Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: DSGDSG on February 02, 2018, 04:59:21 PM

Title: Ridiculous number of defaults, anyone else?
Post by: DSGDSG on February 02, 2018, 04:59:21 PM
Hello everyone.  I had been contributing to lending club for some time and turned on the automatic investing.  Out of 75 loans right at this moment I have:
2 in grace period
2 16-30 days late
3 31-120 days late
3 charged off

This has knocked my return down to just over 2%.  The stock market has been booming meanwhile I'm getting porked on money I've invested here.  I feel like something has changed with the way they issue loans out?  Have the standards become lax?  How can I have such a high rate of default when I'm not invested on the conservative side??  I have just now turned off automatic investing and I'm going to start taking my money back out.  This is just unacceptable.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: Fred93 on February 02, 2018, 05:13:52 PM
What grades did you invest in?

What is the average age of your portfolio?
Title: Re: Ridiculous number of defaults, anyone else?
Post by: DSGDSG on February 02, 2018, 05:54:00 PM
What grades did you invest in?

What is the average age of your portfolio?

A,B, and C.  I don't see anywhere that tells me what the average age of my portfolio is but if memory serves me correctly I began with lending club in the summer of 2016.  I have yet to have any note get paid off due to reaching the life of the loan.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: Wenessanut on February 13, 2018, 03:42:57 AM
I want to know who is who. Is it a faulty number?
Title: Re: Ridiculous number of defaults, anyone else?
Post by: au88 on February 13, 2018, 10:02:18 PM
See the post "worst month yet".
Title: Re: Ridiculous number of defaults, anyone else?
Post by: lendingprosper23 on February 15, 2018, 09:56:31 PM
I experienced the same thing.

I also have been selling my notes for over 1 year, a huge amount never late, and even at 3-6% discounts they dont sell.

Private lending is dead via these sites. The returns make it pointless to invest. The volatility is not for everyone, but I moved as much as possible last august into crypto and have made quite literally 50x the profit I did from p2p lending that I did for 3 years.

p2p lending, such as ethlend, makes beautiful sense on a decentralized platform where individual lenders set terms and collateral is put up. I beg anyone still into private lending give crypto a real look because lending club and propser are a joke.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: Fred93 on February 15, 2018, 10:33:02 PM
What grades did you invest in?

What is the average age of your portfolio?

A,B, and C.  I don't see anywhere that tells me what the average age of my portfolio

On the main summary page, just to the left of your ANAR number, make sure you've selected "primary notes".  Now click on the words "understanding your returns".  This will take you to a page with a chart showing everyone's returns, broken out by portfolio age.  Your account will be shown as a large dot.  You can see how you stack up vs other folks with similar age portfolios.  To the left of the chart it shows you the average age of the loans in your portfolio. 

If you had all 3-year loans, and they all ran for the entire 3 years, and you had this portfolio long enough so that you have a mix of loans of different ages, they would average out to 18 months.  Most porfolios are mix of 3 and 5 year loans, and lots of loans pay off early, so 15-20 months is the typical age of loans in a mature portfolio.

Portfoios with small # of loans experience significantly varied returns just because of the luck of the draw.  Its like flipping pennies.  Even tho you know the probability of heads should be 50%, you can flip 10 times and get only 3 heads, and that isn't strange.  Its just what happens with a small number of flips.

In statistical lingo, the performance of your portfolio is a SAMPLE of the performance of the strategy you are following.  With such a small portfolio (75 loans) you may well be following a strategy that will produce 4.5% returns, but your sample right now is returning 2%.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: kcook73 on June 16, 2018, 12:46:05 PM
I am amazed to see people with $150k + salary that own their house and always had high credit rating default on their loan -- how does that happen, unless they know the ins and outs of the lending system and are running a scam against LC (knowing the loans are backed by 3rd party individuals versus the company itself)?
Title: Re: Ridiculous number of defaults, anyone else?
Post by: Data Junkie on June 16, 2018, 05:45:30 PM
I made the mistake of starting off with automated investing, and my returns have been decimated by the defaults.  I've learned a lot since then, most of it from this forum.  Why I haven't bailed on LC is that the majority loans do get paid in full (well, so far, anyway).  So I have challenged myself to find a fairly reliable way to avoid loans that default.  Betting on my own investment strategy keeps it interesting.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: SusanL on August 21, 2018, 02:15:29 PM
I am a borrower and I have an answer to this.

