The bonus accrual feature pays an enhanced monthly interest rate of 50% of the existing monthly interest rate (based on the maximum bonus accrual of 180 days). For example, a 12% annual loan paying 1% interest per month would accrue 0.49% of the monthly bonus. This will accrue and will only be payable once the loan has been repaid if we are successful in recovering sufficient property proceeds.
Our bonus accrual calcualtion: ((1 * 0.5 * 12) / 365) * 180 = 2.96%
As an example, if a loan is 180 days overdue (and therefore classed as 'non-performing') the investor would receive a bonus accrual of 2.96%.
The bonus is attached to the loan part and is payable to whoever owns the live loan part at the date of repayment.
Although bonus accrual will not be paid at the time of the partial repayment, bonus accrual will be paid against the partial repayment upon full repayment of the loan, provided a sufficient recovery is made. Bonus is calculated on partial repayments up until the date the partial repayment is made, provided the partial repayment is not made past 180 days overdue.
(For example, if a loan is sold during the Tolerance Period Tolerance Period ( 0 to -180 days), the new lender receives the bonus if they continue to hold the loan part until the loan is repaid.)
We believe this feature helps balance the risk/reward investment opportunity of overdue loans. This is paid in preference to Lendy's share of margins and fees.