Assetz Provision Funding Limited (APFL), a UK Limited Company, has been set up to provide a discretionary Provision Fund linked to specific, identified Investment Accounts or loans. Each Provision Fund provides a coverage multiple of the expected future losses on the account, as specified in the terms for each Account. We explain our expected loss coverage multiple in more detail on our Defaults and Losses web page however it is simply the number of times over that expected losses on loans held within an Investment Account are covered by the Provision Fund for that Investment Account. So for example if expected losses in stressed conditions on a loan portfolio within an Investment Account such as the Quick Access Account were say 0.5% and the Provision Fund held assets that represented 1.5% of the loan portfolio in that account then we would quote a current expected loss coverage multiple of 3x. This means that the losses could in fact be three times higher than predicted and still be fully covered by the Provision Fund.
The Provision Fund is designed to cover;
- Payment delays of interest from a borrower where that sum arrives later than expected
- Shortfalls in interest received from a borrower
- Any possible capital losses if a loan defaults and the security when sold does not cover the loan balance remaining
In a situation where Lenders vote to accept a proposal from a borrower for debt forgiveness when there is a clear alternative that offers the prospect of full recovery of Lenders' funds, the Provision Fund will not normally cover losses for those individual Lenders who voted to accept that loss. Lenders that individually voted against taking a loss should expect to be covered by the Provision Fund irrespective of a majority decision to take a loss.