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Lending Club Discussion => Investors - LC => Topic started by: Rob L on December 18, 2017, 06:11:06 PM

Title: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 18, 2017, 06:11:06 PM
This should be fun.

I mentioned in another thread that I still run my auto-invest program every feeding time and score all the new loans. I have it set to invest zero dollars since I'm cashing out but I still get scoring values. So, as time permits, I plan to post what I see as the worst grade A-C loan of the day. Many say the D and lower loans are all terrible (and I have experienced the pain) so I won't go there. Some daily loans will be much worse than others but all will be terrible (at least as I evaluate them). I encourage everyone to post loans they evaluate as even worse than mine:

So, let's start with:

Offered at 5pm EDT on 12/18/2017 a B4 at 10.91% APR:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=125947093&previous=browse (https://www.lendingclub.com/browse/loanDetail.action?loan_id=125947093&previous=browse)
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: jd on December 18, 2017, 08:08:56 PM
I have this one ranked worse than yours:

https://www.lendingclub.com/browse/loanDetail.action?loan_id=126000465

I have added two other loans today (5.32 and 16.02)
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Reginald on December 18, 2017, 10:07:40 PM
Good work boys- lets expose this shite.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: jd on December 18, 2017, 10:13:57 PM
Quote
Good work boys- lets expose this shite

I'm not looking to expose them. I'm still buying loans. I'm just buying ones that I think are good.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 19, 2017, 10:45:24 AM
I have this one ranked worse than yours:

https://www.lendingclub.com/browse/loanDetail.action?loan_id=126000465

I have added two other loans today (5.32 and 16.02)

Yeah, that one looks terrible. My program pre-screens (filters) a set of loan parameters and if the loan fails to pass the pre-screen then it doesn't even compute a score. This loan was one of those. Unfortunately it doesn't even log the rejection reason, it just tosses out the loan and moves on so it never even scored this loan. The code has some debug switches and I might be able to get some visibility into these rejected loans. Guess by definition many of the worst will be these. It never occurred to me that someday I'd be looking for the worst loans  ::)

BTW: what does "(5.32 and 16.02)" mean?
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: jd on December 19, 2017, 11:24:24 AM
Quote
BTW: what does "(5.32 and 16.02)" mean?

Those are the interest rates of the two loans I got yesterday.

Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 19, 2017, 01:45:00 PM
Quote
BTW: what does "(5.32 and 16.02)" mean?

Those are the interest rates of the two loans I got yesterday.

Guess it should have been obvious ...
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 19, 2017, 05:51:37 PM
Okay, I opened up the flood gates so to speak and now get scores on just about all the A,B,C 36 month loans (I don't do 60's).
So many loans, so little time, ... The worst loan of the evening is (drum roll please):

https://www.lendingclub.com/browse/loanDetail.action?loan_id=125988314 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=125988314)

A C3 at 14.08%, 9% funded now so there's plenty of time left to invest  :-\

Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: SLCPaladin on December 19, 2017, 06:26:20 PM
In addition to posting the duds of the day, I would love it if you also post why you think each loan is the biggest stinker. This would be good for me to understand how other people evaluate bad/risky loans.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 20, 2017, 11:19:44 AM
In addition to posting the duds of the day, I would love it if you also post why you think each loan is the biggest stinker. This would be good for me to understand how other people evaluate bad/risky loans.

The short answer is that I don't know. A logistic regression analysis using independent variables such as FICO, inquires last 6 months, employment status, DTI and many others from historic LoanStats data was performed. No results of LC's model such as Grade, Interest Rate, EXPECTED_DEFAULT_RATE, or INSTALLMENT were included as independent variables in the logit analysis. Only borrower data was and should be included. The dependent variable of the analysis was the variable charged off. The analysis result was a set of weighting coefficients that when applied to the same variables in a new loan to be evaluated yields the predicted probability that loan will be charged off or not. Given this probability of being charged off (probability of default or "risk") and the interest rate ("reward") an overall score for the loan is computed. So, there are many many factors that contribute to a loan's score and I have no way to unwind that score into its individual components.

