Derivex - interest free loans?
- Thread starter Lissy
- Start date
nat r said:XBenX.....the term ecomomists like to use is "Hyper-inflation"as seen in Germany where workers were paid at lunch time each day so they could quickly run out and spend their money before it became worthless ....they would then do the same the next day and so on !
Ive got too many bits of paper that justify my (mostly worthless) education - no need to use the wanky terms as well =)
Signed,
XBenX (the disillusioned economist out in the real world)
nat r said:
Nat's right about this waving of Basel II. It's marketing guff. Mind you, it's forward-looking guff, but right now, it's irrelevant. At best, these guys seem to be lining themselves up to be Basel II "compliant" (which is always a rubbery word) when it finally gets implemented.
The G10 bank governors only recently issued a progress report on the implementation. This revised international capital framework will be available from the Bank of International Settlements in 2006 with most member countries probably adopting it in 2007. The interesting part of the banks is that they will probably run the new 3 tier risk management process in parallel with their existing risk management processes. In other words, the banks need to ensure the new process gives them a satisfactory and/or equivalent level of risk protection as their current systems. This new "process" needs to be tested and shaken out. I'm sure the BIS has proprietary software to model the new system (hopefully not Excel
), but it's interesting to note that the banks aren't going to jumping in headfirst without a test run period.Derivex have a fairly sophisticated risk management process, but they're going to test run it on home owners. Hmmm....
I don't mean to sound totally skeptical. I'm trying to keep an open mind on it, but I know I'm going to go through a phase of "cutting through all the marketing crap" before getting to the guts of it. Since I'm in no rush to get a loan, I can be patient.
I emailed Trevor as well and got a speedy reply on the same set of files that he sent to qaz. He didn't send me the pro-forma contract I requested, so I'll have to go ask him again.
All you other hound-dogs out there, keep sniffing!
Jireh
One thing that nobody has really focussed on .....Return on the Capital of $1,500,000.
Despite what some bods would belive ...nobody (ouside the sphere of money laundering) gives you $1,500,000 and expects no equity return or interest on it. To suggest that the cost of capital is zero (as shown in one of the pdfs) is the equivalent of suggesting that gravity does not exist and objects fall upwards.
I always wondered how people on mass fall for scams in the financial world....I now see why...the promise of something that seems unachiveable leads people to ignore the simple and unaviodable reality of the world of money.
Ignore at your peril
Despite what some bods would belive ...nobody (ouside the sphere of money laundering) gives you $1,500,000 and expects no equity return or interest on it. To suggest that the cost of capital is zero (as shown in one of the pdfs) is the equivalent of suggesting that gravity does not exist and objects fall upwards.
I always wondered how people on mass fall for scams in the financial world....I now see why...the promise of something that seems unachiveable leads people to ignore the simple and unaviodable reality of the world of money.
Ignore at your peril
caution and kudos
Thommo,
It's great you figured it out. All the same; be careful.
That said, I agree with your observation on the circularity of the credit market. Ever since we went off the gold standard, credit has been the driving force in the financing world. Now that we have a very well-established credit rating system, I'm beginning to wonder if the basis of the finance world is now shifting to the solidity of cashflows instead of assets.
For some reason, I am reminded of an article I saw recently in the SMH on the winner of the inaugural Bell Shakespeare Make a Scene competition Entrants were asked to visually depict a famous Shakespearean phrase.
First prize went to Sarah Bakes, who created a rag-doll puppet suspended by chains from two sticks of wood. The inscription on the puppet's shirt read: "Jealousy chains a person and leads their actions to be controlled by emotion." [emphasis is mine]
I know it's a harsh image, and I'm definitely not implying anyone is trying to manipulate anyone here, but I suppose we should all hold that sobering thought as we continue our conversations. Jealousy and it's cousin Greed, are powerful, powerful emotions we all need to be mindful of.
Hmmm...
Jireh
Thommo,
It's great you figured it out. All the same; be careful.
That said, I agree with your observation on the circularity of the credit market. Ever since we went off the gold standard, credit has been the driving force in the financing world. Now that we have a very well-established credit rating system, I'm beginning to wonder if the basis of the finance world is now shifting to the solidity of cashflows instead of assets.
For some reason, I am reminded of an article I saw recently in the SMH on the winner of the inaugural Bell Shakespeare Make a Scene competition Entrants were asked to visually depict a famous Shakespearean phrase.
First prize went to Sarah Bakes, who created a rag-doll puppet suspended by chains from two sticks of wood. The inscription on the puppet's shirt read: "Jealousy chains a person and leads their actions to be controlled by emotion." [emphasis is mine
]I know it's a harsh image, and I'm definitely not implying anyone is trying to manipulate anyone here, but I suppose we should all hold that sobering thought as we continue our conversations. Jealousy and it's cousin Greed, are powerful, powerful emotions we all need to be mindful of.
Hmmm...
