PWCC expands its lending activities

[Peter_Spaeth]

As I've explained before, I don't think the UCC-1 is technically required, but I agree with Adam that it's a good idea and could save a lot of aggravation and avoid risk.

[Exhibitman]

Originally Posted by Peter_Spaeth

As I've explained before, I don't think the UCC-1 is technically required, but I agree with Adam that it's a good idea and could save a lot of aggravation and avoid risk.

I would not trust my fate to a judge deciding between members of a pack of squabbling unsecured creditors, not when the cost and effort of protecting myself from that outcome is so minuscule. It is a heck of a lot easier to file a claim to retrieve the property as a secured creditor than it is to slug it out with the rest of the pack of unsecured hyenas.

[Peter_Spaeth]

Originally Posted by Exhibitman

I would not trust my fate to a judge deciding between members of a pack of squabbling unsecured creditors, not when the cost and effort of protecting myself from that outcome is so minuscule. It is a heck of a lot easier to file a claim to retrieve the property as a secured creditor than it is to slug it out with the rest of the pack of unsecured hyenas.

Yeah, what's that saying about an ounce of prevention?

[savedfrommyspokes]

Guess this "anonymous" email puts this loan into a different perspective:

https://youtu.be/cBkfheyo-Fc?t=278

[BobC]

Originally Posted by savedfrommyspokes

Guess this "anonymous" email puts this loan into a different perspective:

https://youtu.be/cBkfheyo-Fc?t=278

Interesting, thanks for sharing that. Not implausible at all, but would definitely indicate some major business mistakes on a company's part that was making such loans, and didn't fully take into consideration the potential volatile nature of the "assets" being held as collateral. Most banks/lenders like to see at least a 20%, or more, down payment on a home loan so they have a sufficient buffer should they end up having to take back the property and sell it on a defaulted loan to recoup what they lent out. But house and land values are usually somewhat slow to change, and normally do not go down.

One would think that sports cards would be considered a very risky, non-traditional type of collateral, with an extremely volatile value nature. Personally, if it were me running such a company, I would be downright scared to offer a loan on more than say 25%-30% of a sports card's deemed value, and even then I would be constantly worried. I would also think that there would be some clause in such a loan agreement that called for a constant measurement/monitoring of the value of the underlying collateral, and that if it was deemed to fall below a certain level, the borrower would be subject to something similar to a "margin call" that occurs when people borrow against the value of stocks they own, and those stock prices fall below a certain level/price. I've never been involved in such a loan/advance based on sports cards, nor seen any agreement for one, so I don't know exactly what any such lender's specific loan terms may be. Nor if their loan agreements call for them being able to go back against a borrower for the balance of what they're owed if the card(s) used as collateral were sold, but didn't cover the full amount of the loan given out and still owed, plus interest, etc.

[Rhotchkiss]

Bob, you are spot on. I actually think one could make a very lucrative business out of lending against cards, but it must be done responsibly. First, the loan-to-value (LTV), must be appropriate. 50%-60% may make sense for Ruth, Cobb, Mantle, Robinson, but not for modern. Regardless, the strength of the underlying collateral is key to setting an appropriate LTV. Second, the lender needs to underwrite each borrower and make them sign personally on the debt. This way, in the event the collateral is insufficient to cover the loan (plus accrued interest and penalties/cost) you can go after the human who should have net worth. Third, there should be a mechanism to value the collateral regularly and to require either additional collateral or pay down if the loan, if the value of the original collateral declines.

I guess we will find out in time whether there are real issues at PWCC- it will have zero impact on me and my collection. But if there is, expect a run on the Vault, SVB-style and some serious “hobby” fall out. Not fall-out in a bank way - as Nicolo pointed out, this is not cash, it’s cards and they belong to people and should all be in the vault. But fall out from PWCC having to dump all their underwater cards/collateral, further driving down the value of modern cards. And, if the vault closes, some people may need to pay major state sales tax but may not have the cash to do so, especially when they are paying tax on a card they bought for $X that is now worth 30% of $X.