Author Topic: Has LC loan quality dropped?  (Read 6747 times)

investforfreedom

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Has LC loan quality dropped?
« on: December 22, 2012, 11:26:12 AM »
I don't know if my observation is correct.  It seems that the quality of LC loans has dropped lately.  I have noticed more loans with "Last Major Derogatory" coming on their pipeline than before.  And I have not been able to find loans that fit my criteria as quickly as I did in the past.  I was able to find at least 1 or 2 loans using the same criteria just a couple of months ago but now I have to go for days without being able to put any money to work.  (And it seems that there are more 60-month C loans coming on the platform as well.)

Can someone shed some light on this? 
« Last Edit: December 22, 2012, 11:30:42 AM by investforfreedom »

investforfreedom

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Re: Has LC loan quality dropped?
« Reply #1 on: December 22, 2012, 11:57:08 AM »
This seems to confirm my observation: http://www.p2panalytics.com/december-18th-2012-is-lending-club-starting-to-run-out-of-riskier-notes/

I continue to find A-B grade loans to be plentiful, but that is not the case with the other grades.
« Last Edit: December 22, 2012, 11:59:09 AM by investforfreedom »

william

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Re: Has LC loan quality dropped?
« Reply #2 on: December 22, 2012, 02:02:38 PM »
Yea I have noticed this for D-G loans. I don't invest in A-C loans so can't say anything about them but for D-G it is much harder to find loans that fit my filters.  November was fine it all started in December.

Lovinglifestyle

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Re: Has LC loan quality dropped?
« Reply #3 on: December 22, 2012, 02:52:50 PM »
Could it be that more responsible people have learned that trying to borrow your way out of debt is a bad idea?

DanB

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Re: Has LC loan quality dropped?
« Reply #4 on: December 22, 2012, 03:02:06 PM »
Actually the average interest rate paid on 3 year loans has gone down in the last few weeks (by around 1%) so would it not in fact be accurate to say that average LC loan "quality" has gone up?  Don't worry though, the lower grade loans will be back. After all we are talking about the American consumer.  :)


Lovinglifestyle...........Maybe they're just taking a break from feeding us the BS about how they're taking out these 20-24% loans to "consolidate" or pay down their even "higher" interest loans. Yeah right, I believe that.  :)

william

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Re: Has LC loan quality dropped?
« Reply #5 on: December 22, 2012, 03:55:52 PM »
Actually the average interest rate paid on 3 year loans has gone down in the last few weeks (by around 1%) so would it not in fact be accurate to say that average LC loan "quality" has gone up?  Don't worry though, the lower grade loans will be back. After all we are talking about the American consumer.  :)


Lovinglifestyle...........Maybe they're just taking a break from feeding us the BS about how they're taking out these 20-24% loans to "consolidate" or pay down their even "higher" interest loans. Yeah right, I believe that.  :)

Very funny but your probably right after the holidays we should prepare for an extravagant amount of lower grade loans.

rawraw

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Re: Has LC loan quality dropped?
« Reply #6 on: December 22, 2012, 04:44:27 PM »
If you track the average FICO on LC's website has been trending downward, although not by much.

yojoakak

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Re: Has LC loan quality dropped?
« Reply #7 on: December 22, 2012, 08:10:44 PM »
I have noticed more loans with "Last Major Derogatory" coming on their pipeline than before.

Didn't they just add this "Last Major Derogatory" field to the data a couple weeks ago? That could explain why it's showing up more often than before.

http://www.lendacademy.com/forum/index.php?topic=518.0
http://www.lendacademy.com/forum/index.php?topic=516.0
« Last Edit: December 22, 2012, 08:14:17 PM by yojoakak »

viking

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Re: Has LC loan quality dropped?
« Reply #8 on: December 23, 2012, 05:29:19 AM »

Didn't they just add this "Last Major Derogatory" field to the data a couple weeks ago? That could explain why it's showing up more often than before.

http://www.lendacademy.com/forum/index.php?topic=518.0
http://www.lendacademy.com/forum/index.php?topic=516.0
It is even there in the old notes if you pull them up on the website.
However, I haven't seen one w/o the N/A; has anyone seen any old notes with a  "Last Major Derogatory"?   If not, then N/A probably means "Not Available or Unknown" rather than "Not Applicable" which describes current notes which doesn't have any  "Last Major Derogatory". I wish they would use something else for "Unknown" rather than N/A.

faeriering

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Re: Has LC loan quality dropped?
« Reply #9 on: December 23, 2012, 09:10:44 AM »
I've also been having more trouble finding notes that I like, though there seems to be plenty of notes listed overall.  I usally use my filters and then hand select for the loan amount being close to the indebted amount (this shows a better ROI with my filters, Ron I'm not necessarily saying that they will use the money to pay off the debt, only that there's a good correlation between this ratio being close to 1, and a loan having a good ROI).  I also like to make sure that the loan payment isn't more than 10% of their monthly income, but I have some flexibility on this if their DTI is lower, or if they have an absurdly high income for their geographic region.  And then I factor in what their delinquency history is like.  I used to be able to get more notes a day than I could invest in, now I find myself having to choose which notes I dislike the least which is making me a bit nervous. 

