Author Topic: Please explain the loan volume at LC.  (Read 7427 times)

CircleT009

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Please explain the loan volume at LC.
« on: October 15, 2015, 01:40:23 PM »
Ok, as most of you know I have been investing with LC for quite sometime, so have a fairly good understanding of how things work.

I will say the last year to 18 months or so have been the most frustrating with regard to loan volume.  I am talking loan volume not "quality loans", as I get ripped by other users for using the word "quality" as that is based on each investor.  Leading up to 9/30, we all saw volume dip to almost nothing.  Then on 10/1 or 10/2, boom, great volume.  Now for the last 3-4 days, back to very low.

How in a period of 10 days have they met some quota for the quarter and started choking the pipeline again? 

I know this is a regular topic on the site, but come on LC.  How can my filters go from producing 10-30 loans if not 50 loans each feeding time a week ago to only producing 3-5. 

Most will say loosen up filters, etc, etc.  I am not interested in that response as I filter on credit criteria not interest rate, so even if LC is moving lower "quality" loans to lower interest rates, I would still see them in my filters.

I guess this is more of a rant than anything, but am hoping someone smarter than me can explain.

I still believe deep down that in some way the retail investor got screwed when LC allowed whole loan purchases.  I really enjoyed the initial rule that allocated the % of a loan an institutional investor could buy based on the % of cash in the institutional accounts vs the retail accounts.  Seemed like the most fair thing to me.  Now I feel the institutional investor is getting all the supply.

Fred93

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Re: Please explain the loan volume at LC.
« Reply #1 on: October 15, 2015, 02:44:07 PM »
The knob is indeed turned quite far toward the institutional investors at this moment. 

Here is the breakdown of fractional vs whole at the last few feeding times.

10/14/15 18:00:00.7  LC Download 517 new loans
10/14/15 18:00:00.7  LC Batch size: $1,267,850f   $6,957,250w 

10/15/15 06:00:00.8  LC Download 484 new loans
10/15/15 06:00:00.8  LC Batch size: $798,250f   $6,524,000w

10/15/15 10:00:01.5  LC Download 709 new loans
10/15/15 10:00:01.5  LC Batch size: $1,446,325f   $10,164,075w

Fractional loans were 15%, 11%, 12% of these three feedings respectively.

jheizer

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Re: Please explain the loan volume at LC.
« Reply #2 on: October 15, 2015, 02:58:58 PM »
Ouch.  It has sucked.  I waited till after the quarter started to move another "larger" amount of money over.  Forgot about it for a few days, then with the weekend and Columbus day the deposit took even longer.  And now I am buying 1 per drop.  Sucks.  I should have just put it in my brokerage account as stocks have rebounded nicely in the same time frame.
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jheizer

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Re: Please explain the loan volume at LC.
« Reply #3 on: October 15, 2015, 04:02:57 PM »
Also thanks Fred.  Nice to have some kind of insight when LC is silent.
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Fred93

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Re: Please explain the loan volume at LC.
« Reply #4 on: October 15, 2015, 04:09:54 PM »
I don't really know what goes on in the mind of the person who turns this knob, but I believe it is influenced heavily by who is yelling.  I suspect that there are institutional investors who have no qualms about making their complaints known. 

I believe therefore that there is value in individual retail investors making their complaints known to LC, to provide some balance.

So call or write them.  Let them know how you feel.

jheizer

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Re: Please explain the loan volume at LC.
« Reply #5 on: October 15, 2015, 04:14:34 PM »
Good call.  I took it to the stupid 2015 public international complaint forum know as twitter and pointed my finger at them.  And I'd agree.  Institutions are more pissed off over the cut off end of the quarter and have way more pull that little 5 digit I.
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CircleT009

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Re: Please explain the loan volume at LC.
« Reply #6 on: October 15, 2015, 05:34:00 PM »
The knob is indeed turned quite far toward the institutional investors at this moment. 

Here is the breakdown of fractional vs whole at the last few feeding times.

10/14/15 18:00:00.7  LC Download 517 new loans
10/14/15 18:00:00.7  LC Batch size: $1,267,850f   $6,957,250w 

10/15/15 06:00:00.8  LC Download 484 new loans
10/15/15 06:00:00.8  LC Batch size: $798,250f   $6,524,000w

10/15/15 10:00:01.5  LC Download 709 new loans
10/15/15 10:00:01.5  LC Batch size: $1,446,325f   $10,164,075w

Fractional loans were 15%, 11%, 12% of these three feedings respectively.

Thanks Fred.  Really appreciate the info.

It is really disappointing to think that the people that got LC to where it is today were retail investors and now LC could care less about retail and primarily puts focus on institutional investors. 


Rob L

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Re: Please explain the loan volume at LC.
« Reply #7 on: October 15, 2015, 06:47:31 PM »
Is this a credible theory?

LC knows the cash balance individually and in aggregate of all individual investor accounts. They modulate the loan flow into the fractional market such that this cash balance is less than x% more or less. Maybe ... ??

I have my line in the sand so to speak. If I'm not able to invest in loans I like then my cash balance will go up and I'll eventually move the money elsewhere. I'm not there now but I'm definitely not lowering my loan standards further. If it happens it happens.

Lovinglifestyle

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Re: Please explain the loan volume at LC.
« Reply #8 on: October 15, 2015, 07:08:03 PM »
Is this a credible theory?