Logistic regression is the classical way consumer loans have been scored for decades. If there is a magic bullet dominant independent variable I am unaware of it. Of course some are more important (more heavily weighted) than others. And some independent variables are of little use as they closely follow others and add little or no value (covariate).  For a good example see the following. It was an interesting and revealing post:

https://forum.lendacademy.com/index.php/topic,3570.msg31593.html#msg31593 (https://forum.lendacademy.com/index.php/topic,3570.msg31593.html#msg31593)

For each loan scored I am able to see the probability of default computed by my program and compare it with the EXPECTED_DEFAULT_RATE provided by LC. Since LC began providing a single EXPECTED_DEFAULT_RATE per grade rather than per sub-grade the comparison is less precise. However I am amazed by the magnitude of the differences and there are very few loans per drop where LC's rate is higher than that computed by my program. When LC's rate is higher it isn't ever by much. These differences have grown over time and it even seems as if LC's newer model expects consumer behavior to be improving. On the other hand I spend very little time with LC anymore and the model I'm using is pretty old. Since I'm no longer investing in new notes I'm more of a casual observer so take this with a grain of salt.



Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: MarinBB on December 20, 2017, 12:52:17 PM
In addition to posting the duds of the day, I would love it if you also post why you think each loan is the biggest stinker. This would be good for me to understand how other people evaluate bad/risky loans.

I also passed on https://www.lendingclub.com/browse/loanDetail.action?loan_id=125988314. Negative items for me included that: the payment is large relative to income, credit history is brief, credit utilization is very high, etc.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Fred93 on December 20, 2017, 01:59:19 PM
In addition to posting the duds of the day, I would love it if you also post why you think each loan is the biggest stinker. This would be good for me to understand how other people evaluate bad/risky loans.

I also passed on https://www.lendingclub.com/browse/loanDetail.action?loan_id=125988314. Negative items for me included that: the payment is large relative to income, credit history is brief, credit utilization is very high, etc.

Other negatives: few credit lines.  goes along with short credit history to imply very little credit experience.  low income.  Renter.
Positive: The amount of loan nearly matches amount owed, so is likely an intentional credit card payoff.  The data shows that loans perform better when these two numbers closely match.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 20, 2017, 07:09:11 PM
Another winner from the 1pm EDT drop:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=125917599 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=125917599)
LC assigns this as a B4, 10.91% interest, 4.03% probability of default.
My wacky auto-invest program says it's a 31.8% probability of default; go figure. What can I say.

From the same drop there's also this gem:
https://www.lendingclub.com/browse/loanDetail.action?loan_id=126084792&previous=browse (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126084792&previous=browse)
LC assigns a C4, 15.05% interest, 7.00% probability of default.
My same wacky auto-invest program says it's a 32.2% probability of default, but it scores slightly higher than the first loan since the interest rate (reward) is a tad higher.

If anyone out there is using a third party invests for their account in any of the loans I post in this thread as terrible it would be fascinating to hear about it.
I'll take a sizable bet that will never happen. Bring it on ...
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: SLCPaladin on December 20, 2017, 07:54:17 PM
Quote
On the other hand I spend very little time with LC anymore and the model I'm using is pretty old. Since I'm no longer investing in new notes I'm more of a casual observer so take this with a grain of salt.

Thanks for explaining what you've done. Once upon a time I had my own special sauce. Most of what I looked for was gleaned by reading posts here and thinking about what others had suggested. I'm not sure if any of my filters helped improve my returns or not. From what I can tell, the most important factor that correlates with LC returns is not necessarily what notes you've selected, but which vintages (e.g. when) you've invested in.

