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Topics - Randawl

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Got another survey from LC.  I think this one was because I've made several withdrawals lately (for no reason other than planned moving of money around).

Among others, one of the questions asked why I had been making withdrawals lately.  It gave me 10 or so choices and the closest was "for other purpose."  The last question gave a text box asking "What could we do to improve your experience" and here is what I typed:

Less of a whole>>fractional imbalance.

A reversion to the days where data transparency was . . . well, more transparent.

Access to Policy Code 2 loans.

Establishment of a BRV/E (Bankruptcy Remote Vehicle/Entity).

A CSA (Credit Support Agreement) akin to that offered to certain Certificate Investors.

I know it was a long shot, but I thought I'd try!

On another note, hello again to those who are still here from several years ago, and to the people who have joined since!

[Edit: Grammar]   

Foliofn - LC / LC Phone Call
« on: February 04, 2015, 10:38:11 PM »
Thought I'd share:

Got a phone call this morning from a guy at LC and one of the questions he asked was, "What can Lending Club do better?" Among others things, I said, "Folio needs some attention.  It could use some improvements."  Then he said something to the effect that we might be getting "API-like features" for Folio in the somewhat distant future (my gestault, we didn't talk timeline).  He didn't elaborate and I didn't ask any more questions because I had to go. 

I wonder what that could mean or if he was just making it up.

Investors - LC / 10-Q September 30, 2014
« on: November 08, 2014, 01:57:02 PM »
Lending Club released their newest 10-Q a few days ago.  I thought this snippet was interesting in light of our recent discussions:

If we were to become subject to a bankruptcy or similar proceeding, the right of payment of investors in our notes may be senior to
the right of payment of our stockholders and there may not be value recoverable by our stockholders.
Under the terms of the notes offered through our marketplace, we are obligated to pay principal and interest on each note on a nonrecourse
basis only if and to the extent that we receive principal, interest or late fee payments from the borrower on the corresponding
loan, but the notes become fully recourse to us if we fail to pay such obligation, which would include being prohibited from making
such payments as a result of a bankruptcy or similar proceeding, or if we breach a covenant under the indenture governing the notes.
In a bankruptcy or similar proceeding due to a default under current or future indebtedness, an action for repurchase or rescission of
securities or other event, there is uncertainty regarding whether a holder of a note has any right of payment from our assets other than
the corresponding loan. It is possible that a note holder could be deemed to have a right of payment from both the corresponding loan
and from some or all of our other assets, in which case the note holder would have a claim to the proceeds of our assets that is senior
to any right of payment of the holders of our common stock, regardless of whether we have received any payments from the
underlying borrower, making it highly unlikely that there would be any value recoverable by our stockholders.

Page 66.


Some highlights:

Estimated charge-off rates were slightly lowered, except for B which increased.

Not too thrilled about the changes to collection fees:
• 18% of the delinquent amount recovered if the loan is at least 16 days late and no litigation is involved
• 30% of attorneys’ hourly fees, plus costs in the event litigation is involved

The ever-shifting credit policies:

• As of August 20, 2014, a credit report must reflect 5 or fewer inquiries (or recently opened accounts) in the last 6 months.  This reduces the maximum allowable number of inquiries in the past 6 months from 6 to 5. In addition, the definition of “inquiry” was updated to exclude credit inquiries related to auto and mortgage loans.  The updated definition will be reflected in loan information for all loans issued on or after August 20, 2014. The updated definition does not apply to loans issued before August 20, 2014.
• On July 25, 2014, the maximum debt-to-income (“DTI”) ratio (excluding mortgage) changed from 35% to 40%.

I am glad they have addressed the prepayment issue that can result in negative returns:

Beginning in Q4 2014, we will limit the size of the service fee charged to an investor during the first 12 months after a Note is issued in order to protect investor returns in the event of a prepayment.  For those 12 months, an investor will never pay a service fee greater than 1% of the contractual monthly payment amount.

Investors - LC / Updates to Loan Migration Status
« on: July 31, 2014, 10:47:30 PM »
As part of the 6/30/2014 updates along with the loan data file (, Lending Club has updated their 9-month loss estimations based on loan status.

Grace period:  23% -> 25%
Late 16-30:  49% -> 57%
Late 31-120:  72% -> 77%
Default:  86% -> 91%

They have not yet updated these estimations in the default "adjusted" settings.

Investors - LC / Call from Lending Club
« on: June 10, 2014, 04:03:36 PM »
Got a random phone call from Lending Club today.  He asked me if LC was meeting my expectations and asked if everything was going well with my account.  He also asked about my API use and whether I used any third party tools.  I heard him typing my responses and he also asked if those third party tools were able to make folio transactions. 

I hadn't spoken with anyone from LC since they called me about API access a long time ago.  I presume this is part of a standard maintain/improve investor relations type of effort. 
Have any of you received similar phone calls recently?  He also made sure to mention that "if you were thinking of adding more funds to the platform, more loans have been recently made available to retail investors such as yourself."  Not too sure how those f/w percentages have actually changed lately, though, if at all.

Investors - LC / "Breaking Change" Regarding API
« on: February 05, 2014, 08:02:53 PM »
Attention Lending Club API users,

This is a notification about an upcoming breaking change to the Lending Club API.

Breaking Change

API v1.4 supports the use of an authentication token when invoking an authenticated operation. As noted in the most recent version of the technical overview document, support for the older authentication method has been deprecated and will be removed. On March 5th, the API will no longer support the authentication method (via BASE64 encoded UTF-8 string

Going forward, the API will only support the API token which can be accessed via the settings page.

If you are still using the older authentication method, we ask you to please migrate to the API token before March 5th. If you do not migrate to the use of the API token before March 5th, your API requests may result in an error.

