISAcava
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Post by IFISAcava on Jan 14, 2018 12:12:26 GMT
I suspect the only winners from chasing PG's are the lawyers. In the longer term though it may help "keep people honest" if they know they will be bankrupted via the PG if the loan fails rather than the PG just being ignored as not cost effective for that loan in isolation.
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bababill
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Post by bababill on Jan 14, 2018 13:40:20 GMT
I suspect the only winners from chasing PG's are the lawyers. Hi.. Perhaps I was not properly clear.. I have received a payout from FundingKnight through a payment from a PG. Three parties were involved, two went bankrupt, the third claimed his signatures were forged and had handwriting tests to try and verify this. A long story short, the gentleman involved decided it was best to liquidate all assets and pay off as much as he could. This was a company that made software games in Wales with funding/subsidies from the British Government. They also had loans on TC. Anyhow- Even though I have many complaints, I would like to thank MT for making (hopefully) this default as quick as possible and not let it linger.
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trevor
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Post by trevor on Jan 14, 2018 22:26:48 GMT
I understood your point Bababill. My point is that some platforms Rebs being the worst offender followed by FS made out that PG offered a security which was not worth the paper it's printed on if the borrower is bankrupt due to the loan defaulting which normally occurs. You getting a return from a claim on the PG is almost as rare as hens teeth. Rebs are now making a show of chasing defaulted borrowers but money to the lender is pitiful.
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Post by elephantrosie on Jan 16, 2018 0:48:38 GMT
P2P platforms aren't able to guarantee losses (unlike FSCS) and FCA would look askance at the platform risk. Timely, transparent data for any non-performance should help provide investor protection under the current regulations (ie to encourage innovation whilst investors are kept up to date with risks). This in no way solves the problem of dodgy valuation reports this just allows for the loan to be quickly passed off to someone else at the first sign of trouble. If all loans had to be held to the end a lot more people would care about the valuation reports. In fact I believe people are buying loans on all platforms knowing it has a dodgy valuation because they will pass it off at the first sign of trouble or well before the end leaving someone else to pick up the loss. Platforms and investors both should be looking at this. If th VR report looks inadequate let the platforms know but more importantly don't invest, if platforms can't get loans away they then have to look at the valuation reports they cant survive unless we invest. agree agree agree
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