BOLDYIELD enables you to invest in asset-backed deals – real estate mortgages and cash – flow businesses. We take precautions to ensure your investment performs well, but as with any type of investment, there are risks involved. By investing in the Platform you may be putting your money at risk.
Below we set out these risks and our approach to mitigate the main risks:
1. Borrower or Project Owner default
Borrower default is the biggest risk and happens when a borrower or project owner becomes unable to fulfill the liabilities it has taken. Meaning that your capital is at risk.
We only participate in secured lending and investing deals, which means that the total value of the investment is always secured against an asset. If the borrower or project owner becomes unable to settle the debt then we can sell the collateral to cover any shortfall. Due to our strict partner selection policy, we choose to cooperate with borrowers and project owners who have proven track record and there are enough liquid assets (assets that could be reasonably sold easily).
However, please keep in mind that whilst the investment is backed by an asset, the realizable value of the security depends on the value of the underlying asset.
If a loan or investment deal goes into default we will contact you to make you aware about this in more detail and explain the next steps of the debt restructuring and even enforcement process, if such is necessary, that we will manage on your behalf.
2. Mortgage or Collateral fraud
Mortgage or Collateral fraud is when mortgages or prohibitions on assets are obtained fraudulently.
Mortgage or Collateral fraud usually involves individual(s) or organised criminal gangs and at least one corrupt associate, such as an accountant, solicitor or surveyor.
Mortgage or Collateral fraud can include:
· Property over-valuation;
· overstating a salary or income;
· hijacking genuine conveyancing processes;
· taking out mortgages or collaterals in the name of unsuspecting individuals or those who are deceased after identity theft;
· taking out a number of mortgages or collaterals with different lenders on one address by manipulating Asset Registry data;
· changing title deeds without an owner’s knowledge to allow the sale of an asset;
· We mitigate these risk in various ways, including:
o We complete a 3-level ownership right due-diligence which means we collect and check all the documents of ownership rights including full payment approvals to be sure transactions are closed properly, no debt is left;
o We thoroughly investigate our partners experience, reputation, historical reliability;
o In case having any minor doubt it is regular practice for us to have third party legal conclusion on ambiguous issues for a right decision to be made afterwards.
3. Portal insolvency
Portal insolvency is the risk that the company operating the investing Portal goes out of business.
We have taken a number of steps set out below to ensure that in the unlikely event of Portal insolvency you would have protection and all your investments would be serviced until maturity. These include:
1. All customer money is held on a segregated Client trust account, if not invested;
2. The security provided by a borrower or project owner in favour of the investment is held by an independent security agent for the benefit of our investors.
We have made arrangements with a back-up servicing provider to take over the administration of our investments in the case of us no longer trading. The back-up servicer will manage the day to day operations of BOLDYIELD to ensure that the Portal can continue service existing customers and that all borrower and project owner payments of interest and capital are credited to investors accounts as usual
4. Asset class market risk
Asset market risk means that the borrowers or project owners ability to pay interest and repay their loans could be affected if there was a downturn in the real estate or other business industry market. We have established procedures to protect our investors against this risk including maximum amount of investment correlating to experience and assets of a borrower or project owner, flexible exit strategy and other measures.
5. Illiquid instrument
Illiquid instrument means that you might not be able to sell your investment parts before the end of the investment term. We will mitigate this risk by offering a BOLDYIELD Marketplace for our investors to be able to sell their investment part any time.