Derivex

[TJamesX]

case wh
Huh?

Company just starting up and you're already predicting bankrupcy?

Give them a chance to get it right first.

I have mentioned my concern for their business plan in the other thread, I believe you can only give money for free for so long before your business model starts to look bad - but this is beside the point, the main reason I brought this up was to look at the worst case scenario from the borrowers perspecive. I honestly believe it is a question worth answering no matter the outcome of Derivex's business.

BTW TJamesX do you have your strategy in place in case the finance providers you use go bankrupt?

Commbank, Westpac, NAB, St George, BankWest, Bank of SA, etc - they're all clearly on the verge of total insolvency!!!

Cheers,

Aceyducey

I personally don't own any property, the only assets I currently own are in shares and cash - so I don't have any liabilities. But these businesses have been around longer and as far as I know charge interest for the loans they write. To be honest I'm not sure what I would do if a bank did become insolvent and I had borrowings with them - I'm unsure of my rights - therefore the question!

 

[Aceyducey]

I personally don't own any property, the only assets I currently own are in shares and cash - so I don't have any liabilities.

Ahh - you're a zero liabilities guy - no wonder you come across as so risk-adverse

I suggest that based on your views you shouldn't buy any Derivex shares.

Anything else you said could be considered talking down the stock

Cheers,

Aceyducey

 

[quintets]

MY previous post was deleted by 'Pitt St' - I suggest anyone conduct a search through Lawpoint, Legalco in regards to Trevor Cohen - it will make interesting reading -

I just tried www.lawpoint.com.au and www.legalco.com.au and came up empty when searching for Trevor Cohen. I think the lack of an paying account might be the problem.

IFHL4U, did you try the search yourself before posting the advice?

J

 

[Monopoly]

I think a PDS relates only to organisations raising funds from the public.

Simon,

Here are a couple of links detailing nature of Product Disclosure Statements.

http://www.sfe.com.au/content/aboutsfe/regulatory/pds.pdf
http://www.findlaw.com.au/articles/default.asp?task=read&id=9274&site=CN

I have yet to see such a crucial document provided anywhere on Derivex's website. Can you direct me to it, perhaps I am overlooking it, mistaking it as being the Contract Terms and Conditions (which albeit important) is not sufficient in helping me (the consumer) make an informed decision about their product/service.

Cheers,

Jo

 

[TJamesX]

Ahh - you're a zero liabilities guy - no wonder you come across as so risk-adverse

Well I do have a Margin Loan facility set up - but I don't have the balls to use it at the moment . Maybe on the next pull back - but I've only just started owning shares 6 months ago, so its one step at a time.

And yes I definitly wouldn't be purchasing shares in Derivex .

But I have got past the whole 'Derivex's model won't work, its a scam etc etc' (eventhough I think it still is). The people on the forum are looking at this from the borrowers perspective - so thats what I'm doing now. So if you are looking at it from the borrowers perspective and look at the risks - I think they would be;

1) You pay the Conduit fee and the loan doesn't settle and the money doesn't get into your account; I don't think this will happen as there is too much conversation on forums so if someones doesn't settle we'll know pretty quick - unless Derivex's is planning to hold everyone's applications and tries to process them all at once and recieve a lot of condiut fees in a short space of time.

2) You don't recieve you're conduit fee if Derivex goes under; This is probably insignificant as you will save that much money in a year in interest payments. So essentially if they survive about a year this is ok

3) If Derivex goes under and your loan gets called in by the administrators; I don't know if this is even legally possible (essentially the question I originally posted a few posts back). It may go back to the original loan contract and creditors may be able to challenge the loan contracts terms and the fact the loans were written as interest free. If this is the case the worst possible scenario would be to arrange immediate refinancing to pay out the loan - so you would need to make sure you can do this.

4) Fine print in the loan contract; thats easy, get a GOOD lawyer to look at it

........... I think that would be about it. The big one for me would be (1), it seems like the only killer to me. So I would want to see evidence of someone's loan contract settling or arrange a payment method of the conduit fee in such a way that this would not matter

 

[Simon]

Simon,

Here are a couple of links detailing nature of Product Disclosure Statements.

http://www.sfe.com.au/content/aboutsfe/regulatory/pds.pdf
http://www.findlaw.com.au/articles/default.asp?task=read&id=9274&site=CN

I have yet to see such a crucial document provided anywhere on Derivex's website. Can you direct me to it, perhaps I am overlooking it, mistaking it as being the Contract Terms and Conditions (which albeit important) is not sufficient in helping me (the consumer) make an informed decision about their product/service.

