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Thread: Harmoney

  1. #2896
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    Quote Originally Posted by Investor View Post
    Your RAR is supposed to fall over time as more defaults naturally occur. Depending on your fee & tax rate, it is still possible to obtain a return of 12% p.a. after fees, tax and Harmoney's predicted default levels.
    I guess it is possible for a minority.

    For the average retail investor on 33% marginal tax, and not in the business of lending, with an average before tax RAR of 13% that would equate to an after tax return of about 8% as effective tax would be more than 33% on the Harmoney supplied before tax RAR. You need to allow for the tax effect as a result of the RAR reflecting the average 20% of gross interest being eaten up as a capital loss (charge offs.)

    i think outsourcing collection to a good quality specialist collector could be good if it allows Harmoney to concentrate on improving the quality of its lending.

  2. #2897
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    Quote Originally Posted by Bjauck View Post


    ...i think outsourcing collection to a good quality specialist collector could be good if it allows Harmoney to concentrate on improving the quality of its lending.
    More likely Harmoney will concentrate on the quantity of its profit by disestablishing the collections department!

  3. #2898
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    Quote Originally Posted by joker View Post
    More likely Harmoney will concentrate on the quantity of its profit by disestablishing the collections department!
    You can always look for a negative in anything Harmoney does, but if you feel that way you probably should not invest with them. As I have previously posted I have not seen much action on following up charged-off loans in the past, so if we are going to get a few shekels for what I had considered lost money up until now, well it sounds good to me. I don't understand why anyone would think that Harmoney will not continue to chase the easy pickings (i.e. pre charge-off arrears). Nothing in their email to lenders suggested that.

  4. #2899
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    Quote Originally Posted by Bjauck View Post
    I guess it is possible for a minority.

    For the average retail investor not in the business of lending, .
    I suggest that Harmoney investors need to carefully consider what the tax acts say about lending losses. Section DB31 states that a person is allowed a deduction for a bad debt written off in an income year. There are limitations but it seems to me that Harmoney investors are generally entitled to claim loss deductions under sub sections 2 and 3. Don't take my view as gospel, but have a good think about matters before accepting that you aren't entitled. If you are deriving taxable income from your activities, are you not "in business"?

    On another note, I don't recall ever seeing stats on what percentage of loan charge offs has been recovered by collection action. If anyone can point me to such info I'd appreciate it, as it seems there is a lot of speculation about what Harmoney may or may not be doing, but no data available to assess the recent email advice.

  5. #2900
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    Quote Originally Posted by BJ1 View Post
    I suggest that Harmoney investors need to carefully consider what the tax acts say about lending losses. Section DB31 states that a person is allowed a deduction for a bad debt written off in an income year. There are limitations but it seems to me that Harmoney investors are generally entitled to claim loss deductions under sub sections 2 and 3. Don't take my view as gospel, but have a good think about matters before accepting that you aren't entitled. If you are deriving taxable income from your activities, are you not "in business"?....
    Definitely seek advice.

    I agree there could be a good point that if you invest in many fractionalised notes through Harmoney that you could be said to be "in business". However there has been no ruling on this point and Harmoney is not bothering to seek a ruling, claiming that all their depositors have "different circumstances." There has been no general ruling as to how charge-offs should be treated, irrespective of the individual investors being "in business" or not.

    If you use Harmoney's auto-invest to invest in Harmoney notes are you in a business?
    If you log into the website several times a day to invest in notes are you in business?

    Investors on the Harmoney platform are covered by the financial arrangement rules but may or may not "be in business"

    It would be great to have clarity and for all P2P investors to be covered by the same rules as to deductibility of fees and charge-offs. A real peer-to-peer scenario? However NZ has not made such a ruling.

    When all those finance companies collapsed, many small portfolio depositors ended up with bad debts which ended up not being deductible for tax purposes.

    DYOR.
    Last edited by Bjauck; 23-12-2017 at 09:28 AM.

  6. #2901
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    Just one more point: Section EW11 states that financial arrangements rules do not apply to the calculation of resident passive income. Investments in finance companies are in my view passive as there is no interaction between the parties. Hence the inability to deduct losses when those companies failed. However, direct one to one lending via an agent who is paid to manage that lending on a daily basis and to conduct arrears management is not passive, in my view.

