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Messages - rubicon

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1
lendingclub is also subject to ECOA, which legally prohibits it from discriminating among certain borrower pools. The most common example is zip code, which could be a proxy for race.


also, hedge funds can value their portfolios in one of two ways:
- mark to market e.g. based on current interest rates
- held to maturity (not subject to mark to market) but starting off with a loss reserve and making write-ups or write-downs when there's evidence the loss reserve is too conservative or too aggressive. This smooths out the returns stream over time and mitigates the impact of returns coming down over time that retail investors see in their accounts as retail accounts only get mark-down when there's an actual credit event.


2
Investors - LC / Re: tax reform
« on: November 14, 2017, 07:16:19 PM »
if I'm not wrong, people who engage in the business of lending money are able to deduct their capital losses as ordinary losses.  That's how hedge funds in the space do it.

http://competency.aicpa.org/media_resources/209898-deducting-business-bad-debts/detail


3
Investors - LC / tax reform
« on: November 14, 2017, 06:57:48 PM »
http://www.taxpolicycenter.org/taxvox/25-percent-rate-pass-through-businesses-helps-rich-investors-not-small-businesses

so, anyone thinking of forming a S corp to engage in the business of lending money?

4
Investors - LC / Re: What happens if Lending Club goes bankrupt?
« on: October 17, 2017, 10:35:34 AM »
can lenders sue LendingClub for changing its underwriting standards materially for the same loan grades without informing investors? Isn't that securities misrepresentation?

After all, these are securities issued by LendingClub.

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Investors - LC / Re: A Surprise Bump in Bad Card Loans
« on: September 21, 2017, 08:44:57 AM »
it's monthly numbers (Aug) which were just released

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Investors - LC / A Surprise Bump in Bad Card Loans
« on: September 20, 2017, 10:22:21 AM »
Credit card lenders are seeing some of the highest delinquency rates in years

https://www.wsj.com/articles/a-surprise-bump-in-bad-card-loans-1505899800


7
Investors - LC / Re: LC Email: "The Next Generation Credit Model"
« on: September 20, 2017, 10:21:46 AM »
They expect lower projected annualized net credit loss on F/G loans on 36 months compared to 60 months: 17.95% vs 16.99%. My guess is that the prepayment for 60 months F/G loans is high enough that the credit losses is actually lower (compared to 36 months). Hence perversely they are able to offer lower interest rate on 60 months F/G loans as you still get higher net projected return with a term premium of app. 1% (9.84% vs 8.89%). I guess lots of 60 month F/G loans refinance into 36 months D/E loans after 1 - 2 years.

But yes it does seem heavily data driven.

8
Investors - LC / LendingClub's Response to Hurricane Irma
« on: September 18, 2017, 09:29:53 PM »
Quote
year's hurricane season has been a challenging time for many Americans. As if the devastation of Hurricane Harvey wasn't enough, Florida and the southeastern U.S. are now grappling with damage caused by Hurricane Irma. Our hearts are with all those impacted by the storms. We wanted to provide you with an estimate on how many LendingClub borrowers could be impacted by Irma and—similar to Harvey—let you know what we're doing to provide relief for them.
 
Estimated Scope of Impact
We estimate approximately 11,000 LendingClub borrowers are potentially affected by Irma (based on zip codes identified by FEMA as of Sep. 15), which amounts to about 1% of LendingClub's total borrower population. Of potentially affected borrowers, about 1,000 are currently delinquent as of Sep. 15.
 
This brings the total population affected by both Harvey and Irma to 53,000 people or 4% of LendingClub's borrower population. (Our updated analysis shows that 42,000 borrowers were impacted by Harvey.)
 
For the vast majority of investors who have diversified portfolios, we expect little to no impact to returns. The affected population is a small portion of our total borrower base of 1.3 million, and we're committed to keeping borrowers on track.
 
