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Lending Club Discussion => Investors - LC => Topic started by: core on September 15, 2013, 08:30:40 AM

Title: Low dollar notes do not show up on Folio
Post by: core on September 15, 2013, 08:30:40 AM
If you try to sell a note where the P+I is less than or equal to about $4.89, they'll let you post it but it will not show up on Folio.  It doesn't even matter if you're trying to give it away at a serious discount.  No error message or warning appears.  It would appear they are hoping you won't notice.  It's not just my listings because no others appear on Folio either.

What is this Mickey Mouse stuff?  The great LC gods have decided that you shouldn't be able to liquidate notes after so many payments have been made??  That wasn't part of the deal when I invested in these notes.

Title: Re: Low dollar notes do not show up on Folio
Post by: rlv99 on September 15, 2013, 08:40:58 AM
Seems they need 5 cents, minimum, per transaction.  It would be a better idea to charge a minimum for their "service" rather than deny a listing.
Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 15, 2013, 08:55:46 AM
Seems they need 5 cents, minimum, per transaction.  It would be a better idea to charge a minimum for their "service" rather than deny a listing.

Naw it's not about the commissions because it's not sale price that determines whether they show, but rather P+I.  You can sell a $100 note at $0.01 if you really want to, no problem, and they're fine with making next to no commissions on that.

Plus they've never had a problem with $4.89 notes for all the years I've been with them... until now.  This change just happened recently.  Possibly the same day they put that nanny notice up on Folio.
Title: Re: Low dollar notes do not show up on Folio
Post by: New Jersey Guy on September 15, 2013, 10:36:35 AM
Core....there must be something in your eggs this morning.

I just listed two BK's on Folio for 98-cents.  Both have Principles around $20 and they are both showing up in Folio.

Interest Radar is picking up dozens of notes well under $4.00 with no problems, all listed within the past 24 hours.

Folio has a ton of notes currently listed, too.
Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 15, 2013, 10:53:01 AM
Core....there must be something in your eggs this morning.

I just listed two BK's on Folio for 98-cents.  Both have Principles around $20 and they are both showing up in Folio.

I know I already said this twice above, but I'm going to try a third time:  This is based on the P+I value, principal+interest, not the asking price.  The reason your $0.98 BK notes showed up is because the principal was over $4.89 -- $20 in your case, so well over the limit.  I am assuming all of the other cheap notes you're seeing on IR also have P+I>=4.90.

As for my eggs, nope I didn't have Scotch for breakfast this morning but this issue is gonna drive me in that direction.



Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 15, 2013, 11:06:58 AM
Screenshot for clarity:

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2FreAnjIc.png&hash=ba01470fc77d54c3eb4192d6831d055a)
Title: Re: Low dollar notes do not show up on Folio
Post by: New Jersey Guy on September 15, 2013, 11:55:38 AM
Core....I gottcha!  And you're right!

I ran searches for "1 payment remaining", then 2, then 3, then 4.

All the loans that appeared were $50 notes which makes sense, because their principles and interest are double.  There were no $25 notes for sale which of course would be impossible.  I think the cheapest note I saw was like $4.89

At "3 payments remaining", the lowest price note had a markup of 67%.  As a matter of fact, all the notes were marked up between 67% and 145%.  Pretty stupid. 

Perhaps this is Folio's first step in cleaning up a pretty sloppy house.

The odds of this adversely affecting your returns are pretty slim.  With a mere 4 or less payments left, a borrower would have to suddenly default or go BK.  At that point, you wouldn't be able to dump the note at any price, and would surely get stuck with a Default.  However, the default amount would be so minimal, it wouldn't make any difference.   
Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 15, 2013, 12:24:00 PM
It doesn't bother you at all that when you invested in the note you did it under the understanding that you'd be able to liquidate it if you had to or wanted to?   Now you can't, for nearly half a year.

I couldn't care less about the default rate being low.  If I want out I should be able to get out, and not have to be locked into my notes for 5 months.  I might need that money for a family emergency.  Interest rates could skyrocket and I might find a better place to get some decent returns.  LC's financial status might come into question some day.  You are stuck!

This is moving the freaking goalposts.

The sneaky way they pulled this off makes it all the worse.  If you want to lock people in to a note for the last 4 months, fine, just tell them that.  When you go to sell it they can instead show a big red error message:  "Sorry, you can't sell this note for 4 months.  Here's why..."  And then they can deal with the backlash right out in the open.  But to happily accept the order, and then quietly just hide it behind the scenes hoping nobody will notice is downright slimy.

New Jersey Guy, for someone who deals in "penny notes" I'm surprised you're accepting this so cheerfully.