  7. #2902
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    There was a message on the Harmoney Dashboard saying no loans will be released to the marketplace over the Holiday period from the 23rd to 26th December.
    Yet on the 26th Boxing Day they released 39 Loans, who was told about that? Did anyone using this forum get any?

  8. #2903
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    Quote Originally Posted by permutation View Post
    There was a message on the Harmoney Dashboard saying no loans will be released to the marketplace over the Holiday period from the 23rd to 26th December.
    Yet on the 26th Boxing Day they released 39 Loans, who was told about that? Did anyone using this forum get any?
    A bit of confusion shown by HM between TWO messages!

    Capture.jpg

  9. #2904
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    Quote Originally Posted by permutation View Post
    There was a message on the Harmoney Dashboard saying no loans will be released to the marketplace over the Holiday period from the 23rd to 26th December.
    Yet on the 26th Boxing Day they released 39 Loans, who was told about that? Did anyone using this forum get any?
    I didn't get notified but my auto-lend got 9 of them. However one of them looks very dodgy...Monthly income $18,633 after tax, rewrite of previous loan after no payments and borrowing $30,000 @ 21.49%. Lives with parents! I've got a feeling an early charge-off is coming. Does Harmoney actually check the borrower's income details?
    ScreenHunt.jpg

  10. #2905
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    Quote Originally Posted by BJ1 View Post
    Just one more point: Section EW11 states that financial arrangements rules do not apply to the calculation of resident passive income. Investments in finance companies are in my view passive as there is no interaction between the parties. Hence the inability to deduct losses when those companies failed. However, direct one to one lending via an agent who is paid to manage that lending on a daily basis and to conduct arrears management is not passive, in my view.
    2016 Article from Deloitte on bad debts and P2P in NZ. https://www2.deloitte.com/nz/en/page...p-lending.html

  11. #2906
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    How is this possible? Below is a screenshot of a loan listed 04/01/2018. Harmoney claims that the borrower has an after tax monthly income of $19,378.33 which equates to $4,400 per week after tax and around $350,000 p.a. gross.
    The borrower states “I am looking forward to being able to consolidate my income and get ahead in the new year”. The level of income and the borrower’s comments seem mutually exclusive/extremely unlikely. The interest rate of 21.49% also seems to discredit the borrower’s income claim. How robust is Harmoney's checking system?
    ScreenHunt.jpg

  12. #2907
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    Looks like they borrower entered their annual income as a monthly figure. Perhaps Harmoney doesn’t place huge weighting on income figures in their loan grades. I suspect they simply rely on they credit ratings of each borrower and grade according to that with a few tweaks.

  13. #2908
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    And how many people using autolend have picked up a piece of this? If such information is being trusted then there is no point in reading the info provided - investors may as well just take a piece of every loan within their grade parameters and hope for a portfolio average based on those. Not my cup of tea!

  14. #2909
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    Quote Originally Posted by joker View Post
    How is this possible? Below is a screenshot of a loan listed 04/01/2018. Harmoney claims that the borrower has an after tax monthly income of $19,378.33 which equates to $4,400 per week after tax and around $350,000 p.a. gross.
    The borrower states “I am looking forward to being able to consolidate my income and get ahead in the new year”. The level of income and the borrower’s comments seem mutually exclusive/extremely unlikely. The interest rate of 21.49% also seems to discredit the borrower’s income claim. How robust is Harmoney's checking system?
    ScreenHunt.jpg
    Quote Originally Posted by Wsp View Post
    Looks like they borrower entered their annual income as a monthly figure. Perhaps Harmoney doesn’t place huge weighting on income figures in their loan grades. I suspect they simply rely on they credit ratings of each borrower and grade according to that with a few tweaks.
    But their system as I understand it requires borrowers to upload bank statements as proof of income. If the proof isn't being verified, the whole system is useless - after all we as investors need verification that borrowers earn sufficient to repay thir loans. Additionally there is a auto-lend filter based on the percentage of repayment v. income. If income errors are present this filter is compromised. It all seems a bit Mickey Mouse - especially sice my last charge-off made no payments and had a (claimed) monthly after tax income of $12,286!

  15. #2910
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    Only a few of the dodgy loans get mentioned on here. I come across similar loans information that simply doesn't make sense on a regular basis. Hopefully Harmoney fixes this problem as lenders will start loosing trust in their platform.

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