Author Topic: Recovery rates  (Read 2570 times)

thezinfan

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Recovery rates
« on: January 06, 2016, 09:41:34 AM »
For the past year, I've been receiving approx 14% recovery (before fees) on my loans that have been charged off. Is that about what others have been receiving?

Joe6Luck

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Recovery rates
« Reply #1 on: January 06, 2016, 03:18:50 PM »
By 14%, do you mean the recovery rate among the notes that had some (>$0) recovery? Or, is it among all the notes that were charged off regardless of whether there was any recovery?

It it is the former, then my result is very similar to yours. But, in my case, quite some, ~40%, notes didn't have any recovery after being charged off. So, my overall recovery rate is only 14%*(1-40%) = 8.4%.


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Rob L

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Re: Recovery rates
« Reply #2 on: January 06, 2016, 07:13:24 PM »
Copied from my post on another thread last week:

I did an analysis last week of recoveries as a percent of amount invested for each of my 512 charged off notes.
These are predominantly D & E notes starting mid 2013 and continuing to date (8100 notes issued).

     Amount Recovered       Number of notes
         21% - 100%                   18
         14% - 20%                     36
         13% - 9%                     176
          8%  - 1%                      16
          0%                              266   

Recoveries are only a part of the picture.
Obviously payments made before the charge offs significantly mitigate the total losses.

With notes sorted in order of decreasing loss as a % of note principal:
   Cumulative Total Loss           Number of notes (and % of total number of notes)
                11%                           64 (12.5%)
                21%                         128 (25%)
                38%                         256 (50%)
                50%                         384 (75%)
                58%                         512 (100%)

For D & E loans 58% may be a good estimate of average loss given default.

thezinfan

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Re: Recovery rates
« Reply #3 on: January 06, 2016, 10:20:45 PM »
Here's more info on my situation...again, this does not include LC recovery fees.

I've had 107 charged off notes from October 2011 to January 2016.

The first 60 of those notes (10/2011-12/2013) produced erratic results:
0% - 22 notes
4-5% - 28 notes
9% - 1 note
14% - 4 notes
25% - 2 notes
44% - 3 notes
Overall average of 5.8% recovery for these 60 notes.

I would doubt that I would see more recoveries on these notes. From 2014 to 2016, totally different. I've had 33 notes charge off from 1/2014 - 5/2015:
0% - 8 notes
14% - 18 notes
24% - 6 notes
43% - 1 note
Overall average of 13.5%

The last 14 notes are still fairly new (charged off April 2015 - current, most were September or more recent). No recoveries on those, but that expected.

One other caveat. I also sold some stinkers via folio so I don't have recovery info on those.

Joe6Luck

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Re: Recovery rates
« Reply #4 on: January 07, 2016, 12:13:05 AM »
I did an analysis last week of recoveries as a percent of amount invested for each of my 512 charged off notes.

An alternative way is to calculated the recovery rate as the "recovery value - recovery fee" / "principal + interest at the time of being charged off."

In my opinion, this is a better way to measure the efficiency of lending club's "recovery" capability after a note is charged off. It avoids the complexity to check how much you originally invested into a note. Different users might purchase notes (from the same loan, with same original principal value, say $25) at different prices from either foliofn or retail said. In this case, they invested different amount, but their recovery rate from the same loan will be exactly same.

In addition, I think this leads to a simple way (which can definitely be refined) to decide the maximal discount % when one wants to sell a very bad note, say, being 100+ day late.



« Last Edit: January 07, 2016, 12:16:12 AM by Joe6Luck »

thezinfan

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Re: Recovery rates
« Reply #5 on: January 07, 2016, 12:45:44 AM »
Joe6Luck,

That was my exact reasoning for looking into this. My recovery rate is really 70% of 13.5% on that last batch, as I think the LC fee is 30% of recovery. So that means if LC keeps up this higher rate of recover, your max discount on a near dead loan should be approx. 90%.