Did LC change how they were setting their interest rates recently? Or did they change who they were recruiting to be borrowers? or the good loans just getting picked up faster when they are released to the marketplace?

investforfreedom

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Re: Has LC loan quality dropped?
« Reply #10 on: December 23, 2012, 09:41:55 AM »
or the good loans just getting picked up faster when they are released to the marketplace?

That's why I dislike the implementation of automated investing.  Good loans could be gone very quickly.  Even though only a relatively small percentage of loans is set aside at random for large investors, they could still participate in the remainder of the loans after a period of time, manual or automated.  And the rest of us are frontrunning each other with our automated investing strategies.  (Even though no two persons' investing filters are the same, they could still be similar in many respects, as far as picking good loans are concerned.)
« Last Edit: December 23, 2012, 04:48:41 PM by investforfreedom »

viking

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Re: Has LC loan quality dropped?
« Reply #11 on: December 23, 2012, 01:46:25 PM »
I've also been having more trouble finding notes that I like, though there seems to be plenty of notes listed overall.  I usally use my filters and then hand select for the loan amount being close to the indebted amount (this shows a better ROI with my filters, Ron I'm not necessarily saying that they will use the money to pay off the debt, only that there's a good correlation between this ratio being close to 1, and a loan having a good ROI).
How do you filter for the ratio? Do you use your own spreadsheet or IR?
On IR I didn't really find a higher ROI (or IRR as they use now) for the Ratio~1. However, better results were surprisingly yielded for a Ratio > 0.4.

Can you give some examples of your Strategies that performed best with the Ratio ~1?

rawraw

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Re: Has LC loan quality dropped?
« Reply #12 on: December 23, 2012, 01:56:10 PM »
I've also been having more trouble finding notes that I like, though there seems to be plenty of notes listed overall.  I usally use my filters and then hand select for the loan amount being close to the indebted amount (this shows a better ROI with my filters, Ron I'm not necessarily saying that they will use the money to pay off the debt, only that there's a good correlation between this ratio being close to 1, and a loan having a good ROI).
How do you filter for the ratio? Do you use your own spreadsheet or IR?
On IR I didn't really find a higher ROI (or IRR as they use now) for the Ratio~1. However, better results were surprisingly yielded for a Ratio > 0.4.

Can you give some examples of your Strategies that performed best with the Ratio ~1?
I found significant benefits on NSR.  Did you first only choose debt consolidation and credit card before running the filter?  Otherwise you'd screw up the data, since the revolving line has nothing to do with debt to remodel a pool.

viking

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Re: Has LC loan quality dropped?
« Reply #13 on: December 23, 2012, 02:13:03 PM »
I've also been having more trouble finding notes that I like, though there seems to be plenty of notes listed overall.  I usally use my filters and then hand select for the loan amount being close to the indebted amount (this shows a better ROI with my filters, Ron I'm not necessarily saying that they will use the money to pay off the debt, only that there's a good correlation between this ratio being close to 1, and a loan having a good ROI).
How do you filter for the ratio? Do you use your own spreadsheet or IR?
On IR I didn't really find a higher ROI (or IRR as they use now) for the Ratio~1. However, better results were surprisingly yielded for a Ratio > 0.4.

Can you give some examples of your Strategies that performed best with the Ratio ~1?
I found significant benefits on NSR.  Did you first only choose debt consolidation and credit card before running the filter?  Otherwise you'd screw up the data, since the revolving line has nothing to do with debt to remodel a pool.
I haven't tried NSR. Where is the "Requested Amount/Revolving Balance" Ratio parameter listed?

rawraw

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Re: Has LC loan quality dropped?
« Reply #14 on: December 23, 2012, 03:02:34 PM »
I'd have to look, as the site has changed lately.  But this blog post talks about it: http://www.nickelsteamroller.com/blog/2012/02/featured-filter-revolving-credit-balance/