Harmoney

[permutation]

I have read somewhere in the past that Harmoney financials are audited. Personally over the 42 months that I have invested, the financial side has always been 100% spot on according to my spreadsheet that I update daily.
There are sometimes reporting anomalies regarding loan information on the platform but less hang ups than in the early days. I feel confident in the money side of things in my account.

[BJ1]

I have no concerns about my funds Permutation - my audit interest lies in their processes and the accuracy of what they give us to make decisions on.

[BJ1]

Beacon, there is so much of what I have learnt over a lifetime in money that it is hard to impart, either in this forum or by PM. However, I will add that the majority of families need to allocate above 25% of pretax income to accommodation, be that rent or mortgage (majority, not all by any means) and so the theoretical maximum available for other finance costs should be 10%. I hardly ever lend if the repayment to after tax income exceeds 10% as it is quite likely that, no matter what the applicant says about debt consolidation, there will also be a credit card on drip feed in the background.

[beacon]

Beacon, there is so much of what I have learnt over a lifetime in money that it is hard to impart, either in this forum or by PM. However, I will add that the majority of families need to allocate above 25% of pretax income to accommodation, be that rent or mortgage (majority, not all by any means) and so the theoretical maximum available for other finance costs should be 10%. I hardly ever lend if the repayment to after tax income exceeds 10% as it is quite likely that, no matter what the applicant says about debt consolidation, there will also be a credit card on drip feed in the background.

Thank you BJ1. Be interesting to watch how the results unfold - your cautious ABCs vs Myles daring CDEs vs Cool Bear Index ( I think he's closest to being an index, out of all who care to consistently share here). Looks like a sunny day all around for Harmoney fans today. Enjoy the sunshine, all!

[myles]

The following table may be of interest to some. It shows my default adjusted return.

Attachment 9917

Notes:

• current interest rates are used - old rates were better/different
• my selection method/criteria used - so not what someone else would get
• I don't like A5's, I love F1 and F2 - all are anomalies due to low numbers
• D's and E's are my money makers!

[humvee]

The following table may be of interest to some. It shows my default adjusted return.

Attachment 9917

Notes:

• current interest rates are used - old rates were better/different
• my selection method/criteria used - so not what someone else would get
• I don't like A5's, I love F1 and F2 - all are anomalies due to low numbers
• D's and E's are my money makers!

Something does not quite make sense / add up

The invested column is $ or number of notes?
In $ the total invested column does note make sense
if number of notes the interest and payments columns don't make sense

[myles]

Something does not quite make sense / add up

The invested column is $ or number of notes?
In $ the total invested column does note make sense
if number of notes the interest and payments columns don't make sense

All $'s - I should have formatted them that way.

So under Defaulted Loans:
Invested: is $ invested in the loans that have defaulted (i.e. purchase of notes)
Interest: is $ of interest returned from the defaulted loans (prior to defaulting)
Payments: $ paid by borrower prior to loan defaulting
Loss: = Invested - (Payments + Interest) $'s [i.e. what I lost from initial purchase of notes)

Total Invested: is total $'s I have invested in that grade (all loans)

The rest should be obvious?

[humvee]

All $'s - I should have formatted them that way.

So under Defaulted Loans:
Invested: is $ invested in the loans that have defaulted (i.e. purchase of notes)
Interest: is $ of interest returned from the defaulted loans (prior to defaulting)
Payments: $ paid by borrower prior to loan defaulting
Loss: = Invested - (Payments + Interest) $'s [i.e. what I lost from initial purchase of notes)

Total Invested: is total $'s I have invested in that grade (all loans)

The rest should be obvious?

Ok that makes more sense thanks

[myles]

I take the comments above, but the point I'm trying to show is the rate/value of defaults per grade. Defaults are not annual, they are total over the life of all loans - the %Loss is based on total invested value per grade, not current or final value (so loss of potential interest is not included).

I take Cool Bears point on fees, so I've added that in - it had no effect on the overall trend, but it could have. Tax is at a portfolio level so I'm not including it deliberately.

I know the last column is meaningless, but I find it to be indicative of the return for the grade.

Updated with 15% loss due to fees:

Attachment 9918

The key thing I take from these values is that the expected, larger default losses for higher grades is not what I'm seeing. So selection criteria can impact expected defaults and averages - significantly.

[leesal]

I take the comments above, but the point I'm trying to show is the rate/value of defaults per grade. Defaults are not annual, they are total over the life of all loans - the %Loss is based on total invested value per grade, not current or final value (so loss of potential interest is not included).

I take Cool Bears point on fees, so I've added that in - it had no effect on the overall trend, but it could have. Tax is at a portfolio level so I'm not including it deliberately.

I know the last column is meaningless, but I find it to be indicative of the return for the grade.

Updated with 15% loss due to fees:

Attachment 9918

The key thing I take from these values is that the expected, larger default losses for higher grades is not what I'm seeing. So selection criteria can impact expected defaults and averages - significantly.

Further to Coolbear and Snow Leopard, That analysis although interesting overlooks much. Defaults, will create a drag on your return - due to the capital not being recuperated so interest is foregone.

Fee should be applied against all interest.

Early repayment amplify's the impact of default, especially in the higher grades. Without the benefit of your data, would say your E5 grade is returning closer to 12% rather then 19%. See attached.

Capture.JPG

That said your DEF grades are performing very nicely, and well below the predicted static loss ranges indicated by HM, so you must a knack for risk selection