Hello!
Omaraha informs that Estonian loans, which are signed from 01.06.2019, have commission fee of 30% instead of previous 20%.
Omaraha.ee

Hello, Thanks for your notification. I can fully understand this. The business has to be profitable for the shareholders. Can I ask you does this also mean Omaraha will stay in Slovakia and/or the refunds from defaulted loans will rise ? Kind regards, WM

Everything else continue as before. You can still invest into Slovakian loans and compensations is on similar level. In the future there might be increase in compensation amount.

vlk494
Everything else continue as before. You can still invest into Slovakian loans and compensations is on similar level. In the future there might be increase in compensation amount.

To be fair, it has been by understanding so far that compensation fund is not something that OR uses (or should use) to generate profit, it should be (is?) self sustainable. Therefore I fail to see the link between higher revenue from mediation of interest payments and compensation payments.

My understanding so far has been that the only payments out of the compensation fund go to investors and never to OR as profit. Compensation fund owns significant portfolio of old loans bought back from investors and is likely to receive at least some payments for these loans - who benefits from these payments? Do these go back to compensation fund or do these go to OR income?

Technically I can imagine how OR as legal owner of these old loan parts will sell them to compensation fund over and over again and in this way is depleting compensation fund. This would be possible if compensation fund is not treated as separate unit within OR, because after the sale OR is still legal owner of the loan part? However, I don't think (hope) this is happening, but without detailed accounting overview - you can never be sure?

I did think about this already some time ago but as I felt this was very unlikely, I never brought it up. Now when increase in compensation is being discussed BECAUSE OR will be receiving other income, it kind of seems that these two might be connected?

I am probably wrong, but please explain if you don't mind.

Under FAQ: “The warranty fund will sell the problematic loan to a collection agency after the investor has received their payment from the fund. The income from the sale will be directed back to the warranty fund.”

Arne assumed that the investors will lose 1-2% after the comission funds going up. My prediction is more like 3-5%, but we'll see who is correct.

olavi

Omaha does not use compensation fund to generate profit. All funds from it go to compensation payments for the investors.
All loans sold from date 01.03.2014 onwards, belong to collection agencies who bought them and not to Omaraha. Money, we receive from sell of these loans to collection agencies, is important to reach 60% compensation level.
Older loans were sold by every investor individually, therefore have been already compensated and cannot be used to sell to the compensation fund again. If some money returns from these old loans then it will go to compensation fund.

We would ask not to suggest uncorrect theories, especially if it is already unlikely for the person who proposes it. If you have any questions about theories, then you can send us message or email.

vlk494

Makes sense, at least on paper. Like I said, impossible to check without detailed accounting data, but no reason to suspect that it is not as you describe it is.

But what about the minimum compensation payment? How is it possible to increase the minimum payment if it doesn't get subsidized from other sources? And if it does get subsidized, then whats the point of taking with one hand and giving with the other? Lower but more predictable returns with a sort of platform provided guarantee?

If increase in investor fees is not related to increase in compensation amount then what is holding back the increase atm?

I would assume that current compensation fund is sustainable at 60% floor because most of the time we see payments that are higher than 60%, but it does not seem to be sustainable at higher than 60%.

olavi

Increasing minimum compensation % is possible, if the feel that compensation fund size is adequate compared to in debt loan amounts and combining compensation amount with what we receive from collection agencies is enough, to for certain meet 60% compensation level.
Of course we will also look at longer picture and not always increase compensation % to its highest possible level. If debt amount increases for whatever reason then it is good to have larger reserves.

vlk494
Hello!Omaraha informs that Estonian loans, which are signed from 01.06.2019, have commission fee of 30% instead of previous 20%.Omaraha.ee

Will this fee increase be accompanied by minimum compensation % increase?
I think such possibility was mentioned in an earlier post.

kkkkk

At the moment minimum compensation stays at 60%.