Cheers,

Jo

Jo,

What was the point of those documents? No mention of loans - are all discussing finacial products to invest in other than shares.

Did you read them?

Cheers,

 

[Byronent]

Conduit Fee

Can't you add the Conduit fee too the loan so they get it at settlement?

You only pay the loan application fee which is insignificant in my opinion.

I dont' believe anyone can claim your home, maybe call in the loan but you would still have ample time to refinance, and for every year they survive, think of the equity you are building in your home.

 

[Sim]

maybe call in the loan but you would still have ample time to refinance,

Don't count on this ... I haven't seen the contracts, but look for the key phrase "time is of the essence" ... if it is there, then they can (legally) get rather nasty about having to wait for their money back if they do call it in. Watch out for penalty clauses if you don't cough up quickly.

 

[quiggles]

I've read the T&C and the general (model) contract. It appears (usual disclaimers) LESS onerous than similar documents I've had to sign with major banks and also appears to lock Derivex in to 0% for the term of the loan. (assuming the right boxes are filed out the right way).

On repayments, it stated that Derivex could recall the loan in the event of a default by the borrower (unlike another one where the banks could withdraw the loan for any reason) and set out your rights clearly.

 

[Aceyducey]

1) You pay the Conduit fee and the loan doesn't settle and the money doesn't get into your account; I don't think this will happen as there is too much conversation on forums so if someones doesn't settle we'll know pretty quick - unless Derivex's is planning to hold everyone's applications and tries to process them all at once and recieve a lot of condiut fees in a short space of time.

There are legal recources for this. And it wouldn't only be forum gossip in play. There would be criminal charges.

3) If Derivex goes under and your loan gets called in by the administrators; I don't know if this is even legally possible (essentially the question I originally posted a few posts back). It may go back to the original loan contract and creditors may be able to challenge the loan contracts terms and the fact the loans were written as interest free. If this is the case the worst possible scenario would be to arrange immediate refinancing to pay out the loan - so you would need to make sure you can do this.

Much more likely that the loan book would be sold at a substantial discount....buy it for 70% of it's value and even on 0% loans there's a 30% profit margin.

4) Fine print in the loan contract; thats easy, get a GOOD lawyer to look at it

Applies to all loans - have you ever read a loan doc's t&cs before? All lenders ensure they have every legal right they can get & the person taking out the loan has as few as legally possible. And there's nothing wrong with that!

Cheers,

Aceyducey

 

[luckyone]

T&C

I read in the terms and conditions that they can call back your loan if the value of your property drops. My question is, how much would it have to drop by for the loan to be called in?

 

[always_learning]

Sorry to be negative again. We all hope very very much that 0% home loans could be true, common sense and simple logical tells use it cannot be, but after a half way plausible business concept based on some secret black box systems, and some professional looking loan documentation that appears to protect both assets and capital repayments many are ready to go for it!

Sorry to get on my high horse but money if money has meaning cannot be created out of nothing, money is created out of adding value, creating value, mitigation of risk etc. Even Derivex makes no secret they will take your asset and with a complex secret business/financial process borrow multiple times its value based on the income stream of your replayments. ie. 5 cents/year of replayments of $1 of assets will be used to borrow $3.

Doesnt that like some kind of Star Trek episode trigger a "red alert" in people's minds?

Are some people saying "well yes, maybe it is a house of cards built on the earthquake prone ground of the international financial markets, but so long as my house and capitial repayments are safe, get in quick for the free money whilst the party lasts".

Putting on my bad hat for a moment, if we there is a free money party about to happen and people are being invited to join, what the heck right, nothing lasts forever, first in best dressed? I just want to know who will be paying? Australian super funds, bond holders in the Norway? Oil rich Saudis princes (which in that case.... Simon where's that application form!)

 

[Andrew_A]

Simple enough

Has anybody yet definitely established that:

There is the contigency to refinance within a reasonable time frame with another lender of your chosing if things go pear shape, thus removing any connections and obligations to Derivex?

