9 Facts About Mortgage-backed Loans On Viventor
28 March 2017 | Comments
Peer-to-peer lending in Europe is progressing remarkably, with industry growth in high double-digits over the recent years. But the industry is still in its early days, and passive investors ready to explore this asset class are probably the biggest winners.
You are willing to give peer-to-peer lending a try, yet are looking for something more conservative than unsecured consumer loans? We have the perfect solution: investments in mortgage-backed loans in Spain.
Seymoure was one of the first lenders to join Viventor, and we have received numerous questions from investors over time. In case you were also curious but never asked, here are 9 facts about Seymoure and its mortgage-backed loans available for investments on Viventor.
1. What is Seymoure?
Seymoure is a Spanish lending company operating solely in the area of secured lending. The team has years of experience and profound expertise in non-bank lending and mortgage lending.
Within its first two years of operations, Seymoure has issued more than 100 loans with the total value of over 6 million Euros and remarkably low average loan-to-value (LTV) ratio of 29%, making investments in Seymoure loans a very conservative decision.
An important fact: Seymoure rarely issues a loan against the sole property of a borrower. Only borrowers with two or more properties are considered in standard cases. This, of course, remarkably decreases the risk level.
2. How come there is no website for the company?
Seymoure mainly uses offline customer acquisition channels, such as individual local brokers that are very popular in Spain. Moreover, the company also partners with online mortgage broker networks, such as T-Presta and others.
The particular approach is used due to majority of targeted customers seeking financial solutions offline, as well as in order to avoid overhead expenditure for online marketing setup. As per Seymoure’s forecasts, such expenditure would not result in customer acquisition costs that could compete with the level offered by other acquisition channels currently used.
3. Who are the borrowers, and what do they need money for?
There are two main client segments that Seymoure services.
First and foremost, those are autonomos, which is the Spanish term for self-employed or autonomous workers. This is a very popular form of business setup in Spain for small enterprises, due to much friendlier tax policy, less bureaucracy and other reasons.
To put it in context, these are people running small businesses like cafeterias, bars, beauty saloons, and others. In vast majority of such cases, the loan is secured by underlying business venue.
Second, those are people owning and operating rental properties. Taking a loan from bank in Spain is a very complex and frustrating process that takes several months. In order to get faster access to the financing needed for refurbishments of a property, or additional capital for next property’s purchase, companies like Seymoure is a great solution.
Charging higher interest, while offering many times faster and more convenient service than banks is the key competitive edge of Seymoure. In parallel, a fair share of the borrowers keep their loan applications in banks open, and refinance themselves to a cheaper solution within 6 to 12 months – once a bank has approved the loan and issued funds.
Effectively, the two most popular products offered by Seymoure are secured SME Loans and Bridge Loans, both of which are some of the hottest alternative finance products around the world nowadays. As of recent, the company has also started lending money against other liquid assets in Spanish market, such as Taxi Licenses and Estanco Licenses, which are required for selling Tobacco products in Spain.
4. How can individuals afford to pay such high monthly quotes?
Since almost every borrower is taking the loan for business purposes, the monthly cash flow generated by business activities is much higher than average salary, and therefore sufficient to make higher monthly repayments.
5. Why are the LTV’s so low?
Loan-to-value (LTV) ratio shows proportion of the borrowed money against the underlying collateral. For instance, if someone borrows EUR 20’000, and secures the loan with a property worth of EUR 100’000, the LTV is 20%. The lower the LTV, the more secure a loan is.
LTV ratios are so low mainly due to the risk appetite and strategy of Seymoure. The company is targeting prime borrowers that do not have the will or patience to wait for a bank to process their loan request within several months. Seymoure normally does not issue a loan, if the LTV is above 50%, with the average LTV across its portfolio being below 30%.
6. Does Seymoure have first or second charge on the mortgages?
Seymoure always has the first charge on a mortgage. First charge means that in case a loan goes default, Seymoure has the first hand legal right to cover its losses from the proceeds of realization of the underlying collateral.
7. What is the origination process like?
After submitting the loan request, client gets an answer within a few hours, but no later than within one working day, ensuring high customer service standards.
Proposed financing solutions are presented to the borrower. After selecting the most convenient option, all required documents are prepared and presented to the borrower.
Once the documents are finalized, both Loan Agreement and Charge on the underlying collateral are signed between borrower and Seymoure’s Loan Manager, in the presence of and approved by a Public Notary.
8. What is the Debt Recovery process like?
Debt Collection agents start communication with every delinquent borrower from the first day overdue. Regular calls are made, as well as e-mails and text messages are sent on a daily basis, clarifying the situation and negotiating loan cancellation or refinancing options.
In case of failure to establish contact with the borrower via phone or e-mail, other online and offline channels are used to initiate communication
In case of borrower going 90 days past due date, a pre-court warning letter is sent to the borrower, stating all legal actions to be taken, as well as outlining the potential consequences. Same information is communicated with the borrower via phone.
Should a borrower go 120 days into delinquency, a Debt Certificate, along with a Claim, is prepared and submitted to the court by Seymoure.
After the court’s ruling, Seymoure prepares for property auction, potentially participating in the auction itself in certain cases.
Throughout all stages of Debt Recovery process, the main objective of Seymoure is to negotiate a convenient solution for both parties and avoid court proceedings, which results in additional time and monetary resources spent.
9. What are the historical default rates?
Since Seymoure started its lending activities, less than 10% of all clients have gone over 90 days into delinquency. Out of those, only three cases have been submitted to court, all of which have resulted into rulings in favor of Seymoure and full recovery of loan principal, accrued fees, and disbursements for other related expenses.
Why is investment in Seymoure’s loans a smart choice?
All loans listed by Seymoure are secured with mortgages or professional licenses, carrying remarkably low LTV ratios. This implies the record-low levels of risk.
Loans have monthly repayment schedule, ensuring regular cash flow for you as an investor.
Seymoure’s loans generate between 8% and 9% return per annum, which is a very attractive rate of return of investments in low-risk loans, secured by liquid Spanish properties and other assets.
If you are looking for low-risk investments to add to your portfolio, or are simply seeking alternative to consumer loans, this is the perfect solution. Invest in Seymoure’s loans now!
If there are any additional questions, we are always happy to answer them in the comments section below, or via e-mail.