Bertrand J: I met a Mintos loan originator who proposed me a note in 2017. He told me buyback guarantees are not much guarantees, and it’s more interesting for him to borrow a large amount (we didn’t discuss the amount) from me than to have to deal with Mintos and investors mainly interested in short term loans. I declined the offer but it exists if you are interested. As dumb unwealthy guy I wouldn’t do it, though. I don’t even invest on Mintos or other platforms anyway.
Peer Duck: Once again, claim rights to individuals, which investors consider to be holding, are nothing more than a fancy wrap. You are dealing with the business loan for the operational needs backed by a portfolio, and nothing else. So yes, the straight loan to a LO with the clear purpose would be actually much more beneficial for both sides, with no resources to waste on the plywood claim right purchase. so, at the end of the day, all your "diversification" is concentrated inside a non-banking lending industry, maybe some moderate international diversification, but zero cross-industry. While there is no sufficient data to build a correlation model between different LOs, no doubt it is higher than 0.5 and does not add any durability to portfolio
Kristaps Mors: In many cases even this part is not true: “backed by portfolio” 🙉 instead backed by hopes & promises
Peer Duck: I took a Mintos a model, they indeed put a pledge on loan originator assets.
Kristaps Mors: In all cases? Then hard to understand why recoveries are so slow and difficult
1) Can't comment, possibly some grey schemes for affiliated companies may took place
2) Overvalued portfolio (Aforti f.e)
3)"Controlled landing into terrain" by C-levels and other exit-strategies to leave a burden on the weakest (penny investor)
4) for most cases, recollection from default LO would never cover 100% of a principal, and I would never believe it was intended to (otherwise it is a claim for a riskless investment)
Me Myself And I:
5) even if you have a pledge on the whole portfolio, you need to be able to pull it off (legally and operationally) otherwise it will be pink elephants in the sky. Looking at my favorite examples Capital Services and Monego ... for CS even having a direct claim, but if you are not able to reroute the payments and negotiate yourself to dead until all money has been spend...not worth the paper the contracts were written on
For Mintos, if the other side doesn’t play ball and you don’t get them nailed legally with personal liabilities...🤷🏼♂️
1 - is a complicated legal process that depends on agreements signed and a lot of details, like is it the only claim etc. Also on the legal procedure to be done. Bancruptcy - longer, mortgage - faster. Also depends on the other end, they can argue all the way, this will make it at least 3x longer.
Peer Duck: It also depends on the portfolio quality. It's quite easy to inflate a portfolio with low-quality loans prior to the meltdown