Author Topic: Bankrupt notes no longer selling on Folio  (Read 12306 times)

Bohb Daishi

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Bankrupt notes no longer selling on Folio
« on: January 24, 2014, 02:53:38 AM »
Looks like LendingClub decided that bankrupt notes were too good to sell on the Folio. This change must have come with the new Folio update earlier this week. There goes my 95%+ discount bankruptcy note flipping strategy, plus about $120 in purchased inventory that I can no longer offload to "greater fools" for profit...

Think I could call them and get a credit for that $120 because they didn't warn us before changing their policy?
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core

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Re: Bankrupt notes no longer selling on Folio
« Reply #1 on: January 24, 2014, 03:01:39 AM »
What do you mean?  I just listed 10+ BK notes a few hours ago, and they are showing in the results.  At least I think they are.  What exactly changed for you?

As for calling them and getting credit, that's very funny.  One of these days though, they're going to get their butts sued for this moving the goalposts crap.

Bohb Daishi

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Re: Bankrupt notes no longer selling on Folio
« Reply #2 on: January 24, 2014, 03:10:12 AM »
There are still a few on the market and I can still sell a few of mine as well. But the bulk is trapped with a blue flag that says "Sorry, this note cannot be sold at this time due to pending bankruptcy."

I'd bet that they have someone manually flagging bankrupt notes to keep them from selling, but they aren't done with the whole list yet.


What do you mean?  I just listed 10+ BK notes a few hours ago, and they are showing in the results.  At least I think they are.

It could also be a website-specific block, since you were still able to sell "pending payment" notes for a few weeks after the change.
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core

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Re: Bankrupt notes no longer selling on Folio
« Reply #3 on: January 24, 2014, 03:28:47 AM »
Oh.  Heh yeah you could be right about that.  Oops.

Thanks for the heads-up.  No more buying BK notes for me.  Rats.  I never did get a chance to make much from them anyway; I was still refining my strategy and now poof gone. 

Were you able to determine if it's just chapter 7?  I saw a chap 13 today where LC actually filed proof of claim. Maybe something will come out of that one, so it's definitely still worth something.  What about if they just provide bankruptcy counsel?  That's not a BK.  I'm wondering if they've done the same thing for deceased borrowers.

Bohb, you should just sue Lending Club in small claims to get your cash back.  In your own county.  Just to make a point.

Bohb Daishi

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Re: Bankrupt notes no longer selling on Folio
« Reply #4 on: January 24, 2014, 04:01:44 AM »
Bohb, you should just sue Lending Club in small claims to get your cash back.  In your own county.  Just to make a point.

I actually do plan to call them in the morning. $120 for a single phone call is well worth my time.

I wonder if this would actually hold up in court if I did sue them...  ::)
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Bohb Daishi

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Re: Bankrupt notes no longer selling on Folio
« Reply #5 on: January 24, 2014, 04:12:34 AM »
Thanks for the heads-up.  No more buying BK notes for me.  Rats.  I never did get a chance to make much from them anyway; I was still refining my strategy and now poof gone. 

Were you able to determine if it's just chapter 7?  I saw a chap 13 today where LC actually filed proof of claim. Maybe something will come out of that one, so it's definitely still worth something.  What about if they just provide bankruptcy counsel?  That's not a BK.  I'm wondering if they've done the same thing for deceased borrowers.

Confirmed for Chapter 7, Chapter 13, bankruptcy council, and even "proof of claim". The ones that are still on the market seem to be random, which lends credibility to my theory that they are manually flagging these notes (or there are a lot of people who know how to backdoor the system). I think you can still trade dead cadavers to necrophiliacs,  since it doesn't mention it on the sell screen.

