Here are my thoughts
1. Moolahsense will not care if your loans got into trouble. Why should they? They are merely middleman who take a cut of commission with no skin in the game. Their business is risk free. If you lose money, too bad for you. They will cite that fair warning has been given.
Hi WC32890,
Thanks for your note. I agree with you, however my gripe here is that MoolahSense did not represent it that way. If they were upfront abt debt collection will be minimal on their end. FINE. DYODD. but they didn't do so. Maybe I read misunderstood wrongly on their FAQ pages but they represented during the investors sessions in this way as well.
MoolahSense's principal role is to:-
- Perform introductory functions on behalf of prospective issuers and investors for the issuance of notes
- Provide a streamlined process for the issuance of notes (including the development of standard contract Note)
- Facilitate the payments and collection of sums due under or in connection with those Notes (including taking certain actions on behalf of investors upon an issuer's default or if the issuer becomes, or is likely to become, insolvent).
MoolahSense is not be a party to any Note, save for third party rights granted under such Agreement
They failed to do 3.
MoolahSense will manage late repayments with a 3-stage process.
Stage 1: If the issuer misses, fails to pay or only partially pays the repayment on any due date, MoolahSense will activate procedures to email, SMS or call the issuer. Every action and feedback (or lack thereof) obtained from the issuer will be recorded on the platform and communicated to all affected investors.
Stage 2: If the issuer fails to remedy the missed/late/partial repayment after 30 days, MoolahSense may activate the debt collection services of 3rd party professional debt collectors to collect the money on the investors' behalf. We currently partner with Datapool (S) Pte Ltd. Datapool is Singapore’s leading collections and account receivables management agency with 34 years of track record in recovering corporate and consumer debts.
Stage 3: If the missed/late/partially paid repayment remains not remedied after 90 days from the onset of the first due date, MoolahSense may categorize the issuer as in "default". This means that the note will be terminated and the outstanding balance (including interest till the end of the original term, late payment fee, late payment interest) will become immediately due and payable. MoolahSense will then seek out solutions and present cost-benefit analysis to the affected investors. Affected investors will be invited to vote to obtain a quorum to proceed on the next course of action, which may include authorizing MoolahSense to pursue their collective interests at their own costs. MoolahSense shall also report such default in payment to the credit bureaus which will have a detrimental mark on the credit standing of the issuer.
Stage 1: failed. updates are never timely. and many investors had to chase them or in my case, I chased the borrower directly, giving them a few threats of my own.
Stage 2: failed. debt collectors is their last resort which by then is too late. they rather "give chance" to the borrowers by restructuring the loans, often without qualified majority consent of the investors. as a result borrowers took advantage of them.
Stage 3: Most (90% or more) of their loans are not classed as "default", in some cases loans which are >1 year due. They call it "stressed". Again they love to restructure loans rather than play hardball with the borrowers.
2. Because of point 1, neither their "senior" management, credit people or owners/CEO cares. All they care about is how to grow the business and scale it large enough to sell it or list it and cash out to make profits for themselves.
Agree. I think choosing a platform is very important. The sponsors behind them, the owners etc have to have credibility. Admittedly, I was wrong about them. I attended the initial investors sessions and various borrower roadshows. And to be fair to them, MoolahSense started off great. They were transparent, fast to implement suggestions, responsive and receptive to queries (I know as I drove a very hard line of questioning on their borrowers before each investment i made). Loans done were repaid promptly.
But things went downhill. Some key people left. Investor volumes grew (loans were filled within 2 minutes of launch!). they removed investor meet ups with borrowers. Implemented auto funding (imagine someone auto allocating your monies into risky loans). mgmt of NPLs went good at first but then went to bad and then to worst. Custy service became rude. NPLs grew.
I realised that things were bad, so i made an early decision to get out. Thankfully i did so and escaped the bulk of the damage. Its not like Moolahsense started out shite. they WERE good.
In contrast, look at Pavel from Capital Match and i quote him from his email from one year ago:
Thanks to your support, Capital Match has grown strong and became a leader in marketplace lending/invoice financing in Singapore. We have attracted substantial venture capital funding, we are growing and diversifying operations and revenue sources, and are on a path to profitability. As a VC-funded company, there could be an exit in the future - either through an acquisition or a listing on stock market. In my personal capacity (not as a representative or director of Capital Match), if Capital Match is successfully acquired or lists on stock market in the future, I will refund to you from my personal proceeds from the sale of shares in such a transaction an amount of up to 30% (if such proceeds are sufficient to do so) of the principal you may have lost as an investor on unsecured loans / promissory notes processed through Capital Match platform from February 2015 to June 2016.
3. They don't have good, experienced, empowered credit people. I mean Banks spend a fourtune to hire good, experienced credit people to look after their credit risk. But Moolahsense does not have financial strength to pay for experienced credit people and do not care to pay for experienced credit people simply because of point 1. In addition no experienced credit people from banks worth their salt will want to join a start-up like Moolahsense anyway.
Lawrence CEO is a seasoned banker. He was a buyside and sell side banker, worked thru PB setups and worked thru IB houses. ex DCM banker. he knows credit. Wei Tuck the ex-COO is another seasoned banker. Barbara the main credit analyst also another ex bank credit analyst. I think things really went downhill after Wei Tuck and Barbara left. I duno who are the new folks who came in but from the profile of the firms listed on MS these days, these new fellas SUCK.
4. The loan market in SG is small and saturated with banks already covering most of the credit worthy clients and non bank FI covering the so-so credit worth clients leaving the not so credit worthy clients no choice but to pay 8-15% interest on loans. I mean that's like marginally better than borrowing from loanshark type of interest rates. Why would any company do that unless they are desperate? And because the owners want to scale up they will just on-board clients. They have no choice
Agree. like how I questioned why Epicentre wanted to raise thru MoolahSense. They are after all a listco. They couldn't give me a satisfactory answer (red flag). Quite a lot of the clients were not "unbankable" and had bank loans existing. just that the banks were charging them similar rates vs MS too bur takes a few weeks to process. whereas execution via MS is faster (hey 2 mins filled man!)
anyway, my exposure is small. I got out early, currently stuck on 1 loan with abt $400+ due. Its pocket change to me, just a few hours of my pay. i can write it off easy which i am happy to as I entered into this eyes open, mentally prepped for a default. but I'm not letting this slide simply because of how MoolahSense has mishandled my and many other people's loans.
pls pardon my long reply.