I've been running off my portfolio for the past year. If charge-offs level off (or go down) and LC raises rates, I may dip my toe back in the water. But my modeling and my note analysis feels rusty from not having picked new notes for some time. I feel like I need to figure out what new factors I should be paying attention to were I to begin investing again.

Out of curiosity, could you briefly explain how you put together your logit analysis? Is this some statistical model you built yourself?
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 21, 2017, 10:27:52 AM
Quote
On the other hand I spend very little time with LC anymore and the model I'm using is pretty old. Since I'm no longer investing in new notes I'm more of a casual observer so take this with a grain of salt.

Thanks for explaining what you've done. Once upon a time I had my own special sauce. Most of what I looked for was gleaned by reading posts here and thinking about what others had suggested. I'm not sure if any of my filters helped improve my returns or not. From what I can tell, the most important factor that correlates with LC returns is not necessarily what notes you've selected, but which vintages (e.g. when) you've invested in.

I've been running off my portfolio for the past year. If charge-offs level off (or go down) and LC raises rates, I may dip my toe back in the water. But my modeling and my note analysis feels rusty from not having picked new notes for some time. I feel like I need to figure out what new factors I should be paying attention to were I to begin investing again.

Out of curiosity, could you briefly explain how you put together your logit analysis? Is this some statistical model you built yourself?

I have a friend that's pretty good with stats that put the current logit analysis together. I built the real time auto-invest engine to make it go. I've performed a few logit analyses using LC historical data and the statistical package R (open source) and recommend R highly (terminal interface, not GUI). There is also a very good book "Credit Scoring, Response Modeling and Insurance Rating" by Steven Finlay that provides an excellent guide to the whole soup to nuts process of building a credit scoring model.

 
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: SLCPaladin on December 21, 2017, 11:42:42 AM
Much appreciated Rob L.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 21, 2017, 06:00:07 PM
Just so it doesn't seem as if there aren't some really bad A grade notes out there:

https://www.lendingclub.com/browse/loanDetail.action?loan_id=126165764 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126165764)

LC assigns an A3 grade, 1.84% probability of default and a 6.72% APR? Who buys this stuff?
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 23, 2017, 12:07:40 PM
Maybe the worst A, B and C of the previous day or two would be interesting.
Also, the $ amount of funding per investor has historically shown the popularity a loan (the larger the amount and/or fewer investors the more popular the loan). If wisdom of the crowd has any relevance then the larger the amount the better the loan. That's the third parameter before the URL.

A5,   7.97%, $34.19  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126198526 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126198526)
B4, 10.91%, $35.46  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126104375 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126104375)
C2, 13.59%, $37.73  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126147546 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126147546)

Examples of loans that scored highly:
C4, 15.05%, $50.79  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126200380 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126200380)
C5, 16.02%, $91.86  https://www.lendingclub.com/browse/loanDetail.action?loan_id=125954804 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=125954804)

Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 28, 2017, 02:25:57 PM
Couldn't let this one pass without a post.  Worst score yet:

B2,  9.93%, $33.23   https://www.lendingclub.com/browse/loanDetail.action?loan_id=126185226 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126185226)

Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 30, 2017, 09:09:35 AM
A new absolute worst A,B or C record holder:

B2,  9.93%,  $34.78   https://www.lendingclub.com/browse/loanDetail.action?loan_id=126423450 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126423450)

I'll say again, who buys this stuff?
An amazingly bad deal for the lender and it's hard to imagine anyone would disagree.

Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on December 31, 2017, 06:17:04 PM
Happy New Year!

C4,  15.05%,  $30.11   https://www.lendingclub.com/browse/loanDetail.action?loan_id=126456415 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126456415)
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on January 01, 2018, 12:49:51 PM
Interesting. Your model's scores appear to correlate strongly with credit record and employment info (present or not), which is no surprise. I don't think I disagreed with any of the ones your model downrates.

