Bugs and New Repayment System - Q&A With Kiva CS

[Guest]

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[wthepoo]

Do you see why I'm confused then?

I sure do, Ann - that's what I felt, too, a few months back.

But Pete just stressed the connection I pointed out in my final point... you bear the risk - that isn't the most pleasant connection, probably, but an essential one. So while it will in most cases not be your money that goes into the pockets of the entrepreneur (or home owner ) and while in many cases the borrower would probably even have received a loan with the same or similar conditions without your or Kiva's contribution, it will be your (and the other lenders') sponsorship that is characteristic for this loan and that can rightly make you feel connected in a special way.

I should probably have made this a little clearer - sorry.

Best wishes,
Wolfgang.

[Dagfinn]

Maybe it is this very fact that causes so little direct feedback from the entrepenours as well?

Anyway to me it is that never stopping feeling that there are always something new about the concept not told us that is in stark contrast to the transparancy sold us.  It seems like the story is sweetened just the same way as a can of Del Monte, not anythig bad with that but it is is not the fresh fruit.  About time Kiva came clear on this on their own free will, not having to have it forced out of them like a bad teeth one at a time. . .

I had a talk with them a few days ago and when I came to terms with the message received it was that, essentially, from Kiva's point of view they are ok, even I am not.  A dangerous position to place oneself into, I dare say as the end cause to not justify the means getting there.

Be well all, Dagfinn A.

[Ulli]

Lenders have been used to the fictionalized play by play of "their borrowers."  Without judgment, Kiva essentially fabricated a loaning and repayment process and overlaid it on the actual happenings "on the ground."  This was similar to the 1930s-40s play by play announcers recreating away ballgames, having only the tickertape to find out what had happened and then broadcasting a verbal rendition that had the sound and feel as though the announcer was right there viewing it all.  But the public loved it and it was essentially accurate.
Dan

Dan,
I like your analogy. Staying in you analogy I want to remind everybody that eventually TV made it's way into our living rooms.
Maybe the new Kiva system will be our television which allows us to see what is happening in real time. I trust Kiva and have continued my lending activities after the missing repayment bug was fixed.
Kiva is now a little bit harder to explain to outsiders but it is still an excellent idea and I believe once the repayments come rolling in we all will be much more relaxed and busy relending our Kiva credit.

Ulli

[AccountAbility]

Ann  - Although we are perhaps going off topic, I would like to assure you that the specifics are pretty much as Kiva describes them.  There might be brief periods of transition when they differ, but essentially you as a lender are funding that specific borrower.  When I was handling a mortgage portfolio for retirement plans, we would either commit to or buy a new loan with specific known terms.  Sometimes the originator (comparable to Kiva's MFI Field Partner) would go ahead and make the loan, knowing that they would be happy to keep it in their portfolio if we didn't choose to fund it.  (These were all new loans, not "seasoned".)

Whether we committed to the new loan and it was our specific funds that were disbursed or if the originator disbursed the funds and we reimbursed them, in both cases by the time the ink was dry it was our loan and we stood the risk of delinquencies and default.  If the originator also acted as servicing agent for the loan (as is the case with Kiva's MFI Field Partners) we received monthly reports on the repayments of that specific loan, when they were paid and when they were delinquent.  The servicing agent was audited to ensure that their books were accurately reflecting what actual payments the borrower made and what payments were disbursed to us.  If the loan got in trouble, it was our trouble-- unless the trouble was mistakes by the servicer (in which case it was still our trouble, just of a different sort.)   In Kiva's case, we lenders have effectively delegated to Kiva the job of working out and resolving the trouble.

We are now seeing in the new system a process that mirrors the process I describe above.  With some reworking of the reporting to lenders (as I proposed in my previous post here), I think it will end up working fine.  

Dan

[Dagfinn]

Let us hope and prey for that Dan, that it will end up just fine - though for certain they way in which we get there is equally important.


- Dagfinn A.

[RichardF]

If the loan got in trouble, it was our trouble-- unless the trouble was mistakes by the servicer (in which case it was still our trouble, just of a different sort.)   In Kiva's case, we lenders have effectively delegated to Kiva the job of working out and resolving the trouble.

Albeit keep in mind per the Kiva Terms of Use Agreement, we have have no authority nor recourse in this mandated delegation.

1. Participation in the Program
...
1.1. Loan Disbursement.
...
Field Partners are solely responsible for screening each Borrower and posting requests for Loans on the Website, and Kiva (a) expressly disclaims any responsibility to screen any Borrower or any Field Partner, and (b) shall have no liability whatsoever and you shall hold Kiva harmless from, any and all liabilities with respect to, or resulting from such screenings.

1.2 Loan Collection and Repayment.
...
You hereby acknowledge and agree that neither Kiva, its Field Partner(s) nor the Borrower(s) will be obligated or pay you any principal (other than to the extent actually received by Kiva from a Field Partner with respect to such Borrower) interest or other fees or amounts to you or any other Lender in connection with any Loan you make.

[Dagfinn]

Dear Richard, albeit your are dead right from a formal/legal point of view this is a very different issue.  If Kiva have to relate to its lenders based on their formal/legal standing they have lost their lenders = their existence for being.

The sad part is that Kiva apparantly is not yet aware of this fact of life - and act without respect to the lenders that flocked around them wanting to believe in this grand idea of transparant person to person involvement.

I cannot speak for others but I think I am not alone when saying that if Kiva volunteered freely accurately what is going on we would be patient, optimist and thrustful that in the ned they will come around and getting it right.  However that requires to be candid and proactive about the information (included lack thereof), the very essence of transparancy if you will.

This is what is missing and no formal or legal issue can control this, hence - if they do not soon realise they need the trust and goodwill of its lenders Kiva will become a swan that did not fly.

In all earnest, Dagfinn A.

[AccountAbility]

Albeit keep in mind per the Kiva Terms of Use Agreement, we have have no authority nor recourse in this mandated delegation.

I guess I of all people am aware of that, having about single handedly kept the thread alive in the Lounge about the Kiva Contract:

http://www.kivafriends.org/index.php/topic,1666.0.html

I personally don't have a problem with the delegation having left no authority or recourse with us as lenders, other than the lack of communication.

I also started a related thread about the Terms of Use and current implications:

http://www.kivafriends.org/index.php/topic,2947.0.html

Dan

[RichardF]

Dagfinn and Dan,

I agree with your sentiments.  That was a feeble attempt at Kivan irony, using its own words to highlight the inherent fatally flawed weakness of an iron-clad legalistic defensive posture.  Such continued protectionist posturing against its own lenders very well could lead to its own demise.

[TropicalPete]

Gerard,

Let me first define some terms:
PA1 - Payment system circa August 2008 and prior
PA2.0 - September and part of October 2008 where partial repayments were deposited to our accounts, when Kiva was able (like the Note under every loan states), for some on a daily basis.
PA2.1 - They new partial repayment system that started by freezing daily repayments and continues with monthly partial repayments (based on the grace period schedule you have described which was not part of PA2.0).

Why did Kiva not go from PA1 directly to PA2.1 by doing the first big partial repayment bonanza on September 15th 2008 (for payments received in August 2008 and prior) then make the next monthly payment on October 15 2008 for the month of September?

That's how I would have planned the transition from PA1 to PA2.1. The way Kiva went from PA1 to PA2.0 then to PA2.1 then provided us an explanation of PA2.1 seems like Kiva discovered and rectified the flaws of PA2.0 and moved to PA2.1 and are now trying to sell us the story that PA2.1 was planned from the beginning.

Why was PA2.0 necessary?