Yes. We have taken two steps to ensure that borrowers know they will always get their loan when the auction closes, and that investors know they can start earning interest immediately on all successful bids:
- The borrower is committed before the auction starts.
Before the auction begins, the borrower completes legal documentation committing to accept the loan, provided that the average rate of interest achieved in the auction is at, or below, a maximum rate (known as the ‘reserve rate’).
- We ensure that auctions are fully filled at the reserve rate.
We work with a group of underwriters who have agreed to participate in each auction and invest in whatever proportion of the loan which is not taken up by other investors.
They do this by bidding in the auction alongside other investors. Their bids are placed gradually during the life of the auction and all bids are at the reserve rate. They cease to bid when the reserve rate for the auction has been met.