Author Topic: Competing with institutional lenders for notes.  (Read 23313 times)

yojoakak

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Re: Competing with institutional lenders for notes.
« Reply #60 on: July 20, 2013, 11:56:06 AM »
The institutions do get lower fees and this is disclosed in the Prospectus -- it's what you'd expect when dealing with large volume clients.  This is why I dislike speculation, such as the prior "LC prefers one million dollar account than 10 accounts representing a million!" They never mentioned the fact LC makes less money on that one million dollar account.

LendingClub makes most of it's money off of ORIGINANTION fees... i.e. the Borrower borrows $10,000 or $30,000 or whatever and immediately pays 5% of that to LendingClub (A or B loans might pay less) .

A discount on the 1% SERVICE fee every month is small potatoes -- or are you saying Large Investors are getting a kickback on that Origination Fee?

https://www.lendingclub.com/public/rates-and-fees.action
http://www.lendingclub.com/kb/index.php?View=entry&EntryID=103
« Last Edit: July 20, 2013, 12:07:16 PM by yojoakak »

Randawl

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Re: Competing with institutional lenders for notes.
« Reply #61 on: July 20, 2013, 12:23:51 PM »
Certain institutional investors are insured against losses, all but guaranteeing that they will be profitable:



From the 10-K:

Contingencies

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.


http://www.lendacademy.com/forum/index.php?topic=944.msg5686#msg5686

mo

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Re: Competing with institutional lenders for notes.
« Reply #62 on: July 20, 2013, 02:50:56 PM »
It's unlikely that is something that large investors will get going forward.  That was probably just an enticement given to the first few that agreed to invest in LC loans prior it it becoming 'main stream'.