Derivex

[Peter 14.7]

HI All

Speaks cleary, Acey does. Hummmm...

I wonder if all the interest in D is more from fear of missing out than concern about the legality?

You dont have to go far to find some dodgy operators to be concerned about but theyare being examined here on SS with such detail.

Personally I have not considered D but I do know this...

John Symonds set up Aussie Homes Loans and was one of the first big non-bank lenders. It was all new this form of finance. It whas gone on the change the industry forever.

John Symonds has previously set up a number of businesses and I and not totally sure but gone belly up I believe 2 times.

So this are not always cut and dried.

Peter 147

 

[see_change]

I wonder if all the interest in D is more from fear of missing out that concern about the legality?

I don't see what the rush is. If it works well , they're still going to be around in a month or two.

See Change

 

[AdamN]

Money for nothing and chicks for free cannot be. If they are making money and you are better off, then the whole world is heaven. We can now go back to Genesis in the Garden of Eden and stop worrying about ever buying a house. Or not ? This could get interesting yet...

I have my own theories but am keen to know from others, if this is the real deal and takes off :
1) who is renting anymore ?
2) the impact on the market and economy with no competition for money ?

Also, my understanding is that the T&C and PDS are normally 2 different documents. I have the T&C but does anyone have a copy of the PDS ? If so, could they upload it pls ?

Ad(ios).

 

[ggumpshots]

How's the exchange rate risk been Gumpshot?

Cheers,

Aceyducey

As the guy said halfway down having jumped off the cliff

so far so good...................in fact great, but I did monitor the yen/$A closely the first year

 

[tmc]

So the worst case is you have a 5% interest fixed loan for N yrs. AND you get to choose whether you refinance it elsewhere or just give it back to the receivers.

Good point keithj, I honestly hadn't thought of that. That was my last reason not to try this. As soon as I see one person from either here or 'the dark side' progress their application through to conclusion, I'm going to give it a go. I still don't think this can or will last for too long, but you've pointed out there's nothing to lose whether I'm right or wrong.

TMC

 

[Bill.L]

Hi all,

Jamie, since I asked the question about any settlements on loans, Simon has replied to the thread. As it seems to be a fairly important part of where this discussion goes, I felt it would be appropriate for him to answer. Still waiting.

My personal opinion is that too many people are looking beyond the obvious.

What is the worst case scenario?

Probably that all the application fees are lost and there are no loans.

bye

 

[Kristine..]

HI All

Speaks cleary, Acey does. Hummmm...

I wonder if all the interest in D is more from fear of missing out than concern about the legality?

You dont have to go far to find some dodgy operators to be concerned about but theyare being examined here on SS with such detail.

Personally I have not considered D but I do know this...

John Symonds set up Aussie Homes Loans and was one of the first big non-bank lenders. It was all new this form of finance. It whas gone on the change the industry forever.

John Symonds has previously set up a number of businesses and I and not totally sure but gone belly up I believe 2 times.

So this are not always cut and dried.

Peter 147

Hi Peter

John Symond (singular) found himself caught up in the Bank of Adelaide crash, and rather than declare bankruptcy looked to trade his way out of the mess he found himself in due to circumstances.

He secured funding from Origin and Macquarie for the first fully secured loans, lent out $50,000,000 in the first month or so with a 1% discount below the Standard Variable Rate for the life of the loan guarantee, and the rest is history.

His autobiography makes for interesting reading. I don't think I've ever read such a frank autobiography before. Everyone at Aussie speaks well of him, what you see is what you get.

He hasn't done too badly for a skinny Australian - Lebanese kid who grew up behind fruit shops.

When I was with Aussie the laptops were loaded with copies of the early 'Go On, Ask Your Bank' and other advertisements and I was surprised to see how many people were moved almost to tears by the memory of those pioneering days.

Remember the ad with everyone standing in line at the bank with the parking meters that they had to keep putting money into while they were standing in the queue? Then John would come into the frame, laughing hilariously, saying 'I don't believe it, the Bank charges you to lend them your money!'.

But no, John Symond has never been bankrupt even though his Rolls was repossessed, he lost all his personal money and assets, he was determined that he would not shame his parents and his family by taking that option.

Pioneers often appear to be fools at the time, but hindsight makes them heros.

Cheers

Kristine

 

[Simon]

Hi all,

Jamie, since I asked the question about any settlements on loans, Simon has replied to the thread. As it seems to be a fairly important part of where this discussion goes, I felt it would be appropriate for him to answer. Still waiting.

