Author Topic: Loan Availability by Initial Listing Status, 17Q3  (Read 1770 times)

Rob L

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Loan Availability by Initial Listing Status, 17Q3
« on: February 11, 2018, 11:06:40 AM »
Considering LC's IRA bonus offer I wondered if I were to swear off the high interest rate stuff and stick with A grade only notes if there would be enough loans offered to be able to invest $100k before the end of the investing deadline of June 30. So, I downloaded the most recently available vintage (17Q3) from LoanStats and took a look. My preference is 36 month term. I never invest in loans with an initial listing status of "whole" since these have been passed over by the institutions and they're way smarter than me.

There are almost no 60 month loans that are not offered as whole before moving to the fractional market. For 36 month term I found that about 5 out of every 6 A grade loans are initially listed as whole. Wow! If I were to buy half of the 3021 A grade loans initially listed as fractional at $25 per note my investment would only be about $38k. Moving to B and C grade loans about 3 out of 4 are initially listed as whole. I would have to buy notes in about 40% of all A and B grade fractionals to invest $100k. Considering I'd like to be a bit more selective than that, my note size would have to be much larger (probably $100) for this to be workable. I won't be pursuing this strategy.




SLCPaladin

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Re: Loan Availability by Initial Listing Status, 17Q3
« Reply #1 on: February 11, 2018, 08:07:17 PM »
Very interesting Rob, thanks for sharing. I wasn't aware that retail investors get sloppy seconds (e.g. whole loans that institutions don't want). Talk about adverse selection. Thanks for enlightening me.

Rob L

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Re: Loan Availability by Initial Listing Status, 17Q3
« Reply #2 on: February 11, 2018, 09:05:07 PM »
Very interesting Rob, thanks for sharing. I wasn't aware that retail investors get sloppy seconds (e.g. whole loans that institutions don't want). Talk about adverse selection. Thanks for enlightening me.

I didn't make it clear but I think that most whole loans in the table above are bought by institutions and are never offered to retail investors as fractional. So, I don't know the percentage of initial list fractional versus initial list but scorned whole loans we are offered on the retail platform. That's an interesting question and I don't have that answer. I do know that I'm only interested in loans initially listed fractional and there doesn't seem to be enough of them for me to consider an A grade only strategy to take advantage of LC's IRA bonus offer. On the other hand I was kinda blown away by the 60 month term loan numbers. Almost none are offered as fractional retail before being offered as whole first.
« Last Edit: February 11, 2018, 09:08:13 PM by Rob L »

jd

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Re: Loan Availability by Initial Listing Status, 17Q3
« Reply #3 on: February 12, 2018, 10:23:08 AM »
Quote
Considering LC's IRA bonus offer I wondered if I were to swear off the high interest rate stuff and stick with A grade only notes if there would be enough loans offered to be able to invest $100k before the end of the investing deadline of June 30.

Why would you be considering investing anymore in LC at all?  It seems from your various posts on the forum that you unhappy with your returns and LC in general.


Rob L

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Re: Loan Availability by Initial Listing Status, 17Q3
« Reply #4 on: February 12, 2018, 11:56:48 AM »
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Considering LC's IRA bonus offer I wondered if I were to swear off the high interest rate stuff and stick with A grade only notes if there would be enough loans offered to be able to invest $100k before the end of the investing deadline of June 30.

Why would you be considering investing anymore in LC at all?  It seems from your various posts on the forum that you unhappy with your returns and LC in general.

Guess I look at all kinds of crazy things. If LC gives me $3k to make a $100k investment with a duration less than 3 years it seemed at least worth evaluating the possibility.  Thinking invest in all A's and get a 3% return plus 1% for the bonus. It would have had to look really sweet and I doubt I'd have actually followed through with it. You're right; I'm not happy and there's too much water under the bridge for it to really happen. Just something to look at on a lazy weekend.

jd

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Re: Loan Availability by Initial Listing Status, 17Q3
« Reply #5 on: February 12, 2018, 12:24:15 PM »
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Guess I look at all kinds of crazy things

I do that too. I'll look at everything from every perspective that I can think of. Never know when I'll trip across something that will work for my situation at that moment in time.


mrwhizzard

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Re: Loan Availability by Initial Listing Status, 17Q3
« Reply #6 on: February 12, 2018, 03:44:21 PM »
I do know that I'm only interested in loans initially listed fractional and there doesn't seem to be enough of them for me to consider an A grade only strategy to take advantage of LC's IRA bonus offer.

Are we assuming (or has LC said) that the loans initially offered as whole are a randomly selected subset? Because if not, and the "best" loans are sent to the whole market, then even the rejects from that might be better than the loans initially offered fractional, right?

Rob L

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Re: Loan Availability by Initial Listing Status, 17Q3
« Reply #7 on: February 12, 2018, 06:42:29 PM »
I do know that I'm only interested in loans initially listed fractional and there doesn't seem to be enough of them for me to consider an A grade only strategy to take advantage of LC's IRA bonus offer.

Are we assuming (or has LC said) that the loans initially offered as whole are a randomly selected subset? Because if not, and the "best" loans are sent to the whole market, then even the rejects from that might be better than the loans initially offered fractional, right?

This topic has come up before and folks here on this forum IIRC have said LC has made assurances that the selection is randomized. It's considered something of a conspiracy theory to think otherwise and the risk to LC probably isn't worth their gain. However after the scandal of May 2016 I wouldn't put the theory in the same context as say, the moon landings were faked. Personally I'd consider the possibility LC steers better notes to the whole market as a business risk but would bet my life Americans landed on the moon (and give odds to all takers). For the purpose of full disclosure I participated in the latter; yeah I'm that old. It's good I don't feel that old though.
« Last Edit: February 12, 2018, 06:46:42 PM by Rob L »

Rob L

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Re: Loan Availability by Initial Listing Status, 17Q3
« Reply #8 on: February 12, 2018, 06:45:26 PM »
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Guess I look at all kinds of crazy things

I do that too. I'll look at everything from every perspective that I can think of. Never know when I'll trip across something that will work for my situation at that moment in time.

Very good!
... box of chocolates; you never know what you'll get.  :)