16-08-2018, 10:40 PM
Today FS announced: "Although we are continuing to work towards further recovery it is clear that there will be a shortfall on the first facility, leaving no funds to repay this supplemental loan. As the borrower is in bankruptcy, no significant additional recovery is foreseen. We will therefore, regrettably, be closing this loan with no recovery."
The loan? 3867743062 "Property in Knaresborough - 2nd loan" which even though called a '2nd loan' in the title was actually a 3rd ranking charge (and ay have even been 4th if the wife challenged FS' legal opinion and won, but that is very much a moot point now).
16% really didn't reflect the risk on this one, but I can see how some would have been drawn in given the (mathematically correct, using the supplied numbers) LTV of 63%.
Some discussion as to whether FS can sue the valuer. Seems to me that three desktop valuations were undertaken and FS effectively plumped for the middle one. Probably unlikely, therefore, that a Valuation for loan purposes had been contractually entered into. Ergo - no one is on the line for negligence.
If I'm reading the updates correctly, BTL1 may return another £70k. (Somewhat crudely I've taken the BTL2 return of £75k and divided it by the originally quoted anticipated net equity figure of £167k, and then multiplied the result by the originally quoted anticipated net equity figure of £159k) That would represent another 11% of the 'main' loan holders £625k loan, a 23% return in total.
(In some respects, those 'main' loan holders may consider themselves lucky those other securities were taken, otherwise they'd be also be looking down the barrel of a big fat zero along with the 3rd charge holders.)
Lessons learned? Hopefully FS will have picked up on one or two 'doh' moments - must admit to laughing in astonishment when reading FS were going on Zoopla for the BTL valuations!; and probably getting IMS reports at the outset and as the build 'progressed' might have avoided things like the £625k being spent to get the house completed but there still not being any heating installed when that money ran out.
Lessons for potential P2P lenders? Well this one won't be entering any junior ranking loans on development projects. Not at 15% or 16%, anyway.
The loan? 3867743062 "Property in Knaresborough - 2nd loan" which even though called a '2nd loan' in the title was actually a 3rd ranking charge (and ay have even been 4th if the wife challenged FS' legal opinion and won, but that is very much a moot point now).
16% really didn't reflect the risk on this one, but I can see how some would have been drawn in given the (mathematically correct, using the supplied numbers) LTV of 63%.
Some discussion as to whether FS can sue the valuer. Seems to me that three desktop valuations were undertaken and FS effectively plumped for the middle one. Probably unlikely, therefore, that a Valuation for loan purposes had been contractually entered into. Ergo - no one is on the line for negligence.
If I'm reading the updates correctly, BTL1 may return another £70k. (Somewhat crudely I've taken the BTL2 return of £75k and divided it by the originally quoted anticipated net equity figure of £167k, and then multiplied the result by the originally quoted anticipated net equity figure of £159k) That would represent another 11% of the 'main' loan holders £625k loan, a 23% return in total.
(In some respects, those 'main' loan holders may consider themselves lucky those other securities were taken, otherwise they'd be also be looking down the barrel of a big fat zero along with the 3rd charge holders.)
Lessons learned? Hopefully FS will have picked up on one or two 'doh' moments - must admit to laughing in astonishment when reading FS were going on Zoopla for the BTL valuations!; and probably getting IMS reports at the outset and as the build 'progressed' might have avoided things like the £625k being spent to get the house completed but there still not being any heating installed when that money ran out.
Lessons for potential P2P lenders? Well this one won't be entering any junior ranking loans on development projects. Not at 15% or 16%, anyway.