Harmoney

[leesal]

On the other hand HM held 8m in cash as of Mar17.

Considering it burned through 4m last year (funded in whole by share issuance), HM could only invest with safety if it had guaranteed access to capital.

[myles]

See Page 9 of the investor disclosure agreement (below). It suggests very clearly that the new wholesaler (Harmoney), invests on behalf of all wholesale investors, completely separate from P2P

That has not changed? It means retail investors cannot invest as a wholesaler - there are quite different requirements - appropriate I think?

[XxOrooxX]

I've already taken excess funds out of the platform.

I've started to think about whether our calculated RARs are a true representation of the return were getting. Calculated RAR is the sum of the interests paid less fees and dishonored loans projected for the year. But your sum will include interest from recently funded loans that have a probability of default not taken into account in the annual projection. Essentially if you were to stop funding new loans and let your funded loans run their course you can probably expect a lower return than your calculated RAR.

Thoughts?

[leesal]

The latest disclosure statement is set out much more exacting then the 16 March 2018 investor agreement, which is rather vague on wholesale and no mention of distinct marketplaces and random allocations.

IF HM is using its own 8m? cashpile - was there any mention which marketplace they'd access?

Either way according to the T&C's HM is free to change around the allocations between wholesale and P2P. If its only investing its 8m (and trimming back retail while it does so) , it should take 3 months to push it all through.

[Investor]

I've already taken excess funds out of the platform.

I've started to think about whether our calculated RARs are a true representation of the return were getting. Calculated RAR is the sum of the interests paid less fees and dishonored loans projected for the year. But your sum will include interest from recently funded loans that have a probability of default not taken into account in the annual projection. Essentially if you were to stop funding new loans and let your funded loans run their course you can probably expect a lower return than your calculated RAR.

Thoughts?

They provide RAR as a historical result which may not be indicative of your future return. They are not making any promises about your future returns.

[myles]

IF HM is using its own 8m? cashpile - was there any mention which marketplace they'd access?

They are a wholesale investor.

[RMJH]

Harmoney accesses the wholesale market, which isn't part of P2P so wont get reflected on RAR.

Reading further Wholesalers get access to the wholesale market and P2P platform. So everything will continue much as it does, although the volume will be reduced potentially significantly depending on the allocation policy.

Having not read the latest disclosure statements I was assuming that Harmoney would be treated just like other wholesale lenders on the platform who are included in RAR (but clearly with no fees the returns would be higher). However I think you are suggesting that there is now effectively another platform for just wholesale (possibly with continued presence on the P2P platform being loan run-out). This would make me a little uneasy if they don't report the results of the new wholesale platform form too as we have no check on the fairness of loan allocations. It should be noted that one of the major shareholders is also a wholesale client so maybe they are moving to direct investment to improve returns?

[myles]

Below is the relevant section from the email Harmoney sent out (4 May is when I received it):

Lender documentation:
The Investor Agreement and Disclosure Statement have been updated to reflect a new funding structure that allows Harmoney to invest in loans as another wholesale lender, putting its capital at risk just like you. This lending will be subject to the same controls as other wholesale lenders as described in the Disclosure Statement. The Privacy Policy is also being updated. You can review these agreements via the corresponding links or the first time you enter the marketplace in your lender account from 8th May 2018.

I do not believe there is 'another platform for just wholesale' - little has changed in respect to the platform, changes/additions have been made to various documents to allow Harmoney to invest in the platform. I suspect that the structure that they set up will see them pay fees etc. the same as all other wholesale lenders - it is a separate 'entity' that is investing so cannot be seen to be at an advantage - the whole point of all the document changes...

[myles]

I've reached another milestone in the last few days:

Recoveries $2.13

My recoveries have exceeded one dollar!!!

[leesal]

When Borrowers apply for a loan on Harmoney’s website they are automatically allocated to be funded through either the Peer-to-Peer Service or the Wholesale Funding Model.

I hope you are right Myles. I'll reserve judgement, and hopefully the availability of loans will return to previous levels

No problem with recoveries trickling through, better then nothing! How are your defaults looking as a % of interest?