LC knows the cash balance individually and in aggregate of all individual investor accounts. They modulate the loan flow into the fractional market such that this cash balance is less than x% more or less. Maybe ... ??

I have my line in the sand so to speak. If I'm not able to invest in loans I like then my cash balance will go up and I'll eventually move the money elsewhere. I'm not there now but I'm definitely not lowering my loan standards further. If it happens it happens.
[/b]

I feel exactly the same way.  I also am doing something Bryce brought up recently, re backing up in grades because of the maximum 3K/yr capital loss I have enough years of.  However, I don't really care what the grade is.  Standards are standards, and some of the A and B loans in the same filter as the the rest don't look any better because of things one can't filter for.

Re the cash balance and x% theory, I used to notice getting emails about how much my cash balance was when it started to creep up, with urging to stay invested by using their automated system.  Not getting any now.  The institutions have that need covered I'm guessing.

Thank you Fred93 for the data.  I'm so much more ticked off than I was before seeing that!

FILTER

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Re: Please explain the loan volume at LC.
« Reply #9 on: October 15, 2015, 11:40:41 PM »
I feel the same way that the recent quality and quantity has been disappointing. As mentioned, on 9/30 nothing then on 10/1 and 10/2, were large volumes of notes and BIG money was scooping them up.  I have been attempting to gain lost ground due some big unfortunate expenses this year.  Given the trickle of notes at the end of 9/30, in speculation to allow LC to adjust its balance sheets or modulate its statistics, one would not expect this decline in the first two weeks of the quarter.  Relaxing my filtering standards, I feel uncomfortable buying some notes.  As mentioned, I think allowing institutions to invest in fractions, or large fractions, of a note is fair rather than a whole. 

It’s conceivable that LC does or can modulate in favor of the institutional investor.

Question: Also, in theory, is it possible for the knob/dial turner to direct most the higher quality notes towards the institutional investors?
Thanks to all who provided some insight/input.

Fred93

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Re: Please explain the loan volume at LC.
« Reply #10 on: October 16, 2015, 12:16:44 AM »
in theory, is it possible for the knob/dial turner to direct most the higher quality notes towards the institutional investors?

When they started the whole-loan marketplace, they said publicly that they would not do this.  They said the allocation of loans between the two markets would be random.

I can't find those words now.  They are probably long gone from the web site, etc.

You can do your own statistical analysis on the existing loans, to see if the stats for whole match the stats for fractional.  For example, you could do this on the NSRPlatform website. 

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Re: Please explain the loan volume at LC.
« Reply #11 on: October 16, 2015, 02:07:36 AM »
in theory, is it possible for the knob/dial turner to direct most the higher quality notes towards the institutional investors?

I can't find those words now.  They are probably long gone from the web site, etc.

Thanks Fred 93 Located this in LC Blog: Whole loans

Certain institutional investors have indicated a preference to be able to purchase loans in their entirety to try and obtain legal and accounting treatment specific to their situation. This process would also provide a great borrower experience that can enable “instant” funding.  To accommodate these requests and while insuring that all investors continue to have access to a large number of loans of equal quality, a randomized subset of loans by grade will be available to purchase as a whole loan (i.e. not in $25 increments) only for a brief time period (12 hours), while all other loans will be immediately available for fractional purchase.  If the loans are not purchased as whole loans in the specified time period, they will become available for purchase in the standard, fractional manner.  Some things to note:
•While we anticipate most investors will continue to prefer investing in fractional loans, we will make whole loans available to anyone requesting it by sending an email to investing@lendingclub.com (please put Whole Loan Access Request in the subject line).
•To reflect the additional option of whole loans, a new data point has been added to the browse notes and historical download file called “initial listing status”.  This data point has two possible settings –“F” for fractional, “W” for whole.
•A filter on the Browse Notes page for “Initial listing status” will also be available.

- Hopefully the bold sentence is always accurate.

Rob L

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Re: Please explain the loan volume at LC.
« Reply #12 on: October 16, 2015, 09:40:04 AM »
Thanks to Fred93 we know the w and f numbers for a few recent drops. It would be some extra work, but I wonder:
Of the f's what was the dollar amount of those that were first released as w's and later moved to the fractional side when they were not bought (i.e. initial listing status w)?

PS: I don't think LC has a quality dial; it's random for two reasons. One is that they believe all loans within a subgrade are equally good. There's no such thing as better quality (per LC). Secondly, if they did somehow select better quality loans for institutional lenders it would be discovered and become a huge PR disaster.

jheizer

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Re: Please explain the loan volume at LC.
« Reply #13 on: October 16, 2015, 10:35:26 AM »
On the flip side, I've been having more loans in funding status this last week.  I'm picky enough that on average I will fund ~1 in 75 loans.  So usually they fully find in minutes, worse case hours.  I've got 5 out there currently and they are all weirdly from October 13-14th.  I've always kind of used the speed they get funded as a gauge I am doing things "right" in others eyes as well or looking for things I may have missed.  But I see no issue with these other than one of them is a B so those are usually slower to fund.  So go rerun you stuff over old loans so these stop sitting for me.  haha
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lascott

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Re: Please explain the loan volume at LC.
« Reply #14 on: October 18, 2015, 01:05:52 PM »
Whole vs fraction previous thread. Will be interesting to see 3rd qtrs when shows in in NSR.

Title: LC's Whole Loan vs Fraction Allocation
http://www.lendacademy.com/forum/index.php?topic=3131.0
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