Anyone using collateral p2p?

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  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    bigadaj wrote: »
    It's just that the number of non performing loans has been increasing and for 1% a month then risk to capital and losses are still concerns.

    That's simply the nature of business lending. Certainly no benefit to the platform to have bring their reputation into disrepute generated by poor decision making at the outset. .
  • masonic
    masonic Posts: 23,275 Forumite
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    edited 12 March 2017 at 11:14AM
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    Thrugelmir wrote: »
    That's simply the nature of business lending. Certainly no benefit to the platform to have bring their reputation into disrepute generated by poor decision making at the outset. .
    Note: the following information is about SavingStream, not the subject of this thread, Collateral.

    It's not all business lending at SS. Loans are to a mixture of businesses and individuals. In fact, for one of the loans that went into default, the platform claimed the borrower was an individual when it was in fact a company and they also claimed the loan was 70% LTV when in fact they advanced the borrower 100% of the purchase price of the property plus funds to cover the first 6 months of interest.

    For the above loan, the platform also claimed planning permission had been granted for a development on the land adjoining the property when it hadn't and when the planning decision eventually went against the borrower, they were able to simply walk away from the loan having not risked/lost a penny of their own money, This left the platform (who, incidentally, had an undisclosed 10% stake in the borrowing company) to dispose of the property. The property was valued at £2.4m, but eventually sold after 9 months for £1.3m (purchase registered at the land registry when the money was lent was £1.45m, so it wasn't a bad result, but the valuation was way off because the valuer was misled at to the planning permission status and didn't bother to check).

    So I think there's plenty to bring the platform into disrepute in the handling of the above loan by the platform, and there's about half a dozen other examples of misleading statements being made about other loans.

    Non performing loans (in which interest is in arrears and not being serviced by the borrower) now represent 25%* of the total loan book. For a long time, this was hidden from lenders on the platform, with the platform itself servicing interest payments to lenders without any mention that the borrowers weren't paying interest.

    * this figure is now out of date. Currently 46% of the SS loan book is in interest arrears
  • mapk
    mapk Posts: 157 Forumite
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    masonic wrote: »
    Note: the following information is about SavingStream, not the subject of this thread, Collateral.

    It's not all business lending at SS. Loans are to a mixture of businesses and individuals. In fact, for one of the loans that went into default, the platform claimed the borrower was an individual when it was in fact a company and they also claimed the loan was 70% LTV when in fact they advanced the borrower 100% of the purchase price of the property plus funds to cover the first 6 months of interest.

    For the above loan, the platform also claimed planning permission had been granted for a development on the land adjoining the property when it hadn't and when the planning decision eventually went against the borrower, they were able to simply walk away from the loan having not risked/lost a penny of their own money, This left the platform (who, incidentally, had an undisclosed 10% stake in the borrowing company) to dispose of the property. The property was valued at £2.4m, but eventually sold after 9 months for £1.3m (purchase registered at the land registry when the money was lent was £1.45m, so it wasn't a bad result, but the valuation was way off because the valuer was misled at to the planning permission status and didn't bother to check).

    So I think there's plenty to bring the platform into disrepute in the handling of the above loan by the platform, and there's about half a dozen other examples of misleading statements being made about other loans.

    Non performing loans (in which interest is in arrears and not being serviced by the borrower) now represent 25% of the total loan book. For a long time, this was hidden from lenders on the platform, with the platform itself servicing interest payments to lenders without any mention that the borrowers weren't paying interest.

    The new SS descriptors aren't exactly explicit either. I may be wrong here, but understand that those loans labelled IA (Interest accruing. Interest is only payable if enough capital is received) are best avoided. Perhaps someone could clarify this and whether SBL status loans (Serviced by Lendy) are also ones to steer clear of.
  • masonic
    masonic Posts: 23,275 Forumite
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    mapk wrote: »
    The new SS descriptors aren't exactly explicit either. I may be wrong here, but understand that those loans labelled IA (Interest accruing. Interest is only payable if enough capital is received) are best avoided. Perhaps someone could clarify this and whether SBL status loans (Serviced by Lendy) are also ones to steer clear of.
    Performing loans are the ones marked IOA (interest on account). All others are non-performing to various degrees, Loans will not be formally defaulted until they are >180 days in interest arrears.

    Interest for loans marked SBL are being paid by the platform, but in my view should be steered clear of. I wouldn't hold anything on the platform at the moment, because the platform risk (i.e. risk of collapse) is too high, but if I were ok with that, I'd not hold any loans with with less than 90 days remaining term.
  • JohnRo
    JohnRo Posts: 2,887 Forumite
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    I still have a few £K with SS which I'm slowly selling out of and to me the loan book schedule is starting to look like a slow motion train wreck.

    Surely there's going to come a point, if current trends are any indication, where Lendy simply won't have the means to hold it all together?
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • masonic
    masonic Posts: 23,275 Forumite
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    JohnRo wrote: »
    Surely there's going to come a point, if current trends are any indication, where Lendy simply won't have the means to hold it all together?
    That seems increasingly likely. I made a quick exit because I think long before the wheels come off there will be liquidity problems on the secondary market.

    I think there are still a lot of people buying into loans in the belief they will receive monthly interest when in fact they will not, and may receive no interest at all. When that realisation hits home I expect there will be a run on all affected loans.

    The FCA is also likely to object to current arrangements where Lendy is using its own capital to fund interest payments and top up the provision fund. It may require further changes to the T&Cs that protect Lendy's finances at the expense of its customers.
  • takesyourchances
    takesyourchances Posts: 828 Forumite
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    Out of interest those using Collateral, what average amounts would you normally invest per loan?

    I have started off with a couple so far, £100 on the first and then £25 on the second and thinking to now go with £25 each loan to build the spread up. It'll be interesting to see how this platform works now a couple are underway.

    Thanks
  • masonic
    masonic Posts: 23,275 Forumite
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    takesyourchances wrote: »
    Out of interest those using Collateral, what average amounts would you normally invest per loan?
    No more than 1% of the total money I have invested in P2P across all platforms I use. Usually less due to limits on new loans. I started off at £25-50 per loan until I had reasonable diversification within Collateral.
  • takesyourchances
    takesyourchances Posts: 828 Forumite
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    masonic wrote: »
    No more than 1% of the total money I have invested in P2P across all platforms I use. Usually less due to limits on new loans. I started off at £25-50 per loan until I had reasonable diversification within Collateral.

    Thanks for that, I think I will stick to £25 going forward for the meantime with Collateral to build the diversification up within that platform, my Funding Circle account is no more than 1% per loan and it is at over 100 companies now and then I have my other P2P with Ratesetter and Zopa.

    I like the interface for using Collateral as well from signing up. Thanks again!
  • takesyourchances
    takesyourchances Posts: 828 Forumite
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    I am slowly getting a few loans underway with Collateral, it will take time to build it up as the loans seem to be slow in appearing, but I will stick with it and try to get invested into some more of the loans as they come up.

    Anyone else using Collateral, how long has it taken you to build up a reasonable spread invested?

    Thanks
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