Go to the MyFico forums and search for Lending Club. You will find numerous entries of "I thought LC was withdrawing from my account but they weren't and they never notified me of any default."

I am such a borrower. I had the money to pay my loan but LC never bothered collecting on it. There was a "mishap" on my second payment which they tried to collect on ONCE again. I was out of the country and didn't catch it. I received an email a short time later saying "Thanks for your payment" so I just assumed it was resolved. It was not. In fact, after that, LC never bothered to take any payments out. Not the NSF payment nor any of the scheduled payments. They never emailed me, wrote to me or otherwise contacted me to let me know my loan was in default. If you read through the boards, you will see that this is a pattern. Well intentioned borrowers who might have had an issue with one payment or as in other cases I saw, had simply changed bank accounts (and notified LC) are showing up as defaults and even charge-offs on your portfolios.

I personally discovered mine through a credit bureau alert. I immediately called LC and paid the past and current due (which they collected from the same account without issue) but they had already charged off the loan! Seems they charged it off after the payment which is even worse. They have since collected another payment from the same account. When I realized that they were not updating my credit file I called and asked them to stop the automatic payments. I have decided to fight this.

You can lecture me all you want on "you should have checked your accounts and known the payments weren't coming through." but the fact is, this is a lose-lose. Things happen, people travel, they get busy and they rely on auto-pay. In the absence of any communication or alert saying that there is an issue, that a payment is late, many more borrowers than necessary will default.

I am not an investor and I don't know if LC is structured in such a way that it has an incentive to stop collecting from borrowers but their policies make absolutely no sense to me. When someone calls and makes full payment to bring the account current when the loan has not been sold, LC has the option of reinstating the loan (Amex does this). So it is their policy not to. Why, I don't know. But I hope you better understand why there are so many defaults.

Title: Re: Ridiculous number of defaults, anyone else?
Post by: Fred93 on August 21, 2018, 02:48:55 PM
Susan, thanks for your message.

I would be interested to know WHEN this occurred. 
Title: Re: Ridiculous number of defaults, anyone else?
Post by: pressure9pa on August 23, 2018, 09:56:52 AM
Very interesting to hear this.  I can see some evidence of this in my portfolio, though I confess I haven't tracked it well enough to offer a lot of data.  What I do see is a pattern where my allowances for doubtful receivables consistently rise and my IRR slowly falls for a few weeks, then spikes very quickly back to my acceptable levels.  This may be an indication that LC is asleep at the switch as a servicer most of the time, but there is a periodic trigger for LC to either report to credit bureaus or reach out to borrowers in a different manner which suddenly results in borrower becoming current.  I'll start logging this to see if the pattern is predictable by a monthly pattern or otherwise.

Anyone else seeing this? 
Title: Re: Ridiculous number of defaults, anyone else?
Post by: arcee49 on August 23, 2018, 01:51:05 PM
Very interesting to hear this.  I can see some evidence of this in my portfolio, though I confess I haven't tracked it well enough to offer a lot of data.  What I do see is a pattern where my allowances for doubtful receivables consistently rise and my IRR slowly falls for a few weeks, then spikes very quickly back to my acceptable levels.  This may be an indication that LC is asleep at the switch as a servicer most of the time, but there is a periodic trigger for LC to either report to credit bureaus or reach out to borrowers in a different manner which suddenly results in borrower becoming current.  I'll start logging this to see if the pattern is predictable by a monthly pattern or otherwise.

Anyone else seeing this?

I would say I see this every month but I always attributed it to some borrowers consistently paying IGP or paying Late.  So the same Notes cycle in and out of IGP and Late categories and back to Current.  I say "the same Notes" but I don't track it that precisely.  Just a possible explanation.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: rob53 on August 23, 2018, 04:37:26 PM
Glad to find this thread. I've had a similar experience and was wondering if it was unique.  Been an investor with LC for about 18 months and decided that either their underwriting was easy to game or something was out of whack because it just makes no sense that someone with good job, steady income, good credit, low utilization rate, own home, etc., etc. would walk away from a loan after a month or two. Susan's post sheds a lot of light.