The next step is locking you in for the full 3/5 years.
Title: Re: Low dollar notes do not show up on Folio
Post by: Randawl on September 15, 2013, 01:44:00 PM
This must have been a recent change.  I sold a note on August 26 for $2.14 with a par value of $1.42.


Note Id,Purchase Date,Purchase Price,Par Value at Purchase,Sale Date,Sale Price,Par Value at Sale,Fee
27115676 07/17/2013 $25.00 $25.00 08/26/2013 $2.14 $1.42 $0.02
Title: Re: Low dollar notes do not show up on Folio
Post by: New Jersey Guy on September 15, 2013, 01:47:01 PM
Core....I didn't accept it so cheerfully.  What I tired to do (quickly, I might add) was think of the possible implications and situations that could adversely affect my account.  The point that you brought about not being able to liquidate is quite plausible.  This would quite likely tick me off if for some reason I decided to leave P2P and wanted to put up all my notes up for sale.  The fact that I would have to leave my account lingering for 4 or 5 months waiting for the rest of the notes to go fully paid would be an inconvenience, but only a small one, at that.

I also agree that this should have been disclosed prior to taking effect.  This would have given investors an opportunity to exit those small notes before the new rule kicked in.  And I also agree it needs to be disclosed when posting a note for sale.

This whole situation reminds me of the sneaky trick Craigslist pulls when you try to put an ad up.  It's called "Ghosting" and was mainly aimed at spammers.  You write an ad, you post it, Craigslist confirms the posting with a listing number, but guess what?  Your ad is nowhere to be found in the listings.  Even though your account says it's posted and active, the ad itself just doesn't exist.  Nobody ever sees it.

That is totally wrong!

As far as the Penny Notes are concerned, that's a "Buy/Hold" Strategy in which you keep the note to the very end.  With 1, 2 or even 3 payments left, it's senseless to even try and sell them as the remaining principle doesn't make it worthwhile.  It's no different than trying to buy them with 1,2 or 3 payments left. The 4 to 6 cents interest left on a $25 notes just isn't worth it.

This Penny Note that I own (with 3 payments left)  is a perfect example of why it's not worth the time to put it up for sale, and why it's not worth buying even if I did.  I mean, would you pay me $1.74 to make 4-cents in 3 months?

https://www.lendingclub.com/account/loanPerf.action?loan_id=861996&order_id=9995069&note_id=6143600 (https://www.lendingclub.com/account/loanPerf.action?loan_id=861996&order_id=9995069&note_id=6143600)

Even though I don't agree with their sneaky little tricks, I'm glad they are taking small steps to clean the platform up.  It needs it!

Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 15, 2013, 02:04:39 PM
This must have been a recent change.

It most definitely was.  The last time I sold one was 9/04 so that rules out the 8/28 site updates.  I'm guessing it was sometime between then and around the Folio nanny notice day, 9/11.  The fact that it took me (or anyone else) this long to discover it says something.  Sneaky folks with wicked minds, they are.

rlv99, during your next weekly chat with your account rep, maybe you should ask him if you can sell your notes anytime you want to.  See what he says.  I'll bet you $4.90 that he says that you can.  Then you can turn around and embarrass him with your knowledge of their dastardly plot!

Even though I don't agree with their sneaky little tricks, I'm glad they are taking small steps to clean the platform up.  It needs it!

And by "cleaning up the platform" you mean removing everything that you personally aren't interested in buying. ;)  What needs to be cleaned up??  If you're talking about the 68% markups well guess what... they are still there just like always.  On $5 notes, $10, $25 notes, you name it.  There are overpriced notes all over and locking people down for 4 months does nothing overall to remove them.  How is my par $4.50 note offered for $3.50 "junk"?  That's a decent return for someone that wants to wait it out.
Title: Re: Low dollar notes do not show up on Folio
Post by: New Jersey Guy on September 15, 2013, 04:35:17 PM
"What needs to be cleaned up??"

I have a feeling notes with a certain NEGATIVE YTM or higher are next.

It's not that your little note selling for a discount broke the law.
It's the fact that nearly every little note like that for sale has a very bad, negative YTM.

This is just my guess.
Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 15, 2013, 04:54:40 PM
Then they should have filtered out negative YTM instead of hiding all small notes.  It makes no sense whatsoever.
Title: Re: Low dollar notes do not show up on Folio
Post by: Randawl on September 15, 2013, 04:58:26 PM
There's still a chance that this "change" is unintentional, no?  It doesn't make much sense to exclude sub $5 P&I notes unless they did it because they wanted greater than 5 cents for every transaction.
Title: Re: Low dollar notes do not show up on Folio
Post by: New Jersey Guy on September 15, 2013, 05:03:04 PM
"Then they should have filtered out negative YTM instead of hiding all small notes.  It makes no sense whatsoever."

