|
Post by Financial Thing on Nov 25, 2015 19:10:26 GMT
Financial Thing , what was the security model with Fruitful? Who are you lending to - Fruitful or the end-borrower? What about security - were the loans backed by assets? And finally is there a separate Trust of some kind to ensure sensible wind-down? I am surprised you've got so much back so soon - I guess this implies the loans have been sold on to some third party? Loans were ring fenced and between investor and end borrower, backed by property that the loans were made against. You can read about the wind down here
|
|
|
Post by Financial Thing on Nov 25, 2015 19:07:07 GMT
It looks as though Fruitful was funded in part via a £140k for 8% equity Crowdcube crowdfunding. Company value thus £1.75 million based on that value for 8%. I don't know why the news story has different values from the Crowdcube site. Anyone know what's happening to the money of the equity crowdfunding investors? I assume that they are facing a 100% loss of their money. Optionstrader isn't so badly off from getting 75% back early but the equity funders may not be and I'm not sure it's really very polite to have most of the initial replies to a possible serious loss of money be jokes. To be clear, Frutiful isn't closing their doors, just refocusing on mortgage lending. So I presume equity investors aren't losing anything.
|
|
|
Post by Financial Thing on Nov 25, 2015 17:48:02 GMT
and let the puns begin...
|
|
|
Post by Financial Thing on Nov 25, 2015 17:17:48 GMT
Fruitful's service was "bahhh" none
|
|
|
Post by Financial Thing on Nov 25, 2015 15:52:51 GMT
And a cautionary note with regard to this style of secondary market where you pay the seller for accrued interest ... most (possibly all ?) platforms add the whole of the interest received at the end of loan (i.e "purchased" interest as well as that accrued since the puchase) onto the taxable income statement AS WELL AS adding the "sold" interest onto the sellers taxable income statement. So the message is unless you want to pay upto 45% of the value of the purchased interest in tax, tread carefully. To understand, you're saying then when one purchases a SM piece, it's listed on tax statement so that one would be paying tax on the interest accrued prior to the purchase date? How does one avoid this?
|
|
|
Post by Financial Thing on Nov 25, 2015 14:53:51 GMT
When Fruitful opened its doors in Feb 2015, I decided to take a gamble and invested a four figure sum as I liked the staff communication, simplicity, liquidity, goats and the business model.
Several weeks ago I received an email stating Fruitful would be closing its doors to the P2P lending model of its business for several reasons. The email explained that a portion of invested returns would be credited immediately (75%) while the remaining 25% would be credited within 12 months.
I sent an email to Fruitful asking for more details but didn't receive one back. A little concerning to say the least.
As promised the 75% was received four weeks after the closing email.
Overall Fruitful was a good experience and I'm sure I will receive the remaining 25% (with interest) at some point but needless to say this is an email you don't want to see in your inbox and is a reminder of the risk that is P2P lending and how if a platform closes its doors, how little recourse there is for the average investor without paying hefty lawyer fees.
|
|
|
Post by Financial Thing on Nov 25, 2015 14:26:37 GMT
Awaiting Investment = obvious Lent From Idle Funds = What's currently invested in the QAA? Direct Investment = What's currently invested in the QAA? I still don't know how much I have inside this mysterious QAA "Lent from Idle Funds" means how much has been lent in the QAA from your idle funds (swept from the MLIA, GEIA and GBBA) "Direct Investment" means how much you have invested directly into the QAA (ie. not idle funds from the other accounts) Thanks. So the Idle + Direct = total amount invested in QAA?
|
|
|
Post by Financial Thing on Nov 25, 2015 14:15:29 GMT
Just to clarify - all of our loans are true peer-to-peer loans. The individual contracts are between the borrower and the investors - with FundingSecure only acting as an agent and trustee on behalf of the investors. For each loan you invest in you can download a certified copy of the actual loan details to verify your holding. In the event of FundingSecure becoming insolvent the contracts would remain in place and would not form any part of FundingSecure assets. You are right in asking the question as there are a number of platforms that claim to be peer-to-peer but are simply lending money and then borrowing it from investors. In the event of their insolvency you would effectively be an unsecured creditor, with no direct claim on any particular loan. There are also several variants where individual platforms may have trusts to handle loans or reassign contracts - you would need to check each platform out carefully to verify the actual position. Hope this helps to clarify FundingSecure's position - there are a number of threads on these forums relating to this topic. If you are investing in (or considering investing in) any specific platform I would suggest searching the individual forums and asking the same question if it is not clear. FundingSecure fundingsecure Thanks for the explanation. So in the event of insolvency, who would handle these loans and how often is your loan book given to this 3rd party for record keeping?
