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Topics - rj2

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Investors - LC / Folio is closed, how'd you do?
« on: August 27, 2020, 02:00:35 PM »

Since they announced it was closing I sold 705 notes, which was 80% of my holdings. All that's left now are notes maturing in 6 months or less, plus a handful of "hardship" loans I was unable to sell. In six months I'll transfer the remaining cash out of my account, "gift" any remaining hardship loans to LC, and be gone.

Investors - LC / Hardship loans an even bigger PITA than I thought?
« on: June 07, 2020, 04:46:08 PM »
I can't prove this yet, I need to watch what happens, and maybe others can watch and confirm or deny it.

I have listed my hardship loans for sale on folio and usually no-one buys them, but recently, some of them sold. Good news right?

Not so fast: It appears that the borrower made a payment, the loan reverted to current non-hardship status, AND folio did not remove my offer "payment pending", just kept it up. Of course since there is a recent payment my heavily discounted price is quite attractive! I saw 4-5 loans sell this way before I brought a halt to it.

I don't know if these are out of band payments? Like, the borrower got back on their feet and started paying off earlier than they needed to, or if they were scheduled hardship payments. But when I look at the loan history now I see "deferred, deferred, payment completed" with no indication that it was in hardship status, and the next payment is "scheduled".

I also believe that my offer of sale was not visible to anyone UNTIL that payment was processed. Originally I listed my hardship loans for sale at a steep discount. No one buys them. I believe this is because LC does not actually display them to anyone. I even tried discounting a couple of low value hardship loans by huge amounts (70%, 80%, 90%) just to see if anyone would buy them--no one does. So I think although I see them for sale in folio no one else does.

It's *possible* that I made a mistake, that the loans that sold had reverted to normal status, folio cancelled the offer, but I didn't notice, and then somehow I resubmitted my own deeply discounted offer without checking. But I don't think I did that. I will be watching more carefully going forward to see if I can prove it.

For now I am listing them at a price I am willing to sell IF the borrower makes a payment, and I am assuming they won't sell until the borrower does that.

Investors - LC / Slow exit strategy
« on: May 19, 2020, 01:24:58 PM »
About a year ago I decided to exit LC, and to take two years to do it. The idea was to end up with cash in my account that I could transfer out in one shot without having to sell at a steep discount. My LC account is an IRA so I only wanted to do the transfer once and not repeatedly.

So I stopped buying new notes, and only bought on folio, and specifically, I only bought notes with a maturity date on or before my exit date.

On the first day that meant I only bought notes with 24 months or less left. I had other filters, mainly a high enough credit score and a credit score that had gone up, and a few other things. But the main filter was 24 or fewer remaining payments.

And in the second month, that became 23. Then 22, 21, etc.

Simultaneously I went though and identified every loan with more than 24 payments left and moved them to a new portfolio called "over 24. I put them all up for sale continuously, but not at a discount. At a small premium. With 24 months to sell I figured I didn't need to take a loss, and every month I sold a few, reinvesting the proceeds in notes maturing ahead of my exit date.

Sometimes cash would pile up in my account for a few weeks and then I guess someone would dump a bunch of notes and I'd find enough to buy to stay fully invested. The rate at which I had to reinvest also accelerated as the shorter and shorter duration meant payments became a larger share of my capital.

I realized at some point I would not find enough to buy as the duration became very low and the incoming payments high--I was ok with that, it's an exit strategy. I figured that would happen at maybe 6 to 8 months left, where I'd just lose the ability to reinvest for lack of available inventory fitting my timeline.

I was at the point of buying only notes with 13 or fewer remaining payments when COVID-19 brought a halt to my strategy. There's nothing much available for sale that meets my criteria now and way too much risk. I got burned buying a few "hardship" loans without realizing it and so I'm done with buying now.

I have a handful of notes left over my target date, that I'm now having to discount slightly to sell, and my goal is to sell them over the next year, but that's less than 20 notes out of a portfolio with ordinary hundreds of notes, so I'm almost there.

So now I'm just going to let it run out and accept that I'm not going to be able to reinvest for the final 12 months, but on the flip side, I'm getting more than 1/12th of my investment out of notes into cash every month now just by collecting payments. I'm not reinvesting it, I'll live with that--I see it as rapidly reducing my risk.

Although, I've got 10% or so of my loans in "hardship" status, so I'm expecting to take a bath on that, and likely more will sour.

Investors - LC / What is the lifecycle of a "hardship" loan?
« on: May 12, 2020, 10:56:38 PM »
So what's the lifecycle of these hardship loans?