I totally agree.  That's the smart and fair way.
Somebody should find out what their plans for Folio are.
Core.....They all seem to know you pretty well.  Pour yourself a double scotch and give 'em a warm-and-fuzzy call!  (Just don't put the bottle away).
Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 15, 2013, 05:54:40 PM
There's still a chance that this "change" is unintentional, no?  It doesn't make much sense to exclude sub $5 P&I notes unless they did it because they wanted greater than 5 cents for every transaction.

Sure, it's possible this is all just a huge mistake.  But the timing is too coincidental given their recent kinder, gentler Folio disclaimer.  This could have been some kind of knee jerk reaction to something and they missed by a mile.  And if they were going for a 5 cent minimum commission then they hit the wrong column... should have been asking price rather than par value.

"Then they should have filtered out negative YTM instead of hiding all small notes.  It makes no sense whatsoever."

I totally agree.  That's the smart and fair way.

It would have made at least some sense, but I can't say I would have really liked to see that either.  What happened to the guy who said if you need a lawyer to understand this stuff you shouldn't be trading?  It someone wants to be stupid and give away some of their money, I feel it is our duty as Americans to give them ample opportunities to do so.  If there is no chance of failure then success is meaningless.

And on that topic, it is far better for a person to play around and learn their lessons, see how things work on $2 notes vs $25 ones.  They just made getting your feet wet a whole lot harder on the account balance.  So much for the kinder gentler Folio and 1000 points of light.

Somebody should find out what their plans for Folio are.
Core.....They all seem to know you pretty well.  Pour yourself a double scotch and give 'em a warm-and-fuzzy call!  (Just don't put the bottle away).

Yes, "somebody" should.  But there isn't enough scotch in a bottle to make me want to dial that number ever again.  They would likely just tell me that Stephanie is behind this fiendish scheme and that she's not available.  I don't think a company that implements things in such a sneaky manner is going to tell anyone what they're really up to with a simple phone call?  Besides, it seems much more effective to incite riots.  :)
Title: Re: Low dollar notes do not show up on Folio
Post by: Fred on September 15, 2013, 11:15:02 PM
Then they should have filtered out negative YTM .....

Although this sounds like a good idea, I don't see this being implemented anytime soon given the recent "Trading Agreement" that specifically warns about negative YTM.  The new agreement essentially says "we are going to allow negative YTM, so beware."
Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 18, 2013, 06:57:27 AM
It has now been "fixed" and listings seem to be back to normal... for now. 

These things do not break on their own in such a specfic manner so we can assume they were trying to do something and botched it.  I wonder what that something was, and how long it will be before we see attempt #2.
Title: Re: Low dollar notes do not show up on Folio
Post by: Randawl on September 18, 2013, 03:33:41 PM
Things are back to "normal" on my front as well and I'm glad it seems on the surface that this was a mistake.  Maybe they intended to put a floor on sale price?  Tiny chance of this as it would destroy sales of extremely late and collection notes.  Not that Folio would care about that.  It's in their best interest to maximize turnover and sale price.

Core is right and I hope attempt #2 leaves our negative YTM alone!  As Fred mentioned, it doesn't make sense for them to put forth a notice to the lemmings to agree they read the warning and turn around and do something like that.  Could this all be part of some grander scheme to "clean up" Folio and prevent the sale of highly defunct and negative YTM notes?
Title: Re: Low dollar notes do not show up on Folio
Post by: core on September 18, 2013, 06:23:29 PM
Could this all be part of some grander scheme to "clean up" Folio and prevent the sale of highly defunct and negative YTM notes?

I don't know.  The only thing we can know with certainty is that they will screw up whatever they do try.

If negative YTM notes are to remain fair game, then I really am clueless about what they might try next.  If I was a betting man (and I am) I would bet that their grander scheme is to change things in such a way that it is impossible for anyone to do anything stupid.  I am not sure how one would accomplish that.  I would not like to see them try.

Prosper is the ultimate in crappy trading experiences.  They do not allow you to sell a note for less than a 15% discount (or something like that; I'm not sure of the formula).  Keep in mind they do not allow the selling of notes in late status.  But they also do not allow bidders to bid into negative YTM territory.  So as notes mature the price goes into a "coffin corner", to borrow an aviation term.  And eventually beyond, where it is actually impossible to bid on a note that was just posted for auction. 

Once "They" start telling you how much you have to ask for your notes, and how much you cannot ask, that might as well be the end of the whole works.  When Bernanke puts the brakes on, these notes aren't going to sell for nearly as much and any artificial floor LC puts in place is going to royally put the hurt on people.

LendingClub, let the market work and stay out of it.