Disappointing to hear that LC may be so careless with our money.  Regardless of the cause, they've lost this investor.  Put in initial test of $5k on 200 loans (mostly 3 yr) and as soon as they're paid off, I'm gone.  Every time a few hundred $$ balance is there, I move it to a more productive investment.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: Fred93 on August 23, 2018, 07:35:38 PM
Go to the MyFico forums and search for Lending Club. You will find numerous entries of "I thought LC was withdrawing from my account but they weren't and they never notified me of any default."

Susan, I went there, and I found THREE such stories, one of which I believe was yours.

So we have 3 borrowers making this claim out of something like 1.8 MILLION loans so far.

I'm not sayin' you're wrong ... but three out of 1.8 Million is a pretty small number. 

It may be an indication of negligence, but it is not enough to provide evidence of widespread negligence.

Title: Re: Ridiculous number of defaults, anyone else?
Post by: Reginald on August 24, 2018, 12:43:03 PM
I think its a combination of Lending Club *not* doing a good enough job of underwriting, and at the same time  *not*  doing a good job of collecting or notifying people who are behind on payments. LC depends upon automatic withdrawls from peoples "bank accounts", which seem to fail from the get go. What bothers me is that LC doesnt seem to care, outside of making robo calls to a number which probably is blocking the incoming calls automatically.

Either that or people with perfect credit are scamming the investors.  Either way LC makes money on origination fees, late fees,  collections, and even chargeoffs.

Check this loan for a WTF moment:

https://www.lendingclub.com/account/loanDetail.action?loan_id=132970216

This loan was made to someone with an A1 credit rating, who has not paid back one red cent.  Why would someone risk their perfect credit score?   The purpose of the loan was Medical Expenses. Its past 30 days due and will be delinquent soon. Do you think the borrower is even aware of this? Does LC care? (Do I care ? - yes I'm going to be out $25).

 :-\ 

Loan ID: 132970216 (Joint Application1) | Lending Club Prospectus
Amount Requested   
$21,000
Loan Purpose   Medical expenses
Loan Grade   A1
Interest Rate   5.31%
Loan Length   3 years (36 payments)
Monthly Payment   $632.32 / month
Funding Received   $21,000 (100.00% funded)
Investors   601 people funded this loan
Note issued on   6/18/18 3:18 AM
Note Status   Late (31-120 days)
Loan Submitted on   5/28/18 8:10 AM
Credit Score Range:   820-824
Earliest Credit Line   07/2004
Open Credit Lines   7
Total Credit Lines   20
Revolving Credit Balance   $4,134.00
Revolving Line Utilization   11.80%
Inquiries in the Last 6 Months   0
Accounts Now Delinquent   0

???  ???

Title: Re: Ridiculous number of defaults, anyone else?
Post by: Harvey on August 26, 2018, 02:03:41 PM
What you guys were thinking? You do not even know who you are financing and you think lending club will do the dirty job instead of you?? Come ooon..
www.beelend.com is a global platform, pretty new and zero cost but not too many users. There you will personally verify the borrower and also negotiate the interest rate your lend.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: Fred93 on August 26, 2018, 05:08:30 PM
What you guys were thinking? You do not even know who you are financing and you think lending club will do the dirty job instead of you?? Come ooon..

We were and are thinking that LC has 1.8 million loans documented in detail, and in fact most pay back.  One can be unhappy with the defaults, but it is innumerate to ignore the data and simply try to ridicule based on a few examples.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: .Ryan. on August 27, 2018, 01:34:11 PM
What you guys were thinking? You do not even know who you are financing and you think lending club will do the dirty job instead of you?? Come ooon..
www.beelend.com is a global platform, pretty new and zero cost but not too many users. There you will personally verify the borrower and also negotiate the interest rate your lend.

I very much rely on the platform to accurately evaluate and classify targets. When they prove incapable of doing so (and they are proving this), my money goes elsewhere.

There is already enough work involved in picking loans. I'm not sure I need more.

I am, however, curious as what is offered with "personally verifying" borrowers, however your site has been serving up a "404 page not found" all morning.
Title: Re: Ridiculous number of defaults, anyone else?
Post by: Reginald on August 28, 2018, 11:23:34 AM
Ryan, I agree.

Its difficult for regular people to do a good enough job of screening the loans that Lending Club has already vetted. I guess thats why there are these other third party platforms that will try to do it for you.

I use LC's filters to screen my loans but every once in a while I end up with a loser like Mr. A1 Medical Expenses.  This is an outlier, but its also a reminder that LC is not looking out for you if you just use Automatic Investing - even with filters.

Reg