My personal opinion is that too many people are looking beyond the obvious.

What is the worst case scenario?

Probably that all the application fees are lost and there are no loans.

bye

Bill,

I have now just seen your post. I have been down in Sydney since Thursday attending the Derivex accreditation.

It is my understanding that a number of loans have been approved and the first round of settlements are occurring early February.

I am very busy at the moment and will try to answer objective questions. I have neither the time nor inclination to defend Derivex. Without meaning to be offensive to anyone here - I am just too busy to spend my limited time arguing with people.

I don't believe I need to "sell" this range of products. I am not a salesman nor am I interested in "overcoming objections" or talking people into signing a loan they are unsure of.

Best wishes to you all,

Simon

 

[Bill.L]

Hi all,

Thanks Simon.

If the first round of settlements are to happen in early Feb then it should be prudent to wait until then to see how it is going.

bye

 

[Simon]

Fair call Bill. I have posted on several occassions that people not 100% comfortable should hold off for as long as needed.

All the best to you,

 

[ArJay]

So the worst case is you have a 5% interest fixed loan for N yrs. AND you get to choose whether you refinance it elsewhere or just give it back to the receivers.

Hmmm.... yeh I agree this is a good point made by keithj....which gets me to thinking. Will/do DeriveX have the resources to be able to cope with the influx of loan applications they are going to be hit with after the initial Feb loan settlements? Especially if the media (which they undoubtedly will) gets scent of the story.

Which also gets me to thinking... wonder if their selection criteria for loan applications will become increasingly stringent as they pick up speed. If all goes to plan and they have their patents pending on the process they'll be able to pick and choose their clients like Britney at a bucks night...

Arjay

 

[Aceyducey]

Hmmm.... yeh I agree this is a good point made by keithj....which gets me to thinking. Will/do DeriveX have the resources to be able to cope with the influx of loan applications they are going to be hit with after the initial Feb loan settlements? Especially if the media (which they undoubtedly will) gets scent of the story.

Which also gets me to thinking... wonder if their selection criteria for loan applications will become increasingly stringent as they pick up speed. If all goes to plan and they have their patents pending on the process they'll be able to pick and choose their clients like Britney at a bucks night...

Arjay,

If you're in business too many customers is a problem you like to have (as far as anyone likes to have problems - and some businesses do handle this type of problem badly)

Judging from the posters in this and other forums I reckon there's enough skeptics around that any rush on their loans will be entirely manageable.

Cheers,

Aceyducey

 

[mitchmakhan]

Hey people,
I love the animated discussion this has caused, I have been a mortgage broker for about 18 Months, so I sent the info to a guy in the Brisbane Office who has been around for a while...he went down to the sydney thing as well last week, as far as he is telling me from his understanding that the loans are legitimate, and that we will also be an accredited broker for them...and he has personally applied for a loan at the same time...

If this does work out and I am still hesitant until I see the funds...the possibilities would be amazing...

I have a deal that is cashflow positive at the moment to the tune of 12% ROI so I shall put in an application and see what happens...and if it doesn't work out I will go and get traditional finance....as far as I can see, it's worth a shot...especially as the deal I am looking at is only a small one....I will let you know how I go...

Cheers Mitch

 

[XBenX]

They made pg3 of the AFR today - no new info

 

[mitchmakhan]

FYI>>>>>>Please see below for todays article...


Asic checks interest-free loan offer
Author: Joyce Moullakis
Date: 17/01/2005
Words: 339
Source: AFR Publication: Australian Financial Review
Section: News
Page: 3
The securities regulator is looking into what may be one of the boldest attempts to attract home-loan customers: the promise of an interest-free mortgage.

The loan products being launched today by internet-based company Derivex are being questioned by the Australian Securities and Investments Commission, and Victoria's consumer affairs department.

The Australian Financial Review understands Asic has served notice on Derivex to prove their claims.
The company did not return several calls by the AFR.

Derivex is advertising a home loan product that charges zero interest, a loan application fee of $275, and a loan settlement fee of $400. It requires applicants to allocate 5 per cent of the initial loan amount as a "refundable loan conduit reserve payment", so as to cover late or defaulted payments over the life of the mortgage.

While the AFR understands that Derivex is to issue bonds to make the venture profitable, the firm's website leaves many unanswered questions about how the products work. "The loan underwriter does not share in either the capital loan account accrued or property capital gains accrued," the website says. "Funding profits are directly generated from income accruals earned on capital reserved accounts."