Thank you,

Lending Club Investor Services

71 Stevenson St., Ste. 300
San Francisco, CA 94105
Investor Services  (888) 596-3159
(415) 632-5611 (Fax)

I wonder what other changes they are considering.  Does this mean they are going to give us notice about other changes in the future instead of sneaking things in?

Foliofn - LC / When 59% is >70%
« on: January 15, 2014, 09:59:47 AM »
Supposedly the rules are that you can not list a note with a negative YTM nor any note with a positive YTM but >70% markup - it must be 70% or less mark up and generate a positive YTM.  However, it has long been that even when the YTM is positive, Folio will randomly tell me that a note I have at 69% or 68% "...can only be listed for sale with up to a 70% premium..."  Occasionally it would tell me that a note at 67% is still >70% and I have just dealt with it and lowered the price.  But in the last few weeks it has gotten worse and even notes at 59% premium (with a positive YTM) I get told that it's >70% and I need to reduce it!  I had to list it at 58.72% - it wouldn't even accept 58.81%.  This is occurring randomly as other notes list without issue at ~69%.  More fuzzy math. . .

Investors - LC / Increased Rates for 60 Month Loans
« on: October 26, 2013, 01:19:31 PM »
In the past I have seen borrowers pay a premium of about 3-5% for choosing a 60 month vs a 36 month term.  Lately, I have seen that rate increased for many loans.  Here is an example of a couple today - one with a 7.53% additional rate:

I have not seen any that high until recently.
Perhaps this is LC's response to them noticing that the premium charged was not compensating the risk well enough for the increased charge-off rates seen with 60 month notes.  For those that still invest exclusively in 36's, does this make 60's more attractive to you?  Or do you still plan to take a "wait and see" approach and give it a few more years for the first vintages to fully mature?

As an aside, I would like to see LC report separate charge-off rate graphs and tables for 36's and 60's in their 10-K's/10-Q's instead of combined by grade.

Investors - LC / Change to note status updates
« on: October 10, 2013, 05:53:04 PM »
I was glancing at a note that I had in grace period and noticed new information listed under "Status" where it normally would show "Current", "Completed - on time" and the like.

Recurring payment date changed to 9th per approved borrower request

The loan for reference:

I wonder what other changes are in the pipeline?

Investors - LC / Employer removed from loan description
« on: September 25, 2013, 01:34:51 PM »
Anyone else notice that the "current employer" column has been removed from loan descriptions?  LC replaced it with "Job Title" so we're seeing things like "factory worker", "sales", and "registered nurse" instead.  In the past I had looked at the employer and surmised if the claimed income was reasonable.  People with sales jobs tend to have much more volatile cash flows.  If the employer was "Super Maxx Auto World" I would shy away from it.  I like this change because instead of just telling me who they work for it gives me a better idea of what they do.  Of course, this only applies to those actually being honest with this unverified information.

LC probably also wanted to anonymize borrower details a bit more.  It was relatively easy to google the employer with the city and state and find out exactly where they work and be able to call the business, especially if the borrower worked at a less-than-national company.

LC also added a loan counter in the top right corner of the browse notes page that displays the number of loans listed in the past week.  Perhaps they are hoping this will help counter some of the perception of limited loan availability.

Investors - LC / LC Engaging Collections Agency Sooner
« on: July 26, 2013, 01:18:15 AM »
It seems that Lending Club is initiating usage of their collection agency much sooner than before.  Historically, notes would have to be 60 or more (and sometimes 90) days late before going into collections.  Now, many notes that are freshly 31 days late are being sent to collections.
This seems to coincide around the same time they streamlined their payment processing times.

Anyone else notice this?

Investors - LC / Certificate Investor
« on: April 06, 2013, 01:36:41 PM »
Looks like investors through LCA got the company to insure their investment against losses with their "Credit Support Agreement."

Oh the sweetheart deals that can be concocted if only you have enough money.   8)

From the 10-K:

Credit Support Agreement
During the nine months ended December 31, 2012, the Company entered into a Credit Support Agreement with a Certificate investor. The Credit Support Agreement requires the Company to pledge and restrict cash in support of its contingent obligation to reimburse the investor for credit losses on Member Loans underlying the investor’s Certificate, that are in excess of a specified, aggregate loss threshold. The Company is contingently obligated to pledge cash, not to exceed $3.0 million, to support this contingent obligation and which number is premised upon investor volume. As of December 31, 2012, approximately $2.3 million was pledged and restricted to support this contingent obligation.
As of December 31, 2012, the credit losses pertaining to the investor’s Certificate have not exceeded the specified threshold, nor are future credit losses expected to exceed the specified threshold, and thus no expense or liability has been recorded. The Company currently does not anticipate recording losses resulting from its contingent obligation under this Credit Support Agreement. If losses related to the Credit Support Agreement are later determined to be likely to occur and are estimable, results of operations could be affected in the period in which such losses are recorded.

Investors - LC / Return by Grade Trends
« on: March 17, 2013, 02:47:31 PM »
I've been observing the new data and graphs LC provides every month on their statistics page.
Earlier this month I saw that the return by grade appeared to be quite lower in most grades than the image in my head from the previous month.  I hadn't been saving each one every month but I was able to find February's.

From inception to 2/07/2013

From inception to 3/05/2013

It is expected that these numbers will fluctuate each month but this is the first one that I recall that has negative changes across the board.  Since LC includes loans that are 3 months and older in their NAR calculation, this is the first data set from them that includes originations from the new underwriting standards from December.

Does anyone have older months from LC to compare?

Update for April:

From inception to 4/08/2013

From inception to 5/13/2013

From inception to 6/11/2013

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