Examples of loans that scored highly:
C4, 15.05%, $50.79  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126200380 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126200380)
C5, 16.02%, $91.86  https://www.lendingclub.com/browse/loanDetail.action?loan_id=125954804 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=125954804)

I agree on the first but would not touch the second.
Other signs are good of course -- clean credit record, and more than ten years of credit history. Still, I don't like it.

Edward
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 01, 2018, 06:52:52 PM
Interesting. Your model's scores appear to correlate strongly with credit record and employment info (present or not), which is no surprise. I don't think I disagreed with any of the ones your model downrates.

Examples of loans that scored highly:
C4, 15.05%, $50.79  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126200380 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126200380)
C5, 16.02%, $91.86  https://www.lendingclub.com/browse/loanDetail.action?loan_id=125954804 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=125954804)

I agree on the first but would not touch the second.
  • Makes $500K/yr but has $80K revolving debt.
  • Why moving? Job offer or lost job?
  • Entered exactly $500,000 for income. I don't mind some rounding, but rounding to the nearest half million strikes me as suspect even though it's marked verified.
  • How many football coaches make $500K/yr? Some of course, but this person is in elevated status and needs a loan from LC?
  • Jumped for the $35K instead of calculating how much they needed.
Other signs are good of course -- clean credit record, and more than ten years of credit history. Still, I don't like it.

Edward

All valid concerns. When in doubt, pass and wait for another.
Should be interesting to come back to this one from time to time and see how things are going.
The "wisdom of the crowd" at $91.86 per note seems to imply it might be ok.

PS: Some coaches are paid an insane amount of money. The highest paid I think is Nick Saban.

USA TODAY Sports Published 9:55 a.m. ET May 2, 2017: "Alabama football coach Nick Saban will be paid $11.125 million this season under a three-year contract extension that includes a $4 million signing bonus approved Tuesday by the university board of trustees’ compensation committee. Altogether, the eight-year deal running through Jan. 31, 2025, is scheduled to pay Saban $65 million, not including incentive bonuses that could total $700,000 each year."

What a world.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on January 01, 2018, 07:57:14 PM
The "wisdom of the crowd" at $91.86 per note seems to imply it might be ok.

94% of the crowd are getting lower returns than I am. 99% with similar age and WAIR.

Quote
Some coaches are paid an insane amount of money.

Them and CEOs ...

Quote
What a world.

To put it mildly.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: AnilG on January 03, 2018, 08:43:46 AM
What is wrong with this loan? I don't see anything that stands out. It is just someone going through divorce most probably. Is it just your model saying it is a bad loan?

https://www.peercube.com/comment?loanid=126456415

Happy New Year!

C4,  15.05%,  $30.11   https://www.lendingclub.com/browse/loanDetail.action?loan_id=126456415 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126456415)
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on January 03, 2018, 09:28:41 AM
C4,  15.05%,  $30.11   https://www.lendingclub.com/browse/loanDetail.action?loan_id=126456415 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126456415)
What is wrong with this loan? I don't see anything that stands out. It is just someone going through divorce most probably. Is it just your model saying it is a bad loan?
From my manual-evaluation PoV ... I don't see why it would be worst-of-worst. I would reject it due to the past delinquency and major derogatory, but the great majority of C-grade loans have one or both of those. DTI is high and loan request is for over twice the revolving balance -- I don't consider those absolute disqualifications, but I consider that DTI very significant, the amount mismatch not very significant at this level.

I'd find it very interesting if Rob's model seriously downrates any C-grade loans which have no history of delinquency or derogatories. Those are two of my outright disqualifiers, the others being less than ten years credit history, no evidence of employment, and huge amount of revolving debt. Since my criteria are manual and untested (albeit so far apparently very successful), it's very interesting to compare with the statistical approach.