If you have the property in your name, you have already spent their money and you are meeting your legal requirements, what is the worst that could happen other than a forced refinance?

Establishing the worst case scenario has to be the first priority.

 

[Andrew_A]

Bad hat firmly on

Putting on my bad hat for a moment, if we there is a free money party about to happen and people are being invited to join, what the heck right, nothing lasts forever, first in best dressed? I just want to know who will be paying? Australian super funds, bond holders in the Norway? Oil rich Saudis princes (which in that case.... Simon where's that application form!)

It's often misplaced amongst all the hoopla about the suffering and pain caused to ordinary people that ponzi schemes and their ilk make the early joiners and creators a very nice return Whether it's a pyramid, trapezoid or tetrahedron the money really doesn't just dissapear, it's flowing from the gullible to the lucky and the predators.

I don't really understand yet how this is all working, I'm waiting for some of the smarter people on here to work it out and tell us about it!

I found Thommo's explanation of how it all worked to be very plausible, but without the details you really can't be certain.

 

[Sunfish]

Doesnt that like some kind of Star Trek episode trigger a "red alert" in people's minds?

I must admit it sounds like Douglas Adams' "Restaurant at the end of the world".

Way Solid, It was just a simple theory which I can't expand on. Sorry.

Thommo

 

[Andrew_A]

I must admit it sounds like Douglas Adams' "Restaurant at the end of the world".

Way Solid, It was just a simple theory which I can't expand on. Sorry.

Thommo

Actually I'm reading that locked Derivex thread again and realized how little of it I understood the first time, not doing much better this time

Steve Navra might very well have answered AL's and my question already about who will be bearing the risk.. http://www.somersoft.com/forums/showthread.php?t=18232&page=10&pp=15&highlight=derivex post #141

 

[ArJay]

Hypothetical question to all..... if we're going to look at worst case scenarios how about this.

DeriveX is legit and consequentally is inundated with loan applications.

WHAT NOW??

Will it be first in best dressed or will it be a financing feeding frenzy?
Will DeriveX clones start popping up everywhere much like after the deregulation?

If so, home prices SOAR? Rents?
The econonimic consequences could be unbelievable.... our economy is based on the Aussie dream.

ArJay
(aka Chicken Little)

 

[always_learning]

The econonimic consequences could be unbelievable.... our economy is based on the Aussie dream.

Actually it is much worse, if we agree that our economy is based on capitalism, then it naturally follows that if the cost of capital is becomes zero AND availablity of capital is very high then like apollo-13 "Hey, Houston, we have a problem here".

Lets take 3 businesses models:

• The pub with no beer.
• The pub with beer at $2 a glass.
• The pub with free beer.

Given equal capital reserves which of the above will go out of business the fastest? a) b) or c)? No cheating, there is no way to turn tap-water in to beer or saying that pokies will subsidizing the cost of beer!

Naturally I say c) would fold the fastest, followed by a) and b) has a good chance to stay in business if they can outlast c)

 

[Andrew_A]

Actually it is much worse, if we agree that our economy is based on capitalism, then it naturally follows that if the cost of capital is becomes zero AND availablity of capital is very high then like apollo-13 "Hey, Houston, we have a problem here".

Lets take 3 businesses

• The pub with no beer.
• The pub with beer at $2 a glass.
• The pub with free beer.

Given equal capital reserves which of the above will go out of business the fastest? a) b) or c). Naturally I say c), followed by a) and b) has a good chance to stay in business if they can outlast c)

No cheating, there is no way to turn tap-water in to beer!

Clearly all of them. Any society that has solved the basic problem of allocating resources equitably will be far beyond the need of alcohol

 

[Sunfish]

At the risk of stating the bleeding obvious....... Interest free loans are not the norm!!!! We all agree on that.

So, if this is a legit offer (and no one has proven otherwise) I see it as a dark cloud on investment generally. I'm reminded of the adage "Be careful what you wish for!" If sophisticated rich American (?) investors are abandoning their own currency to take defensive positions in ours, then I see troubled times ahead.

I see it as an early warning that we may revisit the '30's.

For a year now I've advocated a "light on your toes" attitude to investment. For me that means short term stocks..... and I watch the market open every day. I suggest applying very tough "worst case" analysis to your own investments.

It is just possible that 0% int rate may be too much to hold RE!

Thommo