Moneything Voluntarily Closes Its Doors – My Thoughts
** Updated April 3rd, 2020 **
On December 6th, 2019, Moneything announced it will commence winding down its loan book and business closing its doors to new investors. This wasn’t a surprising announcement considering Moneything had many of its real estate loans in default and no new loans were being introduced.
Unlike Collateral, Lendy and Funding Secure, Moneything isn’t in administration but the Directors decided to wind down the loanbook.
Moneything’s defaults magnify some of the risks presented to lenders who invest in high interest-paying property-backed bridging and development loans. I predict investors’ will experience capital losses from some of the failed loans.
Read my comprehensive unbiased Moneything review below highlighting my experiences after more than three years of lending.
Moneything: What You Need To Know
Moneything used to be one of my favorite peer to peer lending companies back when I chased high returns knowing the risk, but as with other peer to peer companies who lent heavily on high-risk property development loans, many loans defaulted. I requested interviews with Moneything to address my concerns but wasn’t successful so my comfort level fell. Moneything’s new loan supply dried up so I sold all my non-defaulted loans.
Moneything’s aims to wind-down its loans book by the end of 2020, an overly optimistic timeline as recovery on property defaults are slow in nature. Factor in the Coronavirus issue and it may take a long time.
I had been investing through Moneything since June 2015. Everything went well until the loan book began to age and property loan defaults increased raising the question of Moneything’s loan due diligence competency. Once I experienced these increased defaults, I began to reduce my investments to await recovery results.
I’m glad that Moneything made the responsible decision to wind down their loan book rather than to choose administration. The Directors are handling the wind-down which I should save money on fees although Moneything’s last recovery statement showed they took over £100,000 in fees without a breakdown of what these fees were for.
I’m hopeful that Moneything will be successful in recovering money on behalf of its investors but so far their recovery track record hasn’t been good.
I have several defaulted loans within Moneything so I will keep this page updated during wind-down progress.
What Led To Moneything’s Voluntary Loan Book Wind-Down?
Moneything tried to remain competitive in the lending sector but ultimately, defaulted property and bridging loans, loss of investor confidence and high competition cause Moneything’s wind-down.
One of Moneything’s main borrowers is subject to possible fraud allegations as it removed assets used as security for loans. One of these assets was an exotic car that had been double financed. Not good.
I was disappointed by Moneything’s lack of communication and while I’m glad they decided to voluntarily wind-down their loan book, I hope they will represent their investors in a competent manner.
In a recent loan recovery, only 20% of a multi-million £ loan was paid out to investors’ with almost 35% being taken in recovery fees. Moneything cited valuation mistakes as being the sole cause of such a poor loan recovery and while this may be the case, I question Moneything’s experience and due diligence process on this and other loans.
As with Collateral, Lendy and Funding Secure loans, I’m disappointed to see the potential flaws in Moneything’s loans.
What Does The Closure Mean For Lenders?
Not much will change for existing lenders both with regular and ISA accounts. Lenders can log into their accounts as normal. The $50 ISA transfer account fee will remain in place. Moneything will continue to manage active loans and pay lenders as normal. Capital will be repaid when loans mature.
Moneything will attempt to maximise recoveries on all defaulted loans. I fully expect to face capital losses on defaulted loans. This has already happened.
All defaulted loans have an update tab so you can keep up to date on the recovery progress:
Moneything states they will attempt to complete their loan book by the end of 2020 within but I think this is very optimistic.
What Is Moneything?
Moneything began as an online pawnbroker that used peer to peer lenders to finance pre-funded. Pawnbroking is an extremely profitable business and one I understand because my late father was a pawnbroker. This is partly why I decided to invest through Moneything even though it was a new platform and I considered it to be in the high-risk category.
Moneything moved away from the original pawnbroking loan model in favour of property and development bridging loans, grouped asset loans and stocking loans consisting of car hire purchase agreements, cars and debentures.
On June 16th, 2019, Moneything announced they would focus on less risky development loans which would pay between 7-10% per year instead of the standard 12% returns. Unfortunately, Moneything was never able to offer these loans, probably due to the ever-increasing competitive lender market.
How Can I Contact Moneything ?
UK Tel: 0800-066-3344
When Did Moneything Launch?
Are they regulated?
Yes, by the Financial Conduct Authority #703549 under full permissions granted March 23rd, 2017. Investments made through Moneything are not covered under the FSCS (Financial Services Compensation Scheme).
FCA regulation is nothing like the FSCS, which covers consumers when they deposit money in banks. The FCA reports to the UK government and has the ability to pursue criminal action against companies which violate its standards and codes of conduct.
How Quickly Are Withdrawals Processed And Received?
I have received my withdrawals extremely quickly, the last one being processed and credited to my bank account within two hours on a business day.
Does Moneything Offer An Innovative Finance ISA?
Yes, Moneything launched its ISA to all in June 2018.
How Much Interest Doid Moneything Pay Lenders / Investors?
Did Interest Accrue Immediately On Loan Purchase Or When the Loan Begins?