Edward
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 03, 2018, 10:47:20 AM
C4,  15.05%,  $30.11   https://www.lendingclub.com/browse/loanDetail.action?loan_id=126456415 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126456415)
What is wrong with this loan? I don't see anything that stands out. It is just someone going through divorce most probably. Is it just your model saying it is a bad loan?
From my manual-evaluation PoV ... I don't see why it would be worst-of-worst. I would reject it due to the past delinquency and major derogatory, but the great majority of C-grade loans have one or both of those. DTI is high and loan request is for over twice the revolving balance -- I don't consider those absolute disqualifications, but I consider that DTI very significant, the amount mismatch not very significant at this level.

I'd find it very interesting if Rob's model seriously downrates any C-grade loans which have no history of delinquency or derogatories. Those are two of my outright, the others being less than ten years credit history, no evidence of employment, and huge amount of revolving debt. Since my criteria are manual and untested (albeit so far apparently very successful), it's very interesting to compare with the statistical approach.

Edward

It's not the worst of the worst, but the model says its pretty bad. I think it's an accumulation of things; 3 inquires, pretty high DTI, large loan amount compared to income, and large revolving balance. The logit model doesn't use the loan grade in scoring since that's a product of LC's model rather than fundamental borrower data. The logit model computes probability of default (PD) but then the final score is computed as a function of PD (risk) and LC assigned interest rate (reward). So, if the interest rate were higher the score would also be higher. If the interest rate were lets say 25% this might score as a pretty good loan. I don't know. The bottom line is that the risk / reward of this loan is computed to be quite poor. BTW, the loan is still less than 50% funded at this time so it seems to be unpopular with many.

There was an interesting thread a few years ago "What's This Best Note Selection Business Anyway" that goes back to a time when personally I was very skeptical regarding the very possibility of retail lenders picking best notes.

https://forum.lendacademy.com/index.php/topic,1953.0.html (https://forum.lendacademy.com/index.php/topic,1953.0.html)

It was pointed out by Emmanuel that LC's model may have a different objective than that of an individual lender and that made a lot of sense to me. It makes even more sense now that LC now only provides its model's PD over full letter grades rather than over sub-grades. Could be their objective is maximized originations while achieving the targeted PD over entire grades. That implies to me that more than ever we lenders should be able to identify better or worse loans. However it doesn't imply how many if any attractive loans there are.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on January 03, 2018, 03:17:49 PM
There was an interesting thread a few years ago "What's This Best Note Selection Business Anyway" that goes back to a time when personally I was very skeptical regarding the very possibility of retail lenders picking best notes.

https://forum.lendacademy.com/index.php/topic,1953.0.html (https://forum.lendacademy.com/index.php/topic,1953.0.html)

It was pointed out by Emmanuel that LC's model may have a different objective than that of an individual lender and that made a lot of sense to me. It makes even more sense now that LC now only provides its model's PD over full letter grades rather than over sub-grades. Could be their objective is maximized originations

Thanks for the link -- interesting indeed. I actually like the formulation by neals384 (https://forum.lendacademy.com/index.php/topic,1953.msg16538.html#msg16538), which is basically what I bolded above. That does mean satisfying investors, but they don't have to outrun the bear, only the other guy. As long as enough investors (individual and institutional) are happy with the returns received for effort expended, improving the predictions might actually be detrimental to their goals by discouraging investment over a broad range of loan grades. And we already know that they claim investing in several grades is diversification, when I see it only as dilution of my goals.

Edward
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 06, 2018, 09:53:46 AM
A new absolute worst of the worst, A, B and C:

B5,  11.99%,  $36.30,  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126152170 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126152170)

BTW, this interesting loan below scored very well.
Typically a FICO of 810 merits a loan grade better than C3 so the LC model sees something that makes this loan much more risky than FICO indicates.

C3,  14.08%,  $60.28  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126651939 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126651939)
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on January 06, 2018, 10:50:31 AM
Interesting indeed, both of them.

