Author Topic: Why do you think California loans are so bad?  (Read 7032 times)

American in Busan

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Why do you think California loans are so bad?
« on: February 18, 2013, 10:21:35 AM »
I don't know anything about their relevant laws, so I can only assume it has to do with the natural disasters there.

Keltset

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Re: Why do you think California loans are so bad?
« Reply #1 on: February 18, 2013, 11:18:42 AM »
One thing that I'm aware of is that CA has a rather shorter period of statute of limitations on the debt for suit's. This might be an encouragement for some people to game the system... I'm sure there are tons of factor's that make CA debt just suck in general. I have not worked with much debt in the state of CA.

nonattender

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Re: Why do you think California loans are so bad?
« Reply #2 on: February 18, 2013, 02:10:00 PM »
Loaded question, assumes the consequent.  Leads me to ask following:

Why is it that you think everyone else thinks California loans are so bad?

And whaddya mean by "so bad"?  (Please provide facts and/or figures.)
« Last Edit: February 18, 2013, 02:11:44 PM by PeerLend »
A little nonsense now and then is relished by the wisest men.

PennySaved

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Re: Why do you think California loans are so bad?
« Reply #3 on: February 18, 2013, 05:08:17 PM »
Of course my experience may not be representative for most of LC loans, but my charge-off data indicates CA loans are riskier.  Out of my 21 charged off loans for 2012, 8 of the charge-offs were from CA.  Two each from RI, OR, and FL.  One each from OH, NJ, KS, MD, VA, WA and AZ.

 I think CA was  more problematic because of the real estate crisis a few years back, higher rate of real estate foreclosures and higher unemployment.  I donít reinvest in many CA loans now.

Dennis

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Re: Why do you think California loans are so bad?
« Reply #4 on: February 18, 2013, 05:19:23 PM »
Interesting question.  I haven't given it much thought until now, but I just went through my LC lates (31+ days) and found that 6 of my 18 lates are from California.  Of those 18 lates, 6 are on a payment plan where they've made at least one partial payment, but none of them are from California.  Do others here think California applicants are too risky?  I'm seriously thinking of filtering California out now.   

rev

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Re: Why do you think California loans are so bad?
« Reply #5 on: February 18, 2013, 05:30:13 PM »

yojoakak

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Re: Why do you think California loans are so bad?
« Reply #6 on: February 18, 2013, 05:45:53 PM »
According to Lendstats:

in CA
$3,707,247 of $109,704,828 is in default: 3.3%

ex CA:
$14,224,562 of $521,631,434 is in default: 2.7%

YOU MIGHT BE ONTO SOMETHING!

rawraw

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Re: Why do you think California loans are so bad?
« Reply #7 on: February 18, 2013, 05:59:14 PM »
Of course my experience may not be representative for most of LC loans, but my charge-off data indicates CA loans are riskier.  Out of my 21 charged off loans for 2012, 8 of the charge-offs were from CA.  Two each from RI, OR, and FL.  One each from OH, NJ, KS, MD, VA, WA and AZ.

 I think CA was  more problematic because of the real estate crisis a few years back, higher rate of real estate foreclosures and higher unemployment.  I donít reinvest in many CA loans now.
But how many notes did you have in CA vs the other states to begin with?

mo

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Re: Why do you think California loans are so bad?
« Reply #8 on: February 18, 2013, 06:32:12 PM »
My 2 cents.  It is because cost of living in CA is more expensive than most states and there is less variance in the cost of housing, even the 'cheap' stuff is expensive.  If you look at San Francisco for example even the totally uninhabitable derelict housing is priced at 400k+  In other expensive metro areas though there is typically at least one part of town that is run down and cheap to live in.  CA doesn't really have that so when you evaluate a borrower you have to keep in mind that salaries and debt levels that seem reasonable for other parts of the country could be poverty level in CA.

Keltset

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Re: Why do you think California loans are so bad?
« Reply #9 on: February 18, 2013, 06:33:17 PM »
According to Lendstats:

in CA
$3,707,247 of $109,704,828 is in default: 3.3%

ex CA:
$14,224,562 of $521,631,434 is in default: 2.7%

YOU MIGHT BE ONTO SOMETHING!

This is one reason I don't buy notes in Cali...

AmCap

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Re: Why do you think California loans are so bad?
« Reply #10 on: February 18, 2013, 07:14:50 PM »
One of the most well known effects of THC consumption is the failure to remember to pay financial obligations as they come due.  I saw it on 20/20!

American in Busan

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Re: Why do you think California loans are so bad?
« Reply #11 on: February 18, 2013, 07:22:10 PM »
Loaded question, assumes the consequent.  Leads me to ask following:

Why is it that you think everyone else thinks California loans are so bad?

And whaddya mean by "so bad"?  (Please provide facts and/or figures.)

Jesus...

They perform the worst out of every state on LC. Go use nickelsteamroller and check out the ROI.

As for your question, I think everyone else thinks California loans are bad because they objectively shitty, if we define shitty as severely underperforming.

AnilG

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Re: Why do you think California loans are so bad?
« Reply #12 on: February 18, 2013, 08:11:55 PM »
This is from my blog post last year Lending Club Borrower's Location and Defaults http://andirog.blogspot.com/2012/10/lending-club-borrowers-location-and.html. CA is the seventh state in default rate after NV, UT, FL, GA, MO and MD. Except for NV and UT, I typically don't avoid loans from any other state.

« Last Edit: February 18, 2013, 08:15:59 PM by AnilG »
---
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rawraw

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Re: Why do you think California loans are so bad?
« Reply #13 on: February 19, 2013, 06:41:33 AM »
Loaded question, assumes the consequent.  Leads me to ask following:

Why is it that you think everyone else thinks California loans are so bad?

And whaddya mean by "so bad"?  (Please provide facts and/or figures.)

Jesus...

They perform the worst out of every state on LC. Go use nickelsteamroller and check out the ROI.

As for your question, I think everyone else thinks California loans are bad because they objectively shitty, if we define shitty as severely underperforming.
"Severely underperforming"

What statistical measure are you using for your basis in this?  Just because it is different doesn't mean it's statistically different, or 'severely' (Which to me implies its far out on the tail) different.

And from Anil's analysis, he found:

Quote
There is no evidence from above default rate analysis that borrowers from California have greater tendency to default compared to other borrowers.


Quote
This is from my blog post last year Lending Club Borrower's Location and Defaults http://andirog.blogspot.com/2012/10/lending-club-borrowers-location-and.html. CA is the seventh state in default rate after NV, UT, FL, GA, MO and MD. Except for NV and UT, I typically don't avoid loans from any other state.

Anil, it looks like you are taking just totals from each state.  Did you compare something like the average FICO from each state before assuming credit quality away for the comparison?

writing2reality

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Re: Why do you think California loans are so bad?
« Reply #14 on: February 19, 2013, 11:19:12 AM »
Echoing rawraw, Anil, does that chart take into account other credit/borrower variables, or is it simply all of the loans? I think before presuming CA loans are good or bad, wouldn't a variety of data sets need to be examined?
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