My strategy was making very consistent money (90%+ success rate), but not much in actual dollar quantity. Only about $100 profit in the end. I had recently started scaling it up in the last month because there were so many more notes on the market.
« Last Edit: January 24, 2014, 04:15:57 AM by Bohb Daishi »
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core

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Re: Bankrupt notes no longer selling on Folio
« Reply #6 on: January 24, 2014, 04:31:52 AM »
I actually do plan to call them in the morning. $120 for a single phone call is well worth my time.

Be sure to let us know how that goes.  Obviously they will not give you any credit, but I'd love to hear what they say.

I wonder if this would actually hold up in court if I did sue them...  ::)

They won't show.  You will win and even if they did your losses would be limited.  There was that woman who sued Toyota I think it was in small claims just because she was angry.  It worked... very well I might add.

Quote
My strategy was making very consistent money (90%+ success rate), but not much in actual dollar quantity.

Well since it's over now, you might as well spill the beans for us.  You said something about -95%... what, you were buying them at -95% and selling for full value, or just scalping a bit?

Quote
I had recently started scaling it up in the last month because there were so many more notes on the market.

So many more BK notes on the market, you mean?  If so, kinda makes you wonder who knew this was all coming in advance.  I will refrain from mentioning the sinister network.  Oops, I just did.  Too late.  But I can say that I bought more BK notes in the last week than I ever have, and didn't think anything of it.  Was just happy to get the deals at the time.  Not much money involved for me so I won't lose much, but it's certainly odd timing.

Bohb Daishi

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Re: Bankrupt notes no longer selling on Folio
« Reply #7 on: January 24, 2014, 05:19:17 AM »
My strategy was making very consistent money (90%+ success rate), but not much in actual dollar quantity.

Well since it's over now, you might as well spill the beans for us.  You said something about -95%... what, you were buying them at -95% and selling for full value, or just scalping a bit?

The -95% number is arbitrary based on the number we've been throwing around for the last few weeks, starting with this thread: http://www.lendacademy.com/forum/index.php?topic=1959.0

I would give more information on the strategy, but I fear that some of you unscrupulous traders who are reading this might be savvy enough to use the knowledge to compete with one or more other strategies that I have. You, Core, are my biggest worry since you have greater resources, more advanced technical skills, and you seem to have more than enough free time to implement some of the low-margin and/or time-consuming strategies that I use. You obviously started dabbling in bankrupt notes after I spilled the beans in that "95%" thread, so that's proof enough to be paranoid.  :-X

I had recently started scaling it up in the last month because there were so many more notes on the market.
So many more BK notes on the market, you mean?  If so, kinda makes you wonder who knew this was all coming in advance.  I will refrain from mentioning the sinister network.  Oops, I just did.  Too late.  But I can say that I bought more BK notes in the last week than I ever have, and didn't think anything of it.  Was just happy to get the deals at the time.  Not much money involved for me so I won't lose much, but it's certainly odd timing.

A few months ago, I predicted that they would do something like this. I thought it would just be a filter, allowing you to keep "investing" in bankrupt notes if you had the stomach for it. But I think it'll be for the better. If not at least to help keep people from getting burned, thus giving them more reason to turn to Folio for their purchasing.
« Last Edit: January 24, 2014, 05:22:25 AM by Bohb Daishi »
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New Jersey Guy

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Re: Bankrupt notes no longer selling on Folio
« Reply #8 on: January 24, 2014, 09:11:33 AM »
"You may not list a Note on the Trading Platform if the Note: is in Default or Charge Off status, has an underlying borrower with a pending bankruptcy filing, has a payment that is processing, is priced at a 70% premium over the total value of accrued interest and outstanding principal, is priced at a negative yield to maturity, or was issued before October 12, 2008. "

This paragraph just keeps getting longer, and longer and longer.

This is a shame.  It must have happened overnight.  One of my filters consistently brought up 9 to 10 BK's.  Now there are none.
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core

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Re: Bankrupt notes no longer selling on Folio
« Reply #9 on: January 24, 2014, 09:30:42 AM »
This paragraph just keeps getting longer, and longer and longer.