Interest accrued immediately on loan purchase on active loans.
When Is Interest Paid?
Interest payments are staggered throughout the month depending on when borrowers make payments.
Am I Lending To The Moneything Platform Or To Borrowers?
Loan agreements are directly between lenders and borrowers.
What Are The Fees?
Lenders pay no fees.
What Are The Length Of The Loans?
Most loans are six months to one year but some are as long as five years. Loans can renew at the end of the term or be paid off early.
What Security Does Moneything Loan Against?
All loans are secured by items such as property, gold, cars, property, debentures, boats, electronics and planes etc. Loan To Values are in the 13-69% range. If the borrower defaults, Moneything or its loan partners can attempt to recover and sell the assets to recover lenders’ money.
What Are The Loan Default Rates?
Moneything doesn’t provide default or late payment statistics on its website but defaults became high on property backed development and bridging loans.
What Is Moneything’s Default Handling Like?
I currently have seven property asset-backed loans that are in default and I expect to lose capital on these defaulted loans. On a positive note Moneything has previously acted in a timely fashion when loans became non-performing.
Some of Moneything’s default recovery results have been less than stellar. One property sold for approximately 50% of its RICS appraised value. This resulted in capital losses to lenders’. This loan took about 14 months to go through the recovery process.
Another loan that was put into administration was found to have subpar building materials resulting in significant remediation which means increased costs and probably less recovered capital.
Another defaulted loan was fully recovered in two weeks but I find this isn’t the norm and I expect the rest of the defaults to take longer to recover.
In April 2020, one defaulted loan resulted in a 20% net recovery for investors’ with possible planned further legal action against the borrower and the RICS valuer.
Moneything provides periodic default updates on the loan information pages.
Is There a Secondary Market?
Yes, but since the wind-down announcement, the market is suspended.
Is There A Provision Fund?
What Happens If Moneything Goes Out Of Business?
This isn’t clearly explained on their website so I emailed Moneything. This was the response:
“There is a Deed of Assignment (DoA) in place for each loan on the MoneyThing platform. Each DoA contains a Schedule of all investments in that loan, the investor’s name and % they hold. This DoA then explicitly describes how the investors (as listed in the Schedule), have an equitable interest in the underlying security of the loan, the proportion being the % listed in the Schedule. The DoA also stipulates that the investor earns 12% (apportioned) annualised interest for the duration of the loan until such time as the borrower redeems or defaults (and the asset is disposed of to recover the capital & interest).
Thus, in the event that MoneyThing were to go ‘pop’, the administrator/liquidator would have access to these DoA (to be able to pass this onto someone to wind-down the loan book), but crucially that the security behind the loans could not be considered as part of the company assets.”
Increasing Property Loan Defaults With Little History Of Property Default Recovery
Moneything saw a large increase in property-backed loan defaults in 2018 and 2019. As far as I’m aware, Moneything has a shorter track record of successful property default recovery. In peer to peer lending, default recovery is extremely important in order to recoup lenders’ funds. It will be interesting to see how Moneything’s default actions progress.
In addition, a couple of defaulted loans have been plagued by previous contractors’ poor building standards that have required extensive remedial work. When this happens, costs increase and full capital recovery becomes less likely.
Some Loan Borrowers / Partners Have Multiple Loans
Moneything works with a smaller number of loan introducers and borrowers, resulting in some borrowers holding multiple loans at the same time. If a borrower defaults on multiple loans, this could be disastrous for lenders. Unfortunately, due to Moneything’s limited loan offerings, it can be difficult for lenders to fully diversify. Ideally, in the future, Moneything will have many more loan partnerships, giving lenders true diversification.
When a borrower has multiple loans, the information is stated in the loan description:
Loans Don’t Amortise
This means lenders receive monthly interest-only payments and the loan principals don’t decrease monthly like on some other platforms. The loan principals are paid back when the loan is paid back in full. This is normal within the pawnbroking business but increases risk since loan balances stay constant, so that’s something you have to evaluate within your risk tolerance.
No Information On Default Rates
Moneything’s website doesn’t show any statistic information regarding late payments or default rates. Most peer to peer lending companies have detailed statistics pages so I’m surprised that Moneything doesn’t.
The Moneything Review Conclusion
Moneything’s voluntary closure was unfortunate as I believed the Directors had good intentions of providing a viable lending business. Unfortunately, questionable lending choices defaulted property loans, possible borrower fraud and loss of investor confidence led to Moneything’s closure.
Moneything’s closure once again highlights the risky nature of property bridging and development lending and how it’s imperative to ensure the companies you are investing through have high expertise in this area of lending.
I’m hopeful that a responsible wind-down will result in adequate recoveries of investors. I will be updating this page as new information is provided.
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** This unbiased review is for information purposes only and should not be considered investment advice. Opinions expressed in this review are based upon my investing experiences. All information was deemed to be correct at the time of writing. Peer to peer lending contains risks so never invest more than you can afford to lose. **