Is Peer to Peer Lending Safe? Coffee with Kuflink's Head of Collections
As Head of Collections for Kuflink, and armed with 30 years of banking experience, I have taken to this department like a duck to water. To get a deal underwritten requires an immense amount of work.
1) Sales staff co-ordinating with Borrowers and their representatives;
2) Kuflink Underwriters carrying out thorough due diligence on Borrowers (ID checks, credit checks etc) and assets;
3) Valuation Reports from RICS approved Valuers. The Royal Institution of Chartered Surveyors (RICS) is a global professional organisation that establishes and enforces standards for valuing, operating and developing assorted types of real estate and Property.
We have also started using Automated Valuation Model (AVM) for instant property valuations - Hometrack. UK lenders have relied on Hometrack for instant, accurate property valuations since 2002. Their AVM gives lenders lower costs and faster time to yes, with no additional risk. Hometrack AVM is the UK market leader. In fact, 17 of the top 20 UK mortgage lenders use their AVM as an integral part of their processes. Adopted by over 50 Residential Mortgage-backed Securities (RMBS), Hometrack was the first model accredited by major rating agencies, including Moody’s, Standard & Poor and Fitch.
4) Solicitors Firms we use must have a minimum of two Solicitors appointed by the Solicitors Regulation Authority (SRA). They do complete Property Lending Legal checks and documentation.
5) Directors may do a site visit and see the Borrower, and we will always engage with Valuers/Monitoring Surveyors to ensure the development is monitored throughout the term of the loan;
6) Credit committee for Kuflink Bridging Ltd examines all paperwork for the deal;
7) Credit committee of Kuflink Ltd will reach its own decision based on its policies;
8) Kuflink carries out internal Compliance checks to ensure procedures are adhered to;
9) Kuflink Accounts team do further verification checks;
The above is a quick summary. As you can tell, we scrutinise each deal, and many don't get through, but when they do, we are confident to put them on the platform and co-fund them. Sometimes there are Post completion tasks which solicitors have undertakings to complete, and for development deals, there are further monitoring reports carried out by valuers. As an extra measure, our Property experienced Directors may also attend the site before the drawdown to ensure appropriate works are complete.
The Covid Period brought out a sense of even more collaboration with borrowers, we needed to ensure the asset was protected and the Borrower was treated fairly. There is little point in forcing a quick sale when the market has turned south. It is often best to ride out the storm.
Our founders created Kuflink in 2011 when they themselves went through troubled times, where their bankers forced them to sell some assets at the bottom of the market. It is difficult when you have borrowers initial equity ignored just so that the bankers can get their money back.
So, we worked with borrowers to ensure they could get themselves to a level where they could reduce the loan amount by a certain amount to get a workable extension. There are times when the Borrower has given up or really cannot see an exit. It is why we have our Kuflink default definition to create quicker alert points for us to take action.
KUFLINK DEFAULT RATE.
A loan defaults when it is one calendar month past a missed payment, with this payment still outstanding. This may be a monthly servicing payment or the full repayment at the end of the term.
FCA DEFAULT DEFINITION
A loan defaults when the Borrower is past the contractual payment due date by more than 180 days. Which is approximately six calendar months.
We react much quicker. We get in contact with borrowers many months before things go into one-month default. Interestingly, our debt repayment during covid was substantial. This is mainly due to the underwriting and credit committee decisions.
I can say that we are looking forward to 2023. Many deals are going through, and due diligence is the key. We learn tremendous amounts about how Borrowers behave under pressure, and we then pass this understanding across the business to underwriters and committees to ensure our investors are better protected. Borrowers can prosper with a Kuflink Peer-to-Peer loan.
- Experienced Expert Underwriting team;
- Experienced Credit Committees (as developers, valuers, and bankers);
- Experienced Asset managers;
- Experienced Accountants;
- Experienced Collections Team;
- Experienced Proprietary Software Developers;
- Experienced Board of Directors;
- Experienced Independent Non-Executive Directors
Third-Party Service providers
- Royal Institution of Chartered Surveyors - RICS approved valuers;
Automated Valuation Model (AVM) for instant property valuations - Hometrack;
- Rating Platforms
- 4th Way
- AML/KYC: Onfido, MangoPay and Creditsafe;
- Cyber Essential Auditors;
- Global Debit Card Service Provider: Stripe;
- Credit Bureau Agencies: Experian, Equifax, TransUnion, and Cifas
- Solicitors Regulation Authority - SRA-approved Solicitors;
- Independent External ISO27001 (UKAS) Auditors;
- Independent External Statutory Accounts Auditors;
- Independent External Bcorp Impact Assessment ESG Auditors;
- Independent External HMRC ISA Manager Auditors; and
- Independent External Financial Conduct Authority.
Updated 4th February 2023
Lender/Investor Risk Warning
* Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 mins to learn more.
† Gross annual interest equivalent rate (compounded annually (Pool) / monthly (Select)) – FAQ Link