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  1. #341
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    Quote Originally Posted by Saamee View Post
    The SM Reserve Fund dropped by 33K overnight!

    Coverage Ratio also dropped from 2.49% to 2.1%

    A rather large Write Off!

    Attachment 9067 Attachment 9068
    I get a response of invalid attachment when I click on the links.

    If SM decide to increase the contribution rate to the Reserve Fund, would that come out of the interest paid to investors? Would it apply to existing investments or just to future investments?

  2. #342
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    Jan 2017
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    Quote Originally Posted by Saamee View Post
    The SM Reserve Fund dropped by 33K overnight!

    Coverage Ratio also dropped from 2.49% to 2.1%

    A rather large Write Off!

    Attachment 9067 Attachment 9068
    The Reserve Fund has been this low before and it will not take long to build up again. I'm just happy to have a fund to cover the loan defaults. SM's Reserve Fund is much better even than LC's vehicle security which might only cover half of the loan value.

  3. #343
    Advanced Member Entrep's Avatar
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    Woah that is a big write off. Wonder if it was one loan or many?

  4. #344
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    Quote Originally Posted by Saamee View Post
    The SM Reserve Fund dropped by 33K overnight!

    Coverage Ratio also dropped from 2.49% to 2.1%

    A rather large Write Off!

    SM RF BAL.jpg SM RF BAL 1.jpg



    Strange I could see them OK - Uploaded again

  5. #345
    Squirrel Mortgages (Verified) JB@Squirrel's Avatar
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    Quote Originally Posted by emerald View Post
    I see that borrowers with lower credit ratings can pay 16.95% to 17.95% interest on Squirrel. Has anyone out there invested in a loan and received a higher rate than 9%?
    Hey Emerald,

    The way the platform works is that we pay investors a set maximum rate by term (that we can change depending on supply and demand) but which we haven't moved since soon after launch. So for 5 years that is 9.00%. Investors can bid below that level to get their money invested faster.

    With an unsecured 5 year E grade loan at 16.95% the difference is the risk premium which is paid into the reserve fund which then takes the credit risk. As such your return doesn't change depending on risk grade. In the event the reserve fund was depleted then we can haircut investor interest to replenish it thus socialising the loss by reducing investor returns. This maximises diversification but keeps investing simple.

    Cheers, JB

  6. #346
    Squirrel Mortgages (Verified) JB@Squirrel's Avatar
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    Quote Originally Posted by RGR367 View Post
    Yeah, unfortunately I only want to lend on a 2 yr term as I got too much out already on those 3 and 5 yr terms. Hoping I don't move out of my comfort zone for this one.
    Hey RGR,

    Remember that consumer finance loans typically pay back way faster than term. You also have the secondary market so can sell your loans at any point of time. To date 5 year loans have sold very quickly especially when at close to 9.00% due to strong investor demand.

    Cheers, JB

  7. #347
    Squirrel Mortgages (Verified) JB@Squirrel's Avatar
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    Quote Originally Posted by Saamee View Post
    The SM Reserve Fund dropped by 33K overnight!

    Coverage Ratio also dropped from 2.49% to 2.1%

    A rather large Write Off!

    Attachment 9067 Attachment 9068
    You guys are fast! It was one loan of $33,000 secured over a house where his business has gone under and took the house out too! It was a C grade. It had been in arrears for a while so good to write it off. We'll still look to recover what we can.

    In the early days we're going to have swings like this, but they'll decrease and the reserves will grow faster.

    The book is now at $10m so we are reserving around $16,000 per month.

    In the first 6 months after launch (our first two cohorts) we had most of the write-offs. This is the biggest single write-off but the arrears rate is stable and declining as that part of the book runs off. We know the intimate details of each write-off as there has only been 6 totalling $100,000. We review every default against policy to identify policy/process weaknesses and then close the gaps. More recent cohorts are performing very well with next to no arrears and no surprises.

    Defaults tend to spike around 12 months. Earlier then that is usually fraud related and we're not seeing any recent defaults which is good. Our arrears rate is very low at 1.70% overall and 2.80% on the older book.

    What's working really well for us now (as we've evolved and learned and adapted) is that 100% of bank data comes to us electronically, we have comprehensive credit reporting, multiple credit bureaus, and tighter policy around self-employed and some migrant segments based on what we've observed in the book. We are constantly looking at ways to improve our credit decisions and are looking to publish more data to the web site.

    Cheers, JB

  8. #348
    Advanced Member Entrep's Avatar
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    Love the engagement JB. Thumbs up from me.

  9. #349
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    Quote Originally Posted by JB@Squirrel View Post
    You guys are fast! It was one loan of $33,000 secured over a house where his business has gone under and took the house out too! It was a C grade. It had been in arrears for a while so good to write it off. We'll still look to recover what we can.

    In the early days we're going to have swings like this, but they'll decrease and the reserves will grow faster.

    The book is now at $10m so we are reserving around $16,000 per month.

    In the first 6 months after launch (our first two cohorts) we had most of the write-offs. This is the biggest single write-off but the arrears rate is stable and declining as that part of the book runs off. We know the intimate details of each write-off as there has only been 6 totalling $100,000. We review every default against policy to identify policy/process weaknesses and then close the gaps. More recent cohorts are performing very well with next to no arrears and no surprises.

    Defaults tend to spike around 12 months. Earlier then that is usually fraud related and we're not seeing any recent defaults which is good. Our arrears rate is very low at 1.70% overall and 2.80% on the older book.

    What's working really well for us now (as we've evolved and learned and adapted) is that 100% of bank data comes to us electronically, we have comprehensive credit reporting, multiple credit bureaus, and tighter policy around self-employed and some migrant segments based on what we've observed in the book. We are constantly looking at ways to improve our credit decisions and are looking to publish more data to the web site.

    Cheers, JB
    Yes, Good on you JB for the upfront honesty and transparency.

    It will take you much further than Metiria Turei!

  10. #350
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    Had a loan repay in full yesterday about 9 months into a 3 year term. Was able to reinvest immediately so no worries. It actually makes sense to me that people borrowing in this way would knock the loan on the head as circumstances allowed. Main thing is to get the rate of interest on the money invested and be able to roll it on to someone else when someone repays.

    A further 51,000 awaiting funding at 9% for 5 years at the moment according to the portal

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