Jireh
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In the structured finance world the assets are the cashflows....hard assets can have limited value whn they fall out of fashion (railways for example) and are difficult to sell in the event of a emergency.
Where as cashflows can be rated as to their predicatbility ....but it is important to note that any cashflow can in theory be structured to give a AAA rating....please don't think this is the answer to all questions and in many deals the AAA tag is thrown in for marketing spin more than anything else....there is often more to the story.
Where as cashflows can be rated as to their predicatbility ....but it is important to note that any cashflow can in theory be structured to give a AAA rating....please don't think this is the answer to all questions and in many deals the AAA tag is thrown in for marketing spin more than anything else....there is often more to the story.
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I wondered the same before and I can see why and how now too. Also, it is amazing to observe how people talk themselves into belief that no interest can be actually bad. On a positive note Derivex generated a good discussion and cleared my mind about several unconfirmed perceptions.nat r said:
M.
I would think that Derivex were expecting this kind of reaction....
WHAT !!! No Interest ?? This MUST BE A SCAM !!!!!!!
People thought the Wright brothers we mad too when the tried to fly.......
Let's just wait and see how it all goes......
WHAT !!! No Interest ?? This MUST BE A SCAM !!!!!!!
People thought the Wright brothers we mad too when the tried to fly.......
Let's just wait and see how it all goes......
Hi all.
At this stage of the "Derivex sensation" my main concern (along with others) would be if they went belly up (thats, if they get off the ground first, lol). Trying to work out exactly what the worst case scenario would be. Obviously some other company would buy them out or you would have to re-finance, BUT does that mean anything you have paid off your loan would be wiped and your loan would go back to the original borrowed amount OR would it just carry on with what you owe?? Hope someone has an idea to this. Thanx.
Regards
Marty
At this stage of the "Derivex sensation" my main concern (along with others) would be if they went belly up (thats, if they get off the ground first, lol). Trying to work out exactly what the worst case scenario would be. Obviously some other company would buy them out or you would have to re-finance, BUT does that mean anything you have paid off your loan would be wiped and your loan would go back to the original borrowed amount OR would it just carry on with what you owe?? Hope someone has an idea to this. Thanx.
Regards
Marty
kissfan said:
This is only half an answer, but something to keep in mind. Regular bank loans allow banks to call a loan for whatever reason. It's contractually allowed.
NAB Calls in Loan
So, I would expect that if Derivex found themselves in strife, they would start calling in loans. Maybe one or two only at first. But it could happen.
If they got wiped out, then my first question is the the status of the conduit fee. Does the trust deed it's sitting in (I think) protect it?
Jireh
This one's for Steve
... and/or anyone else with experience/knowledge in the US market :
It's interesting that such arrangements have existed yet from the activity here and the postings few have been aware of them. The US real estate books by Robert Kiyosaki and Robert Allen ... Mr "no money down" never mention them.
How prevalent are they ?
What market share do they have ?
There's been talk of trustee's ratings, yet I wonder how such schemes are rated from the investor supplying the funds ?
Aside form all the ins and outs of their system I would be more concerned about the contract and what penalaties exist for late payments, defaulting, etc. This and their own insurance structure is where the risk to us borrowers must be.
... and/or anyone else with experience/knowledge in the US market :
Steve Navra said:
It's interesting that such arrangements have existed yet from the activity here and the postings few have been aware of them. The US real estate books by Robert Kiyosaki and Robert Allen ... Mr "no money down" never mention them.
How prevalent are they ?
What market share do they have ?
There's been talk of trustee's ratings, yet I wonder how such schemes are rated from the investor supplying the funds ?
Aside form all the ins and outs of their system I would be more concerned about the contract and what penalaties exist for late payments, defaulting, etc. This and their own insurance structure is where the risk to us borrowers must be.
Steve Navra said:
Hi,
I thought I would put the above quote into context:
I am familiar with "Hedging" arrangements in USA; especially in regards to creating a return on the underlying assets held in the CMT. (Using the value in the CMT to create further value via a hedged facility.)
I am unaware of other 'property as first morgage security' for the setting up of a hedged fund.
Derivex's idea is thus interesting . . . we shall see.
regards,
Steve
I thought I'd question ASIC over the claim of interest free, since they don't allow people to advertise seminars and this is the response:
----------
Thank you for your email.
ASIC do not regulate companies that offer loans or credit. These kind of activities are regulated under the Consumer Credit Code, which is governed by the Department of Fair Trading in each state.
Yours sincerely
Customer Service Consultant
----------
Then I sent of to the Fair Trading people and they replied with:
----------
Thank you for your additional enquiry lodged through our internet site.
