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there are tons of investors that would want to invest in this. a loan with a time horizon of 3,5,10 years is certainly worth a look and would fit in with any c

by awl130 11y ago

there are tons of investors that would want to invest in this. a loan with a time horizon of 3,5,10 years is certainly worth a look and would fit in with any consumer finance type investment (micro loans, car financings, etc). the investors would obviously not be involved in debt collection, and neither would the company itself. like any consumer finance (credit card, e.g.) it is a well-structured process of third-parties that handle collection. this is a slam dunk if they can get this executed. the PR risk is real however, i grant you that. there is real regulatory risk here

ryporter 11y ago
With a normal loan, the borrower enters into the agreement with the intention of eventually paying back the loan. In this case, they do not, and are unlikely to react kindly when confronted with repayment after going through a divorce. I hope SwanLuv is massively discounting the anticipated debt in their calculations, because I think this debt will be even less valuable than the average debt sent to a collection agency.
- awl130 11y ago
  obv. your discount rate will reflect the higher default rate. one comp are student loans extended by trade schools; there is a massive amount of loans outstanding by students that either never graduate or never find a job in their trade. they too are unhappy but that is the nature of debt. this will show up on your credit report just like unpaid credit card debt, student loans or car loans
nl 11y ago
A loan is expected to repaid, with some degree of delinquency. Statistically, ~50% of people will never be expected to repay this, and even on the ~50% who should repay you have to find them (which in 20 years time maybe harder than expected, since they are unlikely to let the company know they now need to pay it back). Superficially that doesn't seem like an awesome investment to me.
- awl130 11y ago
  this is essentially an options contract; if you can trade against irrationality then you will win every time; the data is clear that the difference between a couple's expectation of the success of their marriage versus statistical reality is a significant one; that is why if you can manufacture this trade you will reap the economic surplus. this is partially how las vegas and state lotteries work; despite a negative expected value people continue to gamble partially because of irrational overconfidence

by awl130 11y ago

ryporter 11y ago

With a normal loan, the borrower enters into the agreement with the intention of eventually paying back the loan. In this case, they do not, and are unlikely to react kindly when confronted with repayment after going through a divorce. I hope SwanLuv is massively discounting the anticipated debt in their calculations, because I think this debt will be even less valuable than the average debt sent to a collection agency.

awl130 11y ago
obv. your discount rate will reflect the higher default rate. one comp are student loans extended by trade schools; there is a massive amount of loans outstanding by students that either never graduate or never find a job in their trade. they too are unhappy but that is the nature of debt. this will show up on your credit report just like unpaid credit card debt, student loans or car loans

nl 11y ago

A loan is expected to repaid, with some degree of delinquency. Statistically, ~50% of people will never be expected to repay this, and even on the ~50% who should repay you have to find them (which in 20 years time maybe harder than expected, since they are unlikely to let the company know they now need to pay it back). Superficially that doesn't seem like an awesome investment to me.

awl130 11y ago
this is essentially an options contract; if you can trade against irrationality then you will win every time; the data is clear that the difference between a couple's expectation of the success of their marriage versus statistical reality is a significant one; that is why if you can manufacture this trade you will reap the economic surplus. this is partially how las vegas and state lotteries work; despite a negative expected value people continue to gamble partially because of irrational overconfidence