A spokeswoman for Asic confirmed that the regulator had received several complaints about Derivex. "We are making inquiries," she said.
Consumer Affairs Victoria is keeping a watching brief on Derivex to ensure the company complies with the state's fair trading laws.

The promise of an interest-free home loan has also sparked concerns among industry commentators and consumer groups. "Be careful about parting with your personal information," said banking partner at Gadens Lawyers, Jon Denovan.

Victoria's Consumer Law Centre executive director, Chris Field, said consumers needed to exercise caution when taking out a mortgage from a newly established company.

JP Morgan analyst Brian Johnson said that Derivex's cost of funds "is going to be at least the 90-day bank bill rate, about 5.4 per cent, plus whatever costs they have. I can't see how you are going to make money."

 

[Aceyducey]

This is great!

Best to get this type of inquiry completed upfront so that everyone looking at the product down the track can have confidence that it works and is legal.

Much better than ASIC's track record of examining schemes years after they've closed down and the perpetrators left the country.

I wonder if it was someone in the industry who prompted the investigation....it wouldn't do for traditional lenders to have too much zero interest rate competition

Cheers,

Aceyducey

 

[XBenX]

No-one here should make an application until we hear of at least ONE that has gone through and received the loan funds.

How much were those applications? $495 I believe.

bye

I havent applied nor am I going to until I do loads of further research - I started doing some analysis and discussed w/ #ipchat over the weekend - the possible effects on demand and supply are quite staggering - I should post the log of our rants.

Perhaps just one single IMHO would make your post seem less of an order and more of a concerned opinion =)

 

[Free Loader]

It's good that the AFR is now onto the Derivex story which should quickly broaden the scrutiny being applied to involve industry analysts who can get to the bottom of the question of authenticity and consumer risk.

Assuming everything is legitimate though, I suggest everyone with equity in their properties should draft resignation letters from their day jobs and do the following:

1. Borrow 100% of the value of your property/ies from Derivex (including the re-finance of any current loans) on a 20 year term.
2. Invest the surplus funds in fully franked shares, or deposit it with BankWest or ING if you are slightly more risk averse (you'll pay more tax though).
3. Use the resulting 6%+ income to meet the principal only repayments (company profits should soar once they all get access to 0% borrowings too).
4. Re-finance the loan with Derivex back up to 100% of your even more valuable property/ies every five years so there is no 1.95% penalty on early repayment.
5. Then, every five years you will make 25% of the value of your real estate assets for doing absolutely nothing. The loan reduces but the funds you initially invest will not.

It will be like having your own ATM inside the front door handing out cash each month as the loan is repaid purely out of income - the financial equivalent of Norman Lindsay's Magic Pudding (or the never ending pack of Tim Tams for those who aren't as old as me - this link is worth viewing over a cup of coffee now that you don't have to work, although I hold no view as to the content http://www.hrnicholls.com.au/nicholls/nichvol5/vol51ins.htm ).

Nat R, finally you can hang up the Hewlett Packard financial calculator, except to manage your investments.

 

[Free Loader]

This article extract is from today's Mortgage Industry Association electronic newsletter. It is not necessarily negative, the MIAA is just covering its backside at this stage.

"Regulator Investigation

'Interest-free mortgages'

MIAA understands that regulators are looking into what seems to be an attempt to attract home-loan customers via the promise of an interest-free mortgage. The loan products being promoted by internet-based company Derivex are being questioned by the Australian Securities and Investments Commission, and Victoria's Consumer Affairs department.

The company Derivex is not an MIAA member and its operations are unknown to MIAA. There does not appear to be a clear and satisfactory demonstration from the company’s website as to how a mortgage could be interest free.

Accordingly members are alerted to act with caution in any dealings with the company."

 

[Peter 14.7]

This article extract is from today's Mortgage Industry Association electronic newsletter. It is not necessarily negative, the MIAA is just covering its backside at this stage.

"Regulator Investigation

'Interest-free mortgages'

MIAA understands that regulators are looking into what seems to be an attempt to attract home-loan customers via the promise of an interest-free mortgage. The loan products being promoted by internet-based company Derivex are being questioned by the Australian Securities and Investments Commission, and Victoria's Consumer Affairs department.

The company Derivex is not an MIAA member and its operations are unknown to MIAA. There does not appear to be a clear and satisfactory demonstration from the company’s website as to how a mortgage could be interest free.

Accordingly members are alerted to act with caution in any dealings with the company."

Loads of doubt being thrown about here. See my review of emphasis on the reader in bold. Why I wonder.? A little scared it may work the MIAA?

Peter 147