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Messages - Fred

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Investors - LC / Re: Recoveries of Charge-Offs
« on: August 28, 2016, 03:20:04 AM »
It would be nice to have some hard data, but we only have pseudo answers. LC is not transparent enough about recoveries for us to be able to price defaults properly.

This is available, if you know where to look.

As a first step, you will need to download the payment history files.

Investors - LC / Re: Recoveries of Charge-Offs
« on: August 28, 2016, 12:04:16 AM »
I might borrow your strategy.

Don't borrow somebody's strategy just because it "makes sense."

late notes are likely to default and that at least 10% is better than nothing?

This is generally  not true -- there are a lot of nuance.  Recovery rates are not a single-variable risk factor.  You need to include at least Grades, Terms, and Vintages.

Investors - LC / Re: LC's restriction on multiple accounts
« on: August 27, 2016, 02:21:38 AM »
OP, hopefully you are putting all your IRA eggs in LC basket.

Investors - LC / Re: Are LC Grades Completely Random?
« on: August 25, 2016, 03:27:13 PM »
It is not "completely" random, although I did see some interesting grade assignments before.

LC has an initial scoring model which provides the application with a score, which when combined with the applicantís FICO score and certain other credit attributes arrives at a Model Rank. The Model Rank is based upon an internally developed algorithm which analyzes the performance of borrower members and takes into account FICO score, credit attributes, and other application data. The Model Rank is between 1 and 25 and corresponds to a Base Risk Sub-Grade.

I would like to know what the consensus out there would be to allowing Lending Clubís collection department to modify the conditions of a loan for those people who have such extenuating circumstances and extend the loan payoff by letís say another year or two. That would cut the loan payment down and hopefully provide a little relief to those borrowers.

This is not a market practice.

Lenders and investors are business entities; not charity.  On personal basis, they may perform charity activities such as you mentioned above.  However, as business entities, their goals are to maximize profits.

I bought and sold 1000's of Folio notes in 2015. 

I received 1099-B (Folio Investing Transactions).  The IRS will match the amounts reported on this form to the amounts reported on your tax return.  Information on this form may be categorized as short term or long term capital gains or losses, depending on how long an investor held the relevant Notes. Generally, the short term transactions are reported in Part I and long term transactions are reported in Part II of Form 8949.

Investors - LC / Re: What does 9 month loss estimate REALLY mean?
« on: August 18, 2016, 08:47:35 PM »
The discount rate used should be the rate that makes you ambivalent between having the cash in hand, and having the note.

This is not true if you really want to get NPV related to your original question: What does 9 month loss estimate REALLY mean?

Investors - LC / Re: What does 9 month loss estimate REALLY mean?
« on: August 18, 2016, 01:31:09 PM »
Yes. Future payments should be discounted by the return that could be obtained by reinvesting money in the account.

I don't think this will give accurate net present value.  You might be confusing the role of discount rate in NPV vs DCF vs IRR?

Investors - LC / Re: What does 9 month loss estimate REALLY mean?
« on: August 18, 2016, 11:02:23 AM »
They can let the investor set the discount rate. It should be set to the expected return. They can use the platform average return as a default and let the investor modify it.

Are you saying, "discount rate should be set to the expected return?"

If we are talking about NPV, this is the wrong rate to use.  Discount rate should be set at the investor's cost of capital -- should be much lower the LC's expected return; otherwise, it does not make sense to invest in LC notes.

Investors - LC / Re: What does 9 month loss estimate REALLY mean?
« on: August 17, 2016, 04:35:49 AM »
I wonder why LC doesn't include time value of money in their ANAR.

At what rate should LC discount their ANAR?  If it is at 1% or lower, the difference between discounted vs. non-discounted would be very small.

Besides, the discount rate would be a yet-another topic of contention.

This link shows 4 reasons:

Why did a trade or listing cancel?
A trade or listing may be cancelled for the following reasons:
- Lending Club is processing a payment that was received on the loan corresponding to the listed Note. 
- Lending Club received a special payment from a Borrower and Lending Club is in the process of distributing that payment to investors. 
- The loan corresponding to the listed Note moved into a Default or Charge Off status.
- A bankruptcy filing related to the loan corresponding to the listed Note is pending.

Investors - LC / Re: What does 9 month loss estimate REALLY mean?
« on: August 11, 2016, 04:19:52 AM »
1. Is that present value, $24 today? Or future value, $24 in nine months--so worth less today

The numbers are unitless; they are probabilities.  The Late31-120 note has a 76% probability of being charged-off in the next 9 month; or 24% of being recovered.

If you multiply the probability with the outstanding principal, then the resulting amount is neither present nor future value.  It is the expected amount you will receive in the next 9 months.

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

The calculation is based on loan status, which covers from 31-day to 120-day late.  So the estimate so refer to notes closer to the 75 days rather than exactly 31 days.

Any way to get the value of a note based on whether it is 30 vs 60 vs 90 days late?

Yes, go to

General Lending Club Discussion / Re: LendingClub Withdraws
« on: August 10, 2016, 10:43:49 PM »
I don't withdraw from LC often, but recently I've noticed it's recognized a day later with my bank. Has this always been the case?

Nope.  My withdrawals have always taken at least 3 business days.  Perhaps because my account is in a credit union rather than a mega bank?

Investors - LC / Re: I'm peeved with lack of EFG loans
« on: August 10, 2016, 12:47:24 AM »
I've been happily investing in DEFG loans recently to skew my portfolio for higher total return and all of a sudden, about a week and a half ago, the supply completely dried up!

Have you considered getting the DEFG notes from Folio?

Investors - LC / Re: Lending Club 2Q 2016 Results
« on: August 09, 2016, 12:15:01 AM »
The "macro uncertainty" part is BS, IMO.  What macro uncertainty are they talking about: GDP, Interest Rates, Unemployment, Inflation?  These are all within reasonable certainty.

Unless, they are talking about US Presidential election?

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