|
|
|
Post by Financial Thing on Nov 25, 2015 14:11:53 GMT
Awaiting Investment = obvious Lent From Idle Funds = What's currently invested in the QAA? Direct Investment = What's currently invested in the QAA? I still don't know how much I have inside this mysterious QAA
|
|
|
Post by Financial Thing on Nov 24, 2015 19:24:46 GMT
Yes for MT, no for FS AFAIUI. However, MT legally assigns you your part of loan. Somewhere there are multiple threads on this I don't see anywhere on either MT or FS websites that explains who you are loaning money to.
|
|
|
Post by Financial Thing on Nov 24, 2015 19:22:42 GMT
Thanks, that is very helpful
|
|
|
Post by Financial Thing on Nov 24, 2015 17:31:36 GMT
The other thing to take into account is that it's perfectly normal for a borrower to use the interest buffer on many loans. They're there for a reason, to help smooth cash flow for things like rental properties that will have occasional dead periods, and it's also usual for borrowers to use the buffers towards the end of the loan so that they're zero by the time the loan is repaid. So in some instances a big flag would be appropriate but in others it would not and could spook the less informed lenders into an unnecessary exit from a good loan. There's a careful balance to be found. Thanks for your comments and completely agree on showing the big issues versus normal situations. So how is a lender supposed to know when a borrower is using the interest buffer for normal actions versus out of desperation?
|
|
|
Post by Financial Thing on Nov 24, 2015 17:20:01 GMT
chris Mark From a transparency standpoint, it would be nice if AC noted in the flag area if a loan was being paid from the interest buffer. I know it's a lenders responsibility to read through all the notes and docs, but it's time consuming work and sometimes this info isn't easy to find. Nothing worse than finding you invested into a loan that was in trouble.
|
|
|
Post by Financial Thing on Nov 24, 2015 16:28:27 GMT
Hopefully James is now happy and you'll be happy to help me. I have a couple of the easier P2P's set up namely Wellesly and RS and want to spread 2 x 2K across to MT and MS. As these platforms operate in a different way I'd appreciate some help in how you'd go about setting up your lendings as a newbie, till I'm acquainted with it. I'm aware that a couple of the lends will be complete in the morning and maybe there maybe no more for a while. Do I deposit funds in anticipation or will I receive email notification of impending loans, can I set up an intention of lending say at minimum rate of all intended loans etc. Can you guys give me a "Dummies for" procedure for getting me started - assuming I'm not treading on your toes MS? FS- email notification of loans due to launch & start time. All lending on individual loan basis, no prefunding, autolend. Fund account by FP & complete onsite deposit form. Funds credited usually within hour. Log on just prior to loan time and then refresh until appears in available list, then invest (24hr max amount invest limits). Larger loans will hang around, most go in minutes. May not drawdown immediately so some dead time. No SM, loans 6 months, some renew and can opt to renew existing holding. Suggest only fund account for that days loans. Term interest. Fairly regular loan flow, several a week MT- email notification of launch & time. Again no prefunding, autobid. Same funding set up as FS, though potentially even faster to credit. Again log in at launch and bid (24hr max bids) can go within minutes depending on size. Drawdown immediately. no SM, option to roll renewals, email notification few days in advance. Again no point keeping cash in account. Monthly interest. Slower loan flow, 1 or 2 a week at most Current MT loan slightly different due to size, 2 week funding period Don't forget that both MT & FS, I believe legally you are lending to the platforms (no ring fencing) rather than directly to the borrowers, added risk in involved hence the interest rate.
|
|
|
Post by Financial Thing on Nov 24, 2015 15:47:38 GMT
My strategy was to stay away from new loans and only buy SM loans that had been paid on time for several months with zero late payments. You pay a premium but doesn't matter as interest rates are still high and the defaults are minimal. Working well so far, only experienced one default.
|
|