Zopa winding up the Safeguard fund

Froggitt2

I missed this totally, https://secure2.zopa.com/lender/communication/safeguard_wind_down they've just sent out emails saying how much of the fund each investor will receive.

We'll be apportioning what's left in the fund based on the expected defaults in Classic and Access for each investor over the next two years. Therefore, those who have more loans which have been impacted by the Coronavirus will receive a higher proportion of the remaining balance in the fund.

and

 it's likely that the payment outlined above will not fully compensate you for all future defaults

Fortunately I have withdrawn most of the funds to cash as the loans were repaid once the Safeguarded reinvestments were no more. However I still have a four figure sum tied up there. I've never sold loans before....can you find out how much a loan will repay before putting it up for sale? I am guessing that the rates 3 or 4 years ago when these were taken out are higher than today's rates.....is that right?

DireEmblem

It’s a shame they got rid of this feature to be honest.  I’ve never fully understood the reason why.

Just treat it as a windfall if/when received.

DiggerUK

It is a consistent feature of P2P news that none of it is ever positive. Anybody considering 'a speculative punt' should consider Premium Bonds instead..._

Froggitt2

DireEmblem said:

It’s a shame they got rid of this feature to be honest.  I’ve never fully understood the reason why.

Just treat it as a windfall if/when received.

But it's there to cover defaults, not to be free money.
What is the current default rate like for non protected accounts?

Aceace

Froggitt2 said:

I missed this totally, https://secure2.zopa.com/lender/communication/safeguard_wind_down they've just sent out emails saying how much of the fund each investor will receive.

We'll be apportioning what's left in the fund based on the expected defaults in Classic and Access for each investor over the next two years. Therefore, those who have more loans which have been impacted by the Coronavirus will receive a higher proportion of the remaining balance in the fund.

and

 it's likely that the payment outlined above will not fully compensate you for all future defaults

Fortunately I have withdrawn most of the funds to cash as the loans were repaid once the Safeguarded reinvestments were no more. However I still have a four figure sum tied up there. I've never sold loans before....can you find out how much a loan will repay before putting it up for sale? I am guessing that the rates 3 or 4 years ago when these were taken out are higher than today's rates.....is that right?

If you go through the selling process it will tell you how much of your Loanbook is currently sellable before you actually commit to the sale. Loans with late payments aren't sellable. You have to pay a 1% sales fee for loans that weren't purchased under the old Access product. There may also be a Market Rate Adjustment, see below for Zopa's definition: 

Market rate adjustment

In the event you wish to cash out any Market Loan before it is repaid by selling it to another investor, there may be a market rate adjustment. This means you may not receive the full value of outstanding capital of your loan if it has a lower projected return than an equivalent new loan today.

Example: You may try to sell a loan with £10 of outstanding capital. If the projected return for a similar new loan today is the same as your loan and the borrower has not missed a repayment, the buying investor will pay you £10. If the projected return for a similar new loan today is higher than your loan and the borrower has been inconsistent with repayments then an appropriate market rate adjustment is made and the buying investor may pay you £9.80.

Any outstanding capital deducted from the buying investor’s purchase price represents the additional projected return they would expect to earn if they had acquired an equivalent new loan today.

Any market rate adjustments consider interest rate changes and how well your loans have been performing to date.

Aceace

DiggerUK said:

It is a consistent feature of P2P news that none of it is ever positive. Anybody considering 'a speculative punt' should consider Premium Bonds instead..._

There's plenty of good news in P2P. Sure there's bad news from some incompetent and crooked platforms of the past, and no doubt will be some more in the future, but there are many honest platforms out there that offer good value in today's very low interest rate environment. Many lower rate platforms offer a good middle ground between FSCS protected savings and S&S investments for very little risk to capital. (Zopa wouldn't make it in to my top 15 favourite platforms though).

Froggitt2

@Aceace this bit

 If the projected return for a similar new loan today is higher than your loan and the borrower has been inconsistent with repayments then an appropriate market rate adjustment is made and the buying investor may pay you £9.80

is there any way of find out how much of a haircut you're getting before you cash out? And if you have some investments with high rates, but current rates are low, do you get a supplement?

Exiled_Tyke

Froggitt2 said:

I missed this totally, https://secure2.zopa.com/lender/communication/safeguard_wind_down they've just sent out emails saying how much of the fund each investor will receive.

We'll be apportioning what's left in the fund based on the expected defaults in Classic and Access for each investor over the next two years. Therefore, those who have more loans which have been impacted by the Coronavirus will receive a higher proportion of the remaining balance in the fund.

and

 it's likely that the payment outlined above will not fully compensate you for all future defaults

Fortunately I have withdrawn most of the funds to cash as the loans were repaid once the Safeguarded reinvestments were no more. However I still have a four figure sum tied up there. I've never sold loans before....can you find out how much a loan will repay before putting it up for sale? I am guessing that the rates 3 or 4 years ago when these were taken out are higher than today's rates.....is that right?

I missed this too until today.  To reassure what others have said - you can get a quote for selling loans before you go ahead. However I think interest rates are high now as lending risk is much higher than it was before this year.  When I last looked into this the cost of selling out was prohibitive. 

Froggitt2

Exiled_Tyke said:

Froggitt2 said:

I missed this totally, https://secure2.zopa.com/lender/communication/safeguard_wind_down they've just sent out emails saying how much of the fund each investor will receive.

We'll be apportioning what's left in the fund based on the expected defaults in Classic and Access for each investor over the next two years. Therefore, those who have more loans which have been impacted by the Coronavirus will receive a higher proportion of the remaining balance in the fund.

and

 it's likely that the payment outlined above will not fully compensate you for all future defaults

Fortunately I have withdrawn most of the funds to cash as the loans were repaid once the Safeguarded reinvestments were no more. However I still have a four figure sum tied up there. I've never sold loans before....can you find out how much a loan will repay before putting it up for sale? I am guessing that the rates 3 or 4 years ago when these were taken out are higher than today's rates.....is that right?

I missed this too until today.  To reassure what others have said - you can get a quote for selling loans before you go ahead. However I think interest rates are high now as lending risk is much higher than it was before this year.  When I last looked into this the cost of selling out was prohibitive. 

I would have thought that as interest rates everywhere are lower than 3 years ago, Zopas would also be lower than 3 years ago.

Aceace

Froggitt2 said:

@Aceace this bit

 If the projected return for a similar new loan today is higher than your loan and the borrower has been inconsistent with repayments then an appropriate market rate adjustment is made and the buying investor may pay you £9.80

is there any way of find out how much of a haircut you're getting before you cash out? And if you have some investments with high rates, but current rates are low, do you get a supplement?

My bold.  In case you were serious, no, the Market Rate Adjustment is a one way street. Nice try though.