They are listed as current now, but not making payments. Presumably at some point they're supposed to start paying--can they just keep on deferring? For how long?

And once they start finally being "late", do they go through the usual lifecycle for a late loan, starting with 15-30 days, and then 120 days? Or does the lateness "backdate" to the original deferred payment once they are late?

And so how long from today, where it's marked hardship, to when LC is going to mark one of these loans as charged off?

Investors - LC / Total investment minus total payments: -$284.01
« on: March 16, 2020, 09:42:00 PM »
I know, I know it's the wrong way to look at a portfolio. But still. Today I went to LC web interface and moved all my completed notes into one portfolio, containing all and only notes that are either charged off or fully paid. Here's what it looked like:

Notes: 1153
Investment: $26928.83
Payments to Date: $26644.82

Principal: $22547.41
Interest: $4093.81
Late Fees Received: $3.60
Charged Off: $4439.39

WAIR: 15.04%
Composition: 1% A, 11% B, 26% C, 20% D, 29% E, 11% F, 3% G

NOW... Lending Club says that the ANAR on my account is 4.69%, and maybe it is, but I'd have expected better from a portfolio that has been running since 2015. Like actually coming out ahead on the notes that actually run to completion one way or the other.

Thankfully after 2017 I stopped adding money to this account (which is an IRA).

Investors - LC / Available Cash -$1.49
« on: March 07, 2019, 11:18:42 PM »
Ok, it's only $1.49, but how is it that the available cash in my LC account can ever be negative?

I looked through the recent activity and didn't see anything unusual. I bought some notes on the secondary market, as well as some directly through LC's API, got paid some interest, etc.

Anyone else seen this? I guess the next interest payment I receive will wipe it out but I'm kind of curious how it can happen.

Investors - LC / Possible to see how many payments remaining?
« on: February 04, 2019, 01:37:43 AM »
I was looking around the LC site and also downloaded the spreadsheets on the "notes" page, trying to see if I could see how many payments remain on my notes. I found lots of data, but didn't anywhere see the number of remaining payments. I can see the term, outstanding balance, amount of payment, date of first payment, but not how many are left.

What I'd like to do: Calculate the duration of my portfolio. If I can't do that, I'd settle for calculating the average time to maturity of my notes. But if I can calculate the weighted average, I could probably do it properly and calculate the Macaulay duration.

For example, if I had only two loans with the same payment and one had 10 payments left and the other 20 then the average remaining is 15.

Why: I am trying to reduce the risk in my portfolio in anticipation of a potential economic downturn. I am increasingly buying lower interest loans, and I have stopped buying 60 month loans. I'm even considering selling off the higher interest, longer duration loans. Anyway, I was hoping to track this number to measure the difference I'm making as I do this. Also, if I do decide to exit LC at some point it strikes me that it's easier to get out of a short-duration porftolio than a longer duration one, as in, fewer notes need to be sold and more can simply be waited-out.

As an aside: duration is such a fundamental, common concept in fixed income that I'm surprised LC isn't just showing it to me everywhere. Weird the numbers they decide to give me.

Investors - LC / Are things improving?
« on: March 24, 2018, 12:19:27 AM »
I signed up for LC in June 2015 which I think was really not a great time to sign up. As you all know, LC had some serious issues with loan quality in 2015 and 2016. While LC initially presented my account as having a 10% return, what I actually experienced over the following two years was less than a 4% return. Mostly due to excessive charge-offs. For context I was mostly invested in C/D/E with a few F/G loans and a WAIR of around 18% or so.

Recently though I've seen my returns ticking up. My overall return has risen from a low of 4% to 5.5% and seems to be climbing. I'd guess if current trends continue it's going to get to 6.5% or so, maybe even 7%, which while not the 10% I originally expected, is also not the 4% I saw over the last couple of years.

On my side, two things have changed. I've become more conservative in my automated investing, investing only in B/C/D. I've also started making use of Folio, where I target seasoned loans that have a rising credit score and never late. My folio buying has a WAIR of 19% but my automated buying of new loans has a WAIR of 12%. Overall that's giving me a WAIR on newly invested loans of around 17% vs a historically higher WAIR in 2015/2016, so I've become slightly more conservative.

However, my gut says that my increased return is not because I've become slightly more conservative, or that I'm suddenly better at picking notes. My guess is that the underlying return on the platform has just generally improved by a couple of percentages and that rising tide is floating my boat.

I am curious to see what other's have experienced.

Investors - LC / Loan status migration / adjustment numbers - weird
« on: December 09, 2017, 04:44:39 AM »

Lending club has an "adjustment for past due notes" based on what it claims are "loan status migration over 9 months". You can flip it on and off, or customize it. I have always customized it to be more aggressive than what LC sets for 31-120 day lates and defaults.