It's not even a paragraph, it's a big ol' single sentence.  Soon the message will take up the entire screen and look something like this:

You may not list a Note on the Trading Platform if the Note: is in Default or Charge Off status, has an underlying borrower with a pending bankruptcy filing, has an underlying borrower who is deceased, has a payment that is processing, has ever shown a missed payment or the borrower is even thinking about not paying, has an underlying borrower in active military service, has a next scheduled payment date falling on a weekend, has ever been held in an IRA even if that IRA did not belong to you, has any collection notes attached to it, might be something that Core might want to buy, has not had at least 6 months of payment history, has fewer than 10 payments remaining, is priced at a 70% premium over the total value of accrued interest and outstanding principal, has a stated loan purpose of wedding or green loan, is graded C through F, is priced at a negative yield to maturity, is priced such that it would net you any profit whatsoever if sold, was issued before October 12, 2008, or for any other reason we can think up.

New Jersey Guy

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Re: Bankrupt notes no longer selling on Folio
« Reply #10 on: January 24, 2014, 09:48:48 AM »
You know, as hard as I laughed reading that post, it certainly does look like the direction it's heading!

When I first started trading on Folio, it simply read:
"You may not list a Note on the Trading Platform if the Note was issued before October 12, 2008. "  As a matter of fact, that was just LAST January. 

You know what, though?  I can't think of any reasons why they would ban BK's anyway.  Personally, I never dealt with them, but I don't see the problem with dealing in them if you wanted.  So, what's the reasoning here?
« Last Edit: January 24, 2014, 09:50:47 AM by New Jersey Guy »
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core

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Re: Bankrupt notes no longer selling on Folio
« Reply #11 on: January 24, 2014, 10:00:25 AM »
You know what, though?  I can't think of any reasons why they would ban BK's anyway.  Personally, I never dealt with them, but I don't see the problem with dealing in them if you wanted.  So, what's the reasoning here?

It's not that they don't want people trading BK notes.  It's that they don't want people buying BK notes without realizing it.  They figure people are too stupid to figure out what "Borrower declared Chapter 7 bankruptcy" means.  Lending Club could have added a popup warning, but I think they've discovered that all of the other popup warnings LITTERING the site have done absolutely no good.  Short of having a claw hammer come out of the screen and thwack the person on the head there isn't much that can be done for these helpless individuals.  So we all have to suffer because some idiots with sub-60 IQ's need nursed by their mommies.

core

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Re: Bankrupt notes no longer selling on Folio
« Reply #12 on: January 24, 2014, 10:20:38 AM »
Bohb-  Investor services opened up 20 minutes ago.  Please fill us in.  We are all dying to hear how hard they laughed when you asked for your $120 back.

My prediction:  "Sorry sir, the vast majority of investors who purchase bankrupt notes intend to hold them until they are charged off."
« Last Edit: January 24, 2014, 10:24:46 AM by core »

Joleran

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Re: Bankrupt notes no longer selling on Folio
« Reply #13 on: January 24, 2014, 10:24:45 AM »
If they wanted to protect against accidents, they should have added a popup when you select a bk note for buying that says "Hey, this note is in bankruptcy".  It would still be nurse-maiding but I'd much prefer to get rid of them to speculators even for a penny than deal with the murky tax implications of charged-off notes.

New Jersey Guy

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Re: Bankrupt notes no longer selling on Folio
« Reply #14 on: January 24, 2014, 10:40:47 AM »
Quote
It's that they don't want people buying BK notes without realizing it.

You know, you can't play Old Maid if you're afraid of actually getting the Old Maid card every now and then.

There have been times in my haste on Interest Radar where I clicked the wrong note.  Or, yes, I forgot to scan the log.  Ending result was getting BK notes (probably off of Bohb!).  It's part of the game.

Now that I know who was selling these notes, I think Bohb owes me a little bit of money!
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014