Author Topic: How to Analyze Secondary Market Loans  (Read 3208 times)

twigster

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How to Analyze Secondary Market Loans
« on: April 02, 2014, 10:33:10 PM »
Really enjoyed the podcast Chat with Reflective-Rupee:

http://www.stitcher.com/podcast/lend-academy-podcast/episode/32568034

Some questions brought about by the podcast....
Are there any sites that have more filtering criteria available to find loans (ie. more filtering criteria than are available on Folio itself)?

Can you back-test various strategies on any sites out there?

How to develop a strategy and rules for seeking loans?  There was discussion that typically investors over pay for loans with recent late payments.  Also if there have been several on time payments, reduced credit rating etc. are not so important.   So, are there strategies that have been proven or are they just trial and error?  Any recommended strategies? 

I believe this info is probably all ready out there, just unable to find it.

Again thanks for the great podcast, really interesting info about investing in the secondary market. 

 

james

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Re: How to Analyze Secondary Market Loans
« Reply #1 on: April 03, 2014, 12:45:29 AM »
Im also not finding free and useful tools, or even strategy, for folio that I can find for the main LC site. 
Be first, be smarter, or cheat. 2 of 3 ain't bad.

Fred

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Re: How to Analyze Secondary Market Loans
« Reply #2 on: April 03, 2014, 02:51:05 AM »
I do not rely on any 3rd party tools to do this.  Instead, I wrote some programs to download FOLIOfn notes from https://www.lendingclub.com/foliofn/notesRawData.action daily.

Having complete & accurate data in a nicely formatted storage (DB tables) is half of the quantitative/analytic work.  The other half is developing statistical models & automating trade orders.

rawraw

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Re: How to Analyze Secondary Market Loans
« Reply #3 on: April 03, 2014, 10:32:23 AM »
Don't think it exists. Have to go the Fred route

twigster

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Re: How to Analyze Secondary Market Loans
« Reply #4 on: April 04, 2014, 06:28:32 AM »
Thanks for the responses.  The problem I have is how to evaluate all of the different criteria and develop statistical models...  For example a loan with 7 on time payments is better than a loan with 3 late payments and 4 on time payments.  How much of a discount should the 3 late + 4 on times sell for?  Is there some where to see how past notes offered on folio have performed?

Voj

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Re: How to Analyze Secondary Market Loans
« Reply #5 on: June 06, 2014, 03:24:09 PM »
I've looked but did not find anything good. Had to go to the custom data mining route and import all the data into my own platform. I don't want to give away all my secrets but I wouldn't worry about the change in FICO score, there are more important metrics you can use to determine a good or bad loan.

Let the other guy worry about it and sell the note for a discount so that you can scoop it up for a profit. Something as small as a rise in credit balance can lower a credit score. I wouldn't worry to much about it.

I get a kick with finding people who are trying to commit robbery by marking up a note 500% with only $.01 principal on it. On the other hand, there are some real gems out there with no late payments but have gotten the investor spooked because the FICO score went down a few points so they sell the note for a 5% discount but the YTM is 25%.

Loans in grace periods sell like hot cakes. I've seen them marked down 30% and they are gone in minutes.