MIFEX - concerns, updates

[Guest]

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[Natasha]

My agreement as a lender was to provide interest free finance for a loan to an entrepreneur in a developing country. I even concede that my agreement was to provide an interest free loan to an MFI (who could charge interest) to an entrepreneur in a developing country. My agreement was NEVER to provide financial assistance to an MFI for operating expenses. If loans were "topped" up to cover MIFEX  "operating expenses" and advertised as being for a certain entrepreneur/business then it was intentionally misrepresenting what the full amount of the loan was to be used for. Had MIFEX advertised loans on Kiva for themselves "for operating expenses" and lenders had decided to invest in them with that full disclosure, that would have been an entirely different matter. My agreement with KIVA/MIFEX was breached. There was intentional misrepresentation, whether or not entrepreneurs received partially the money or not. Breach of Agreement + Intentional Misrepresentation = Fraud.

[wthepoo]

  , Natasha.

From a German lawyer's perspective, too, it is as "simple" as that.

Best wishes,
Wolfgang.

[charity]

In one of those very crazy coincidences, I clicked on this loan:
http://www.kiva.org/app.php?page=businesses&action=about&id=43424&_tpos=1&_tpg=3
to Rosa Parra in Ecuador, through MIFEX.  It funded in May, 2008 for $1200, from a single, anonymous lender.  0% repaid      

[wthepoo]

It funded in May, 2008 for $1200, from a single, anonymous lender.  0% repaid      

Now that really hurts... thanks, Charity, for sharing your find.

Please let me point out, though, that in this case, assuming that the entrepreneur Rosa Parra actually received the funds in May (possibly minus about 35%) - as the FAQs claim or at least suggest as probable -, and further assuming that she had repaid her monthly instalments to MIFEX so far, she still owes 50% of what she received (plus interest). So, finally assuming that her business is performing fine, our Anonymous friend could still recover about $400 from her...

IMHO Kiva should try to find ways to collect these debts instead of MIFEX (possibly have MIFEX assign the claims to Kiva, e.g. - though this might be a little risky in case MIFEX heads into a bankruptcy proceeding) or at least see that they are collected. Probably Kiva is doing just that, now - the decision to default all loans came a little surprising, though, regarding these cases...

Best wishes,
Wolfgang.

[Odette]

Excellent and very articulate post Natasha! It certainly expresses how many of us feel.

[Jan & John]

I see now 20 comments on the MIFEX default notice I received...
http://www.kiva.org/app.php?page=businesses&action=comment&id=47294&ent=90464

Most of them appear to be in a forgiving mood and/or not really sure what happened mode...

Most appear to place a large part of the blame on MIFEX and a small portion on Kiva's process...

Most appear to be in 'wait and see what happens' mode...

I find this encouraging so far for Kiva's future...

jan

[Odette]

Where is this notice re: MIFEX defaulting all loans? Was it emailed to all lenders with MIFEX loans?
Is it on a Kiva page?    Is it on KF somewhere other than posted by a KF?  I know about the loans defaulting but can't find the 'official notification.'

[wthepoo]

Where is this notice re: MIFEX defaulting all loans? Was it emailed to all lenders with MIFEX loans?
Is it on a Kiva page?    Is it on KF somewhere other than posted by a KF?  I know about the loans defaulting but can't find the 'official notification.'

Here: http://www.kiva.org/about/aboutPartner?id=7 (first paragraph)

Kiva’s Field Partner, MIFEX, is currently experiencing operational difficulties and is unable to repay debt to Kiva. Therefore, all of MIFEX’s active loans have been defaulted and the partnership is now closed. Please see the FAQs below for more information.

Best wishes,
Wolfgang.

[Visitor Number 1]

MFI      defaults       $ amount       % by $ amount

MIFEX      734           337,158          62.5%
WEEC       886           179,444          33.3%
SEED       184            13,965           2.6%
REDC         5             3,805           0.7%
Shurush      7             2,515           0.5%
E Afr Beta   7             2,445           0.5%
HKL          1               162           0.0%
         
totals:   1824           539,494         100.0%


Peter

I was curious about HKL...to see that 5-star MFI had a loan in defaulted status.  Appears to be a false alarm.

Here's the loan in question:  http://www.kiva.org/app.php?page=businesses&action=comment&id=38768&ent=41830

The Kiva Fellow in Cambodia left a comment on the loan stating that this is an error:

Dear Ms. Leah and other lenders

Ms. Im Socheat is mistakenly in default category now.
Actually she has already paid off before maturity date.
We are now trying to fix this mistake with Kiva engeneer team.
Also, we'll have a interview with her as soon as possible.

Kindly wait for a while.
Thank you for your understanding.

Best Regards,

Kanae Ochiai, Kiva Fellow

Posted by Kanae Ochiai from Phnom Penh
Nov 26, 2008

The lenders for this loan should be expecting a larger credit around Dec 15th.

[Jan & John]

Thanks, Visitor Number 1, I was looking at that myself and wondering.

and 

I see you decided to stick around this crazy place after the chat last night?

Actually, those dreadful statistics don't look quite so gloomy to me...
... when I compare them to a total of $50,000,000 loaned out to over 70,000 people. 

I try to stay as positive as I can

jan