A new absolute worst of the worst, A, B and C: B5,  11.99%,  $36.30

I don't even look at "business" loans, and if I did, I'd be suspicious because the revolving balance is so close to the loan amount, so it may really be debt consolidation -- with which I have no problem when it's truthful. And the Public Record On File -- I avoid those even though I've never figured out exactly what it means. ::)  Oh, and three inquiries -- I haven't been looking at that number, though perhaps I should. Nothing obviously explains why the model dislikes it so strongly. Others seem to agree ... funding is going very slowly.

Quote
BTW, this interesting loan below scored very well. Typically a FICO of 810 merits a loan grade better than C3 so the LC model sees something that makes this loan much more risky than FICO indicates. C3,  14.08%,  $60.28

Apparently 107 people agreed with your model, since it was already fully funded by the time I looked. High DTI and loan purpose "other" (I would not have seen in in my normal scan because of the latter), but no reason to disagree with the model.

Edward
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 10, 2018, 09:10:28 AM
Can't exactly remember, but near if not the absolute worst of the worst (so far):

C2,  13,59%,  $33.45,  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126385908 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126385908)
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on January 10, 2018, 09:24:56 AM
Can't exactly remember, but near if not the absolute worst of the worst (so far):
C2,  13,59%,  $33.45,  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126385908 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126385908)
Interesting. I would reject it for the major derogatory. (Obviously my approach is to try to pick C grade loans which are least likely to default.) Don't care for the rounded-off $30K amount. And perhaps I should be paying more attention to recent inquiries. If those aren't the reasons for the low model rating, then it's an example of why you can't pull the individual factors.

Edward
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 10, 2018, 10:07:44 AM
Can't exactly remember, but near if not the absolute worst of the worst (so far):
C2,  13,59%,  $33.45,  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126385908 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126385908)
Interesting. I would reject it for the major derogatory. (Obviously my approach is to try to pick C grade loans which are least likely to default.) Don't care for the rounded-off $30K amount. And perhaps I should be paying more attention to recent inquiries. If those aren't the reasons for the low model rating, then it's an example of why you can't pull the individual factors.

Edward

The 3 inquires are a big part of the story. It is well known that inquires is one of the most significant predictor of default variables. The discussion has always been that LC knows this too so it's model should factor it in into the loan grade assignment. Sure they do, but is is enough or too much? We don't know. Many folks that use the filter approach have posted here they only buy notes with zero inquires.

There's a lot more going on than inquires. The loan payments represent about 20% of the borrowers monthly gross income. That strikes me as a lot.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 11, 2018, 05:44:02 PM
Okay, this unequivocally the worst yet. Not sure the score can go lower, but we will see.

B2,  10 42%,  $27.17  https://www.lendingclub.com/browse/loanDetail.action?loan_id=126923844&previous=browse (https://www.lendingclub.com/browse/loanDetail.action?loan_id=126923844&previous=browse)


Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Fred93 on January 11, 2018, 07:30:29 PM
One of the unexpected things about the LC grading system is how much of a spread of FICO score you find in each grade, especially A and B.

I made this chart a few months back...
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2FLC-FICO-vs-Grade-normalized-2017.png&hash=855344187e59e475e74ee552e7361989)
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 11, 2018, 09:30:42 PM
Very very nice work! I've had something like this on my todo list but I was thinking a scatter diagram. This is much better.
My take away is that the predictive power of FICO regarding LC grades shown on the chart is the slope of the curve's at each point. Pretty obvious. Where the curves are flat there is little correlation. Steep and FICO is correlated. That said, FICO between 660-705 is least predictive for B grade. The curve is pretty flat there. If you throw out F & G since they don't matter anymore and plot the first derivative of each curve, the correlation between FICO and LC grade should jump off the chart (I think). Easier said than done!  :)
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Fred93 on January 12, 2018, 01:19:19 AM
My main takeaway was surprise at how WIDE these curves are.  The correlation between FICO and grade is far less than I had imagined.  There are "A" loans across the entire range of FICO scores.  Who would have imagined that?