Based on the information provided, the main purposes of the Victorian Fair Trading Act 1999 are as follows;
a) to promote and encourage fair trading practices and a competitive and fair market;
aa) to protect consumers;
b) to regulate trade practices;
ba) to provide statutory conditions and warranties in consumer contracts;
bb) to provide unfair terms in consumer contracts to be void;
c) to provide for the safety of goods or services supplied in trade or commerce and for the information which must be provided with goods or services supplied in trade or commerce;
d) to regulate off business premises sales and lay by sales
e) to provide for codes of practice
f) to provide for the powers and functions of the Director of Consumer Affairs Victoria including powers to conciliate disputes under this Act and powers to carry out investigations into alleged breaches of this Act;
g) to repeal the Consumer Affairs Act 1972, the Ministry of Consumer Affairs Act 1973, the Fair Trading Act 1985 and the Market Court Act 1978.
I have attached below, a direct link to this legislation for your information. The Fair Trading Act 1999 shows exactly what a trader is not allowed to do, however, as this is not a regulated economy, a trader is also allowed to run their business as they choose. If a consumer or interested party believes that a trader, company, business etc. is in breach of any part of the legislation, and therefore does not meet the base requirements of Victorian trading laws, they may lodge a formal complaint with Consumer Affairs Victoria (CAV), for possible conciliation or investigation purposes. Until a matter is brought to CAV's attention and a complaint is made, a trader is not investigated. Please advise me if you believe that the trader needs to be investigated and if so, please complete the complaint form as previously supplied.
Fair Trading Act 1999
Yours sincerely,
Enquiries Branch
Consumer Affairs Victoria
------------
So over all they pretty much will do nothing until people have lost money. Interesting system, instead of using prevention, fix it after wards.
Not that I had a complaint against Derivex, just would have put all the issues to rest if one of the above could have verified the product was 100% legal and not a scam.
David
----------
Thank you for your email.
ASIC do not regulate companies that offer loans or credit. These kind of activities are regulated under the Consumer Credit Code, which is governed by the Department of Fair Trading in each state.
Yours sincerely
Customer Service Consultant
----------
Then I sent of to the Fair Trading people and they replied with:
----------
Thank you for your additional enquiry lodged through our internet site.
Based on the information provided, the main purposes of the Victorian Fair Trading Act 1999 are as follows;
a) to promote and encourage fair trading practices and a competitive and fair market;
aa) to protect consumers;
b) to regulate trade practices;
ba) to provide statutory conditions and warranties in consumer contracts;
bb) to provide unfair terms in consumer contracts to be void;
c) to provide for the safety of goods or services supplied in trade or commerce and for the information which must be provided with goods or services supplied in trade or commerce;
d) to regulate off business premises sales and lay by sales
e) to provide for codes of practice
f) to provide for the powers and functions of the Director of Consumer Affairs Victoria including powers to conciliate disputes under this Act and powers to carry out investigations into alleged breaches of this Act;
g) to repeal the Consumer Affairs Act 1972, the Ministry of Consumer Affairs Act 1973, the Fair Trading Act 1985 and the Market Court Act 1978.
I have attached below, a direct link to this legislation for your information. The Fair Trading Act 1999 shows exactly what a trader is not allowed to do, however, as this is not a regulated economy, a trader is also allowed to run their business as they choose. If a consumer or interested party believes that a trader, company, business etc. is in breach of any part of the legislation, and therefore does not meet the base requirements of Victorian trading laws, they may lodge a formal complaint with Consumer Affairs Victoria (CAV), for possible conciliation or investigation purposes. Until a matter is brought to CAV's attention and a complaint is made, a trader is not investigated. Please advise me if you believe that the trader needs to be investigated and if so, please complete the complaint form as previously supplied.
Fair Trading Act 1999
Yours sincerely,
Enquiries Branch
Consumer Affairs Victoria
------------
So over all they pretty much will do nothing until people have lost money. Interesting system, instead of using prevention, fix it after wards.
Not that I had a complaint against Derivex, just would have put all the issues to rest if one of the above could have verified the product was 100% legal and not a scam.
David
Hi David
THey don't ???
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/6BF9C6B19FBF376DCA256D97000BC3FF?opendocument
Well why then are they prosecuting brokers for advertising that they are "independent" and slugging the with $ 25 000 fines.
BTW, independent according to ASIC isnt that you arent tied to one or two lenders, to them it means that you deal with EVERY lender in the country.
The normal people test is what would a normal person reasonably think ?
ta
rolf
THey don't ???
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/6BF9C6B19FBF376DCA256D97000BC3FF?opendocument
Well why then are they prosecuting brokers for advertising that they are "independent" and slugging the with $ 25 000 fines.
BTW, independent according to ASIC isnt that you arent tied to one or two lenders, to them it means that you deal with EVERY lender in the country.
The normal people test is what would a normal person reasonably think ?
ta
rolf
Hi Rolf,
Well you can see the response from both parties. I was a little surprised with ASIC response as well but that is all I got from them.
I posted the website for them and thought they would go a look at it. Guess they weren't interested.
David
Well you can see the response from both parties. I was a little surprised with ASIC response as well but that is all I got from them.
I posted the website for them and thought they would go a look at it. Guess they weren't interested.
David