What We're Doing for Borrowers
LendingClub believes in doing the right thing for both borrowers and investors. Given the scope of the disaster, and similar to our approach with Hurricane Harvey, we've taken several steps in line with guidance from the FDIC to treat borrowers with respect, provide resources, and help them stay on track:
 
1.    Collections call adjustments. Starting on Sep. 11 and through Sep. 25, internal and agency collections teams stopped making calls to delinquent borrowers (approximately 1,000 borrowers) as the storm made its way through the area. We will resume calling delinquent borrowers who live outside of affected zip codes on Sep. 25. We will not resume calling borrowers who live in affected zip codes until Oct. 9. Likewise, we are suppressing direct mail and email collections communications to those same borrowers until Oct. 9.
    
2.    Late fees. We are not charging late fees for borrowers in affected zip codes starting on Sep. 15 through Oct. 30.
    
3.    Credit bureau reporting. For borrowers who live in affected zip codes and who become delinquent, we will append a note to our report to credit bureaus that they have been affected by a natural disaster.
    
4.    Hardship plans. We typically offer hardship plans (where borrowers are allowed to temporarily make interest-only payments to accommodate an unexpected life event) to borrowers when they meet certain eligibility criteria. In response to Harvey and Irma, we have relaxed our eligibility criteria for borrowers in affected zip codes. Hardship plans work to protect investor returns as borrowers whose loans may otherwise progress to charge-off status have the opportunity to make interim payments and some portion may revert to current status. Importantly, our teams will follow our standard process, where we offer progressively more relief to borrowers who ask for help, with hardship plans made available only after other options are exhausted.

 
Extending Relief for Borrowers Impacted by Hurricane Harvey
Much of the Houston area remains underwater and it appears that recovery efforts will take some time. To reflect this reality, and to ensure consistent treatment for borrowers affected by either Hurricane Harvey or Irma, we are making the following changes to the relief that we previously communicated for Hurricane Harvey.
 
•    Collections call adjustments. We will not resume calling borrowers who live in Harvey-affected zip codes until Oct. 2. We will also suppress direct mail and email collections communications to these same borrowers until Oct. 2. We will resume calling delinquent borrowers who live outside of affected zip codes in Texas and Louisiana on Sep. 18.
    
•    Late fees. We are not charging late fees for borrowers in affected zip codes through Oct. 16, extended from Sep. 30.
    
•    Hardship plans. We will be offering hardship plans until Oct. 16, extended from Sep. 30.

 
We've received overwhelmingly positive feedback from affected borrowers to date and have enrolled roughly 1,100 borrowers into hardship plans since Sep. 2. They appreciate our investors' understanding of the circumstances they couldn't control, and your willingness to help us do what's right in an incredibly challenging time.
 
We're committed to doing what's necessary to help our customers stay on track while protecting investor returns, and we're grateful for your support.
 
If you have any questions or concerns, feel free to reach out to us at 888-596-3159, Monday through Friday 7 a.m. through 5 p.m. PT, or investing@lendingclub.com.

Out of 11,000 potentially affected borrowers, 1,000 borrowers are already delinquent (30+ days), before the hurricane! Does this seem really high?

10
Investors - LC / Re: LC Email: "The Next Generation Credit Model"
« on: September 12, 2017, 11:41:18 AM »
it does seem that LC wins while investors lose if there's grade inflation.

12
Investors - LC / Does the Equifax hack impact LC fraud rate?
« on: September 08, 2017, 07:45:44 AM »
And does LC have to buy back the loan?

13
Investors - LC / Re: Anyone selling Florida loans?
« on: September 05, 2017, 09:36:59 AM »
here's a hypothetical question: would you buy a newly originated loan from Houston right now from Lending Club (not folio)? Because real life stuff happens and I seriously doubt that Lending Club has "disaster zone zip code" as one of its underwriting criteria when assigning a default probability.

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Investors - LC / Anyone selling Florida loans?
« on: September 04, 2017, 11:19:53 PM »
No, it's not too early.

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Investors - LC / Re: Selling Houston loans
« on: September 01, 2017, 10:20:31 AM »
No I'm just wondering. Not making a claim one way or the other.

I would point out that the Alt-A and subprime mortgages at the very least owned some equity in their homes or at the very least a call option on that home equity with HPA, if they didn't put a deposit down. If your home and car gets flooded whatever equity you had gets destroyed (assuming no flood insurance) and you're still liable to repay the principal on your (mortgage/car) loans. So you're in deep negative equity territory, which is the definition of insolvent (or bankrupt).

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