Both FICO and grade (independently) are good predictors of default rate, and yet they are not the same thing in different clothing. 
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 19, 2018, 08:21:42 PM
An absolute new low by far! The new super duper LC G5 model wants lenders to fund this??

C1,  12.62%  $29.76  https://www.lendingclub.com/browse/loanDetail.action?loan_id=127342041 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=127342041)

I don't know what's going on with G5 but this is an amazingly bad loan as I see it.
There seems to be plenty of time to jump board. Only $625 of the $10,000 loan is funded at this time (21 hardy investor souls).

The crowd seems to like this one even less:
C3,  14.08%  $0.00  https://www.lendingclub.com/browse/loanDetail.action?loan_id=127366829 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=127366829)
There are zero investors at this time.

The Latin phrase "caveat emptor" seems to be most appropriate.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Lovinglifestyle on January 19, 2018, 11:03:15 PM
"The crowd seems to like this one even less:
C3,  14.08%  $0.00  https://www.lendingclub.com/browse/loanDetail.action?loan_id=127366829
There are zero investors at this time."

No kidding!  Now, at 9:00 p.m., it's listed as "invalid loan".  Wonder what that's code for?
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on January 20, 2018, 09:45:32 AM
An absolute new low by far! The new super duper LC G5 model wants lenders to fund this??

C1,  12.62%  $29.76  https://www.lendingclub.com/browse/loanDetail.action?loan_id=127342041 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=127342041)

I don't know what's going on with G5 but this is an amazingly bad loan as I see it.
There seems to be plenty of time to jump board. Only $625 of the $10,000 loan is funded at this time (21 hardy investor souls).
And 12 more as of this morning ...

A (self-described) accountant with black marks on their credit record. Of course, we don't know what was happening in someone's life six years ago, but they (claim to) have had the job for nine years. And it's a "business" loan.

Oh, two more people jumped on while I was writing ...

Edward
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 20, 2018, 10:49:08 AM
"The crowd seems to like this one even less:
C3,  14.08%  $0.00  https://www.lendingclub.com/browse/loanDetail.action?loan_id=127366829
There are zero investors at this time."

No kidding!  Now, at 9:00 p.m., it's listed as "invalid loan".  Wonder what that's code for?

My mistake. It's listed as a whole loan, not fractional. I was looking up loan_id=127342041 and just stumbled onto this one. Since there were zero investors I mistakenly thought it was unpopular.  :-[
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Data Junkie on January 22, 2018, 11:05:22 AM
My code also flushed out 127342041, but not enough data to predict a default probability.

Here's my worst of this morning:  127296020, C2 (13.59%).  My code predicts a 34.6% probability of defaulting.  Would be curious to see other folks' numbers on this as I am not using linear reg.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 22, 2018, 04:35:26 PM
My code also flushed out 127342041, but not enough data to predict a default probability.

Here's my worst of this morning:  127296020, C2 (13.59%).  My code predicts a 34.6% probability of defaulting.  Would be curious to see other folks' numbers on this as I am not using linear reg.

127296020 was in the 1pm EDT drop way back on 1/19/2018. My program says 11.05% Pd and would not have touched it.
Currently its 43% funded ($4,125 of $9,600), 132 investors, for $31.25 average amount per investor. Not a popular loan for sure.
The worst of that drop IMO was 127095856, C3, 14.08% with a Pd of 30.3%. It's fully funded now and issuing so much better liked than 127296020.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on January 26, 2018, 09:30:52 AM
Okay, I believe this is the worst yet.
Going to start posting the raw loan score just to be able to verify new lows when I find them.

B5,  11.99%,  $33.80  https://www.lendingclub.com/browse/loanDetail.action?loan_id=127697324 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=127697324)

This one is now 100% funded, $12,000 loan and 355 investors. Pd = 53.5%, Score 38.24.
There are so many problems with this one. It punches all the bad buttons. Not even close.
Maybe it's me. Does this one look attractive to anyone out there?


Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: RomanLegend on January 26, 2018, 04:30:47 PM
My site ranked 127296020 a 30 out of 82.  82 is the least likely to default, haha.   Very awful loan. 

Although, I have seen some zeros and an occasional negative sore as well.  Yikes.



Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on February 05, 2018, 02:32:27 PM
New low score:

C1,  12.62%, $39.28  https://www.lendingclub.com/browse/loanDetail.action?loan_id=128208659

This one is now 36% funded, $8,375 loan and 79 investors. Pd = 58.3%, Score 33.10

Verified monthly income is $649, monthly loan payment is $280.66. That's going to be a struggle.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on February 05, 2018, 03:07:14 PM
That's going to be a struggle.
yeah ... have to wonder what was on the application, or what the reviewer was on ... Based on what we see, I just cannot imagine a scenario where it's viable, implying there's likely significant info we don't see.

On track to be fully funded within six hours of release. Yet I often pick up notes on loans that actually look very good for grade C which have gone more than 24 hours since release.

Edward
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on February 20, 2018, 06:39:47 PM
New low score (by far the worst I've seen since I started looking):

C3, 14.08% $31.70 https://www.lendingclub.com/browse/loanDetail.action?loan_id=128311871&previous=browse (https://www.lendingclub.com/browse/loanDetail.action?loan_id=128311871&previous=browse)

Now 15% funded, $11,775 loan and 56 investors. Pd = 79.2%, Score 13.57.

Verified monthly gross income $1,095 per month, monthly loan payment $402.90. More than a struggle!!
Zowie. I want to be on the other side of this trade.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on March 08, 2018, 08:44:53 AM
Not the absolute worst, but the worst in a while:

C2, 13.58%, $34.05 https://www.lendingclub.com/browse/loanDetail.action?loan_id=129579506 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=129579506)

Now 79% funded, $19,225 loan and 450 investors. Pd = 53.3%, Score 39.16.

Verified monthly gross income $1,833 per month, monthly loan payment $653.16. Once again more than a struggle!!
Earliest credit line 2003 so it's not a cash rich but income poor retiree. It's an individual, not a joint application.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Rob L on March 20, 2018, 09:32:53 AM
Just when you think you've seen the lowest score an new champion appears:

C5, 13.58%, $31.53 https://www.lendingclub.com/browse/loanDetail.action?loan_id=130137821 (https://www.lendingclub.com/browse/loanDetail.action?loan_id=130137821)

Now 12% funded, $22,850 loan and 88 investors. Pd = 72.8%, Score 19.26.

Non-verified monthly gross income $1,667 per month, monthly loan payment $803.46.
Yep, that's right. Monthly payment is 48% of gross income. Massage therapist in Cupertino, CA.
You can't make this stuff up.
Title: Re: Worst Loan of the Day Thread, Grades A - C
Post by: Edward Reid on April 11, 2018, 07:15:14 PM
Non-verified monthly gross income $1,667 per month, monthly loan payment $803.46.
Yep, that's right. Monthly payment is 48% of gross income.

Interesting. I would not invest in it due to only five years of credit history, and I don't even look at Business loans. However, I note that credit history is absolutely clean. No inquiries. Claims to own home (a pretty big deal for a MT since they often work out of their homes). I can see ways it could be reasonable. If I were opening a new business and applying for a loan, I would honestly list my current income even if I had a sound business plan to triple my income. Not that I'd consider investing in this one ... but compared with some of the others posted, this one doesn't look nearly as bad to me.

I've never been clear on whether the reported DTI includes the loan payment. This one makes it abundantly clear that it does not. When looking at Credit Card Payoff or Consolidation loans, it matters less IF the applicant is honest, since moving debts from a card to LC is likely to reduce payments. If.

Edward