Well I was looking today to see if I should adjust those settings again and I noticed that sometime since I last looked (over a year at least) Lending Club has updated it in a weird way.

Here are their current adjustments:

0% - Current
31% - In Grace
62% - 16-30 late
88% - 31-120 late
72% - default

Yes that's right, they are listing DEFAULT as having a lower 9 month loss estimate than 31-120 days late.

How is that even possible?

Investors - LC / Rumor Mill
« on: September 15, 2017, 05:04:48 AM »

Rumor Mill says that LC suffered some kind of breach resulting in loss of sensitive data to hackers.

It's being discussed on social media by people who claim to work for LC.

Let's see if it's real.

Investors - LC / Best way to measure true return?
« on: August 08, 2017, 10:59:25 PM »

We all know that ANAR is pretty useless. What do people do instead.

I looked at my July statement, being half way through the year: $13003 account value, $814.77 in interest, $640.96 in charge-offs, $173.81 net return.

$173.81/$13003 = 1.34% or about 2.69% annualized. Weighted Average Return 16.5%.

Investors - LC / Does buying notes manually pause automated investing?
« on: September 29, 2016, 11:01:20 PM »
It's been a long time since automated investing bought anything in my account. Like, two months.

I log in once every day or two and if there's a cash balance I use my preset filter to see if any notes are worth buying. This is the same filter automated investing is set up with.

I usually find something to buy. Not always. But usually.

I don't come along at feeding time so I'm finding notes that are just there for anyone. Several feeding times would have come and gone since the money landed in my account.

So why automated investing never buys anything?

Investors - LC / LC should offer interest on the cash account
« on: August 20, 2016, 03:31:58 PM »

I know, it's supposed to be peer-to-peer lending, not a bank. But why not? Why not turn the cash account into a high-interest savings account. Pay us something like 0.75% to 1% on our cash balances. I'm sure that LC can find something to do with the money, and when we use it to buy a note they see the cash transfer coming a few days in advance--so they could easily manage their investments.

Why would I want this? Here's why:

I"m continually debating whether to transfer another $10k to lending club in my IRA. I have had good returns on the $7k I have invested at LC now, and I'd like to add to my investment. BUT, I just can't see how I can get $10k invested in $25 notes in any reasonable amount of time given the paltry number of notes being listed.

So I don't transfer my money, even though LC is offering me a $100 bonus if I do. I just can't see how I would get my money invested in any reasonable amount of time.

So how does paying interest on cash balances help? Well, at least I'd be getting SOMETHING for my money while I wait to invest it.

If they don't want to pay cash balances on the cash account, they could offer a savings account on the side, and move cash in and out of it between the "checking" type main account balance. I don't know.

Investors - LC / What does 9 month loss estimate REALLY mean?
« on: August 11, 2016, 01:47:37 AM »
LC's ANAR is based on a nine month loss estimate.

I have questions about that, if I have $100 capital in a 31 day late note, is the $24 nine month estimate:

1. Is that present value, $24 today? Or future value, $24 in nine months--so worth less today

2. Is that the estimate for a note that is 31 days late? Or the average late note, more likely around 75 days late?

Any way to get the value of a note based on whether it is 30 vs 60 vs 90 days late? Obviously 60 days late is worth more than 90 but where to get that?

I used to not care but the differences are important in understanding what a late note is worth if you list it for sale in folio.

Money invested in my portfolio is earning about a half percent a month by my conservative estimate based on my allocation, though LC claims it's more. I want to calculate what discount is the break even on holding a non performing note in hopes of payment versus selling and immediately reinvesting the cash.

If it's $24 nine months from now, it's worth $22.92 today and with the 1% fee worth selling at $22.69. If that's already present value it's now worth selling below 24.24... But that also depends on whether it's $24 the day it goes late, or for the average of all 31+ day late loans.

I'm willing to hold the late loans if the expected value is greater than what I can get on folio, but how to calculate that?

Let's overlook things like changes in credit score and focus just on the length of delinquency for now.

Seems hard to arrive at the expected value necessary to determine what price in folio is profitable to sell.

Investors - LC / What are late notes worth?
« on: July 23, 2016, 06:58:04 PM »
LC returns adjustment says that 31 to 120 day late notes have a 9 month loss rate of 56%. However, I listed a dozen of them in folio at a 60% discount and nobody wants to buy any of them. Presumably if LC is right, 4% off their 9 month value is a bargain but obviously no one really thinks so.

So, what are they actually worth?

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