Author Topic: New Loans with 25-26 day funding periods?  (Read 3879 times)

DLIFVOIP

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New Loans with 25-26 day funding periods?
« on: April 03, 2016, 11:51:56 AM »
Title says it all.

rickhuizinga

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Re: New Loans with 25-26 day funding periods?
« Reply #1 on: April 03, 2016, 05:06:24 PM »
Title says it all.
I've seen some at 29 days.

nmay2k

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Re: New Loans with 25-26 day funding periods?
« Reply #2 on: April 03, 2016, 06:30:08 PM »
It looks like some radical changes are happening at LC. As far as I know, the 4/3 6:00 release is the first to have a greater than 14 days funding period. These are expiring between 4/28 to 5/2 or a 26 to 29 days period. Also this release was not visible until 8:20 am PT (> 2 hour delay). The 4/3 10:00 release was skipped and the 4/3 14:00 release of 180 loans was 30 loans fractional (17%) and 150 loans whole (83%) or about 18 loans in the B/C grades & fractional. The majority of loans released are whole loans and they do not become fractional after 12 hours anymore. Is LC having a melt-down? Has it been taken over by institutional onvestors?

hzhou9

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Re: New Loans with 25-26 day funding periods?
« Reply #3 on: April 03, 2016, 08:02:18 PM »
The funding process has been radically changed I am afraid, since LC announced that webbank will hold a proportion of the loans instead of the previous "issue fee".
I believe now borrower has already got money before the loan is fully committed on the website, and that's why LC could extend the funding period to a month, or even longer in the future. And this might be good in my mind - it gives higher requirement for underwriting, as the loans may finally screw LC's own money if nobody wants it.

nmay2k

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Re: New Loans with 25-26 day funding periods?
« Reply #4 on: April 03, 2016, 09:56:31 PM »
SO here are some leanings I did not realize from a p2p Bloomberg article last April (2015):

Apply for a loan with LendingClub, the biggest of those online markets, and WebBank issues it. Two business days later, LendingClub buys the loan and parcels it out to the investors who pledged to fund it. WebBank collects interest on the money for that window and earns a fee from LendingClub.

LendingClub and Prosper donít originate loans themselves because they donít haveóand donít wantóbanking licenses. Turning to a third party to create the loans lets them avoid regulatory costs, and being viewed as technology companies rather than financial firms improves their image with investors.

One question is whether WebBank is involved enough in the lending process. Courts have disagreed over what it takes for a bank to call itself the lender when its partners are the ones arranging and servicing the debts, says Richard Eckman, head of the financial-services practice at law firm Pepper Hamilton. If a judge were to decide that WebBank cannot create loans unless it holds them longer and does more to vet borrowers, the business model for online peer-to-peer lending could fall apart.

SO LC never had skin in the game....I am thinking we are cuting out the middle man but I guess not.

From another Bloomberg article Lending Club's Brilliant Charade
from August 2014:

Lending Club's founder and chief executive, Renaud Laplanche, has repeatedly portrayed the business as a high-tech marketplace bringing together borrowers and lenders. As he put it in a 2013 interview, "We do the matchmaking and perform important risk management functions. We underwrite, price and service the loans on behalf of investors."

That's not quite right. According to the IPO filing, Lending Club has $2.36 billion worth of loans on its books. The actual loan origination is done by WebBank, a Utah-chartered financial institution that sells the loans to Lending Club. There's nothing peer-to-peer about it. The company is an intermediary between a bank and institutional investors, a structure that moves the lending business out of a regulated environment and into an unregulated one.

So perhaps the charade is over since Madden v. Midland. How about getting a real p2p lending club...

hzhou9

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Re: New Loans with 25-26 day funding periods?
« Reply #5 on: April 03, 2016, 10:36:17 PM »
SO here are some leanings I did not realize from a p2p Bloomberg article last April (2015):

Apply for a loan with LendingClub, the biggest of those online markets, and WebBank issues it. Two business days later, LendingClub buys the loan and parcels it out to the investors who pledged to fund it. WebBank collects interest on the money for that window and earns a fee from LendingClub.

LendingClub and Prosper donít originate loans themselves because they donít haveóand donít wantóbanking licenses. Turning to a third party to create the loans lets them avoid regulatory costs, and being viewed as technology companies rather than financial firms improves their image with investors.

One question is whether WebBank is involved enough in the lending process. Courts have disagreed over what it takes for a bank to call itself the lender when its partners are the ones arranging and servicing the debts, says Richard Eckman, head of the financial-services practice at law firm Pepper Hamilton. If a judge were to decide that WebBank cannot create loans unless it holds them longer and does more to vet borrowers, the business model for online peer-to-peer lending could fall apart.

SO LC never had skin in the game....I am thinking we are cuting out the middle man but I guess not.

From another Bloomberg article Lending Club's Brilliant Charade
from August 2014:

Lending Club's founder and chief executive, Renaud Laplanche, has repeatedly portrayed the business as a high-tech marketplace bringing together borrowers and lenders. As he put it in a 2013 interview, "We do the matchmaking and perform important risk management functions. We underwrite, price and service the loans on behalf of investors."

That's not quite right. According to the IPO filing, Lending Club has $2.36 billion worth of loans on its books. The actual loan origination is done by WebBank, a Utah-chartered financial institution that sells the loans to Lending Club. There's nothing peer-to-peer about it. The company is an intermediary between a bank and institutional investors, a structure that moves the lending business out of a regulated environment and into an unregulated one.

So perhaps the charade is over since Madden v. Midland. How about getting a real p2p lending club...

I think it's not important who originates the loans - key is the underwriting:)

jheizer

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Re: New Loans with 25-26 day funding periods?
« Reply #6 on: April 03, 2016, 10:49:27 PM »
Interesting that they haven't had a blog post or anything about all this yet.
Replacement to P2P Quant's Percentile Tool http://lc.geekminute.com

Rob L

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Re: New Loans with 25-26 day funding periods?
« Reply #7 on: April 04, 2016, 10:25:29 AM »
Maybe I'm confused but this appears to be ALL about Madden, no?

http://www.lexology.com/library/detail.aspx?g=5bbee9ff-c33b-479b-a1d7-4fc040666e63

Would be nice for someone on the Lend Academy editorial staff to contact LC and then write a blog post to let us know what is going on and how it affects us.
« Last Edit: April 04, 2016, 10:37:41 AM by Rob L »

fliphusker

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Re: New Loans with 25-26 day funding periods?
« Reply #8 on: April 04, 2016, 11:31:30 AM »
Do whole notes have the same length of listing as fractional?  Did that change too?

nmay2k

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Re: New Loans with 25-26 day funding periods?
« Reply #9 on: April 07, 2016, 09:36:09 PM »
Most whole loans are 14 days in funding except for some of the loans on 4/3 which were as much as 29 days in funding.