Harmoney

[jallison]

Lack of investment in Harmoney market place may in hindsite be a good thing 180000 principle in Nov2018 now down to 115000 and writeoffs have jumped from under 5000 to just over 8000 in that time although my investment parameters have been the same
Has anybody else experiencing high white off lately

[myles]

Has anybody else experiencing high white off lately

I noticed a bit of a jump early in the new year, but thought that was a processing catch-up (pretty sure a similar jump last year). Overall my charge offs are tracking fairly consistently.

How old is your portfolio? Depending on when you invested the bulk of your $'s there is typically a significant hit of defaults as they work through - typically this is anywhere between 9 months (if you invest quickly) and 14 months (if you ramp up from a slower start).

[BJ1]

Jallison: I have experienced an increase in arrears and subsequent write-offs in recent months, some arrears appearing for the first time with more than one instalment unpaid. I'm not convinced that arrears management meets industry standards, nor do I have confidence in the process whereby our investments are onsold to other parties - I've never seen or heard of any external audit around this procedure.

[jallison]

3 and a half years slow at first but 120000 steadily over last 2 years. don't get me wrong happy with returns 15.4% rear and 70000 interest but thought my greater writoffs may reflect slowing economy

[myles]

The second graph in this post shows my last ~6 months of charge offs (orange) and reducing arrears. If you draw a straight line through the orange graph, that's pretty consistent for me. It's difficult to generalise as all portfolios are different. Just as an example; you may have purchased a lot of loans last Christmas that are now defaulting, where I didn't - so many variables.

[beacon]

I agree that it is not in the 'spirit' of what most think P2P to be, but does that matter?

Myles, I respect you for what I have learnt from your posts here in the last 2 years, and for the care and effort visible in your contributions to-date, but I think integrity matters. It should matter. Here is a little something from Warren on the matter of executive integrity (http://www.berkshirehathaway.com/letters/2018ltr.pdf )

Over the years, Charlie and I have seen all sorts of bad corporate behavior, both accounting and operational, induced by the desire of management to meet Wall Street expectations. What starts as an “innocent” fudge in order to not disappoint “the Street” – say, trade-loading at quarter-end, turning a blind eye to rising insurance losses, or drawing down a “cookie-jar” reserve – can become the first step toward full-fledged fraud. Playing with the numbers “just this once” may well be the CEO’s intent; it’s seldom the end result. And if it’s okay for the boss to cheat a little, it’s easy for subordinates to rationalize similar behavior...

[myles]

That, I believe, is one of the main issue with P2P in NZ, it (peer-to-peer) was never clearly defined by ComCom.

The whole concept of peer-to-peer is more about doing away with the central controlling entity and allowing peers to more closely interact with each other. Within the constraints of privacy and security, this is how the Harmoney platform works, both for retail and institutional investors.

I agree that it is not in the 'spirit' of what most think P2P to be, but does that matter?

but I think integrity matters. It should matter.

I wrote that from the perspective of the FMA and whether any action could be taken to change the current situation i.e. does it matter to them/can they do anything about it.

[beacon]

I wrote that from the perspective of the FMA and whether any action could be taken to change the current situation i.e. does it matter to them/can they do anything about it.

Sure, and I was hoping that my comments about integrity get shown to the Harmoney CEOs, so FMA doesn't have to get involved.

[beacon]

Or 100% if that's what it takes for them to continue. Would that be grounds for any action - quite possibly not.

100% loan allocation to instos should be grounds for revocation of any P2P organisation's P2P license. In fact, majority loan allocation to instos over sustained periods, as Harmoney has done since inception, goes against the P2P grain too, but was perhaps allowed by ComCom so this sector could open up as a viable alternative to traditional banks in the small economy of NZ.

What is happening here now is quite different, in that instos are sidelining the small lender here - and the retail lenders are being forced to withdraw capital as it is sitting idle for long periods, while wholesalers have been getting their fill. And new wholesalers are joing the Q...

In the P2P queue, wholesalers should be waiting their turn to get their fill, not the retail lenders. A lot of money is soon going to be repaid to kiwis via imminent redemptions. Harmoney should be aiming to dial down the instos to 49% (and not upping them to 85% or higher) as the retail lenders become more comfortable partnering with Harmoney. As sophisticated investors, wholesalers have multiple alternative avenues for investment which are closed off to the small guy.

[Bjauck]

I wrote that from the perspective of the FMA and whether any action could be taken to change the current situation i.e. does it matter to them/can they do anything about it.

I guess that if the current P2P regulations allow the licensee operator (Harmoney) to regulate lender peers and restrict certain loans to particular lender peers then Harmoney is safe from action. Otherwise, if their licence is silent on the issue, there could be the possibility of litigation on discriminatory practice.