DoFinance Insights and Outlooks: Available funds and pay-out requests

Welcome to DoFinance Insights and outlooks! DoFinance has prepared important information so that you stay up to date with the latest developments. Today’s blog update provides information on topics related to principles of information exchange and cost deduction for collection of loans in Loan Originators systems as well as the withdrawals of the proceeds of portfolio sale. 

How it worked

Dofinance systems have automated connections to the Loan Originators systems. Any repayment of the borrowers debts in Loan Originators lending system was automatically transferred to Dofinance system and represented in available amount statements and these amounts were made available for pay-out requests.

These available amounts, however, were not supported by actual transfers of funds from Loan Originators to the Dofinance investor accounts. Dofinance has requested Loan Originators from Poland and Indonesia to explain the current situation and transfer their outstanding amounts.


What obstructed the operations

As stated in several prior communications, Loan Originators faced distress during COVID19, related to, among others, material adverse changes in local regulations, interest rate caps, and in respect of Indonesia, substantial changes in requirements for foreign lending companies.

As a result of the distressed situation Loan Originators have suspended issuing new loans and are focusing  exclusively on collection of outstanding loans for more than a year already. The result is that income of the Loan Originators has significantly decreased and their ability to mitigate the defaults of consumer loans [on their own account] has become impossible. Additionally, the expenses related to ongoing debt collection could be funded only from the recovered funds. As stated in several prior communications, for the last several months the costs of collection have been higher than the collected amount from the debtors. As a result, Dofinance has not received payments from Loan Originators for [a part of] loans that have been repaid, but whose collection costs exceeded  the collected amounts.


Collection costs coverage source

Pursuant to the terms of the Assignment Agreements concluded between the Loan Originators and the assignees or the Terms and Conditions of DoFinance Website Usage Agreement, the investors have an obligation to cover all actual costs related to enforcement of the claims, including the costs of recovery of the loans incurred by DoFinance (or the Loan Originators acting on its instruction) as the investor’s representative fulfilling the authorization granted in the Terms and Conditions of DoFinance Website Usage Agreement or the Assignment Agreement to ensure the enforcement of the claim on behalf and in the interests of the investor.  Furthermore, pursuant to the Terms and Conditions of DoFinance Website Usage Agreement or the Assignment Agreement DoFinance is entitled to withhold costs incurred by DoFinance (or Loan Originators) while ensuring that the Loan Originator continues servicing and recovery of the loan from the funds to be transferred to the investor before they are paid into the investor’s account.

Dofinance has done thorough analysis of the said agreements and costs presented by Loan Originators, and concedes that as a result of the above situation part of the funds [previously specified in the [investor accounts as] available for pay-outs have to be adjusted for collection costs. Pursuant to the Terms and Conditions of DoFinance Website Usage Agreement, DoFinance is entitled to correct the errors and make amendments to the investor’s profile.

The purpose of this letter is to inform investors of the costs associated with debt collection, as well as to inform about the adjustments that will be made associated with funds that will be actually received or anticipated from the Loan Originators.

The costs deduction will affect amounts calculated in positions of Available amounts, and Reserved amounts that are not supported by funds received from the Loan Originators.

The total costs that the Loan Originators used within the scope of Assignment and Terms and Conditions of Dofinance Website Usage Agreement related to management of one’s assets are 148 739 EUR.

Within the next week (until) respective adjustments will be made in the DoFinance system reflecting reduction in available funds due to costs presented above. The adjustments will be made in a manner that each investor statement will show all related accounting records for better understanding.

Only a share of investors will be affected by these adjustments, but the purpose of this is to make proper adjustments in how the information is displayed to investors. 

These costs will not affect amounts received from sale of Loan Originators portfolios.


First Withdrawals are done

Leaving all the above there and switching to the subject of the portfolio sale proceeds withdrawal, DoFinance is proud to announce that the first batches of payments were already processed and paid to the investors. DoFinance has received quite a lot of requests and KYC forms for further review. This process is not amid the fastest ones out there, but it moves forward.

If questions remain please be sure to contact DoFinance Support.