answered Matti's questions about the terms and conditions of the platform:
Matti: What penalty does this refer to? Additional payments for the borrower?
7.2.5. The Loan Originator reserves the right to calculate a contractual penalty according to the Loan Agreement if the Borrower delays the repayment
Afranga: Yes, the LO reserves the right to add charges to the borrower, for example late interest, collection fee, court fees, etc.
Matti: This is contradictory with what your help says:
8.6 The Assignee understands that all of the Loan agreements contain clauses according to which the Borrower has the right to repay the loan early without paying interest or penalties and buys the Claim under such conditions. The Assignee undertakes not to bring any claims against the Loan Originator, Afranga or the Borrower concerning full or partial early repayment of Loan based on the lost profit and any other losses.
vs. Help: In the event that a loan is repaid before the maturity date, you will receive in full your outstanding investment plus the accrued interest and late interest, if any.
Afranga: The text means that the Investor understands that under the loan agreement the borrower has the right to repay the loan before maturity at the borrower's discretion and that the borrower will not pay additional interest or penalties arising from early repayment - meaning there will be no penalties, additional charges or interest incurred by the borrower for the early repayment. In the event of full or partial early repayment the investor will not hold afranga or the LO responsible for the lost profit (the future unearned interest as per the repayment schedule).
In the event of early repayment, as pointed out in the help section, the LO repays principal plus accrued interest. Now that we read the highlighted text of the assignment agreement it's perhaps a bit ambiguous and l'll pass over to Legal to put it in more explicit terms.
Matti: Can you explain these provisions some more, e.g. give an example of how the buyback obligation could result in lost profit for an investor? Other than if the loan originator goes bankrupt? I mean, I understand that in that case funds may only be recovered from the borrowers through a liquidation process but how could an exercised buyback result in lost profit?
9.2 The Loan originator hereby authorizes Afranga, in case if the Loan originator’s obligation to exercise its buyback obligations have occurred, to write off from the Borrower’s Account and transfer the virtual money equivalent to the buyback price to the Virtual Account of the Assignee immediately, without obtaining prior separate order from the Borrower. The Claim shall be considered as transferred to the Borrower from the moment of the payment of the virtual money equivalent to the buyback price in the Afranga Account of the Assignee. The Assignee shall not file any complaints against the Loan Originator or the Borrower in respect
to the exercise of the buyback obligations due to lost profit and any other damages in this respect.
9.5. The Assignee shall not make any complaints or claims against the Loan originator in respect of the exercise of the buyback obligations due to lost profit and any other damages in this respect.
Afranga: Similar case to the one above. The Investor will not receive the full interest under the Assignment agreement and in accordance with the repayment schedule, because the loan is bought back before its maturity date. The Investor will only receive accrued interest up to the date of buyback. The Investor agrees that he will not hold Afranga or the LO accountable for the unearned interest due to the buyback.
Read all questions and answers in the attachment.