so you want some money for your pool...

[lender_john]

I wouldn't invest in this primarily because of the delinquencies.. but taking a second to read the details really makes me wonder...
https://www.lendingclub.com/foliofn/loanDetail.action?loan_id=4786190

Supposedly nearly 270k income... 
Home ownership: Rent
Loan description: ... ... to finance a pool...
Q & A ...  rent is 2000

So this person makes over a quarter million a year.. wants a loan for 30k to finance a pool at their home which they rent.

[SeattleSun]

I really like to see a description of why they want the money and don't like it when its missing on Prosper.

And then again so many shoot themselves in the foot with a description I can see why so many leave it blank.   LOL

[SarahV]

This person is insane.

"Current rent is $2000, utilities and car gasoline average $1600 a month, and credit cards and other credit payments total a little over $4000 a month as we are paying more than minimums to get them paid off sooner. "

How on earth do you spend $1600/mo in utilities and gasoline??? Unless that weird punctuation/phrasing should be interpreted to include car payments (which would still be a pretty expensive car).

And they have $4000/mo in credit card payments with $80k in debt and they are looking to borrow another $30,000!? To finance, as you noticed, a pool on a property they don't own. Probably after they build it the landlord will raise their rent, because hey, now the property has a swimming pool!

[edward]

Interest Radar information makes it even more interesting:
Rents, but has 15 mortgage accounts
1 Charge-off in the last 12 months
Last 90-day late account was 9 months ago
Total of 6 accounts ever 120 days late
But IR rates it 409/U

[SarahV]

I've found a lot of 40X/U IR scores among very high-income but otherwise really sketchy loans...

[mo]

Seems fraudulent.  They claim their employer is "Florida International University", a university in Miami, but they list their location as, "Fleming Island, FL".  In other words, their employer and location are literally on opposite ends of the state.

Since FIU is a public institution the names and salary information if it's staff are published information.  You can find a list of people making roughly the borrower's claimed salary ($269,004) here;

http://databases.sun-sentinel.com/Orlando/ftlaudosuniversities/ftlauduniversities_list.php?pagesize=100 

The closest one is over 7,700 off.  Not conclusive but really fishy I'd say.

[SeanMcD]

The loan seems goofy, but I wouldn't make too much out of the salary info for FIU - any sort of dual income would make that chart useless.

[pplinvestor]

One of my rules is that I won't fund anyone who makes >$240K/yr.  I, as one of 99%ers, don't want the top 1% earner defaults on my loan.  I can't take it.

[rawraw]

I've found a lot of 40X/U IR scores among very high-income but otherwise really sketchy loans...

Well, are you saying that rich people should have the same expenses you have?  And that very high income isn't a useful variable?

[SarahV]

I've found a lot of 40X/U IR scores among very high-income but otherwise really sketchy loans...

Well, are you saying that rich people should have the same expenses you have?  And that very high income isn't a useful variable?

Wow, you're reading quite a bit into my statement that wasn't there! I'm saying that I've found a lot of high IR01/unknown IR04 scores among high-income but otherwise really sketchy loans. No more and no less. I made no comment or judgment on "rich people" or whether or not it's a useful variable. Clearly it is, or I wouldn't use income in most of my filters.

But if you have an F or G loan with multiple recent delinquencies, a huge amount of debt, major derogatories, 3 or more inquiries, etc. but they have a high income... it surprises me that it would get a 408 or 409 score because that's literally as high as you can get in that ranking system, and it seems like there must be better loans out there. I mean, obviously if they have major derogatories and recent delinquencies their high income is not cutting the mustard for them. (Or maybe they are lying about the income?)

But, hey, I'm not a statistician! What do I know. You can buy up all those notes if you like them  

Edit: Adding some examples of the loans I'm referring to... these are all 409/U with 5-6% expected loss. Maybe that's right, but it seems crazy to me.

http://www.lendingclub.com/account/loanDetail.action?loan_id=5938548 ($100k income, 4 delinquencies, major derog)
http://www.lendingclub.com/account/loanDetail.action?loan_id=5844991 ($120k income, 4 inquiries, 99.8% utilization)
http://www.lendingclub.com/account/loanDetail.action?loan_id=5446235 ($150k income, 5 inquiries, delinquency/major derog, 1 year employment... although bonus points for working pest control in a town called "Locust Grove," no wonder he makes a lot of money!)
http://www.lendingclub.com/account/loanDetail.action?loan_id=5694641 ($250k income, 4 delinquencies, major derog, 95.8% utilization, $90k revolving credit - and he's borrowing this for home improvement, not to reduce debt!)

[Lovinglifestyle]

This is a sticky point about the 405-409s for me as well! 

I had to steel myself to "discard" many of them in favor of common sense.  Clearly I'm not a statistician.  I don't believe the "numbers don't lie" argument.  The lie depends on the question asked, among other factors.  After college statistics (and lots more) in the math department, educational training in standardized tests, and more chemical and physics lab work than I care to admit to, I can't help but look for flaws and their causes in reported data. 

Conversely, I don't understand some of the low scores for people who appear dependable to me.  I vote for them anyway and I'm glad their loan isn't funded yet!

That said, when I'm on the fence about a loan I'll let the score influence me. 

 

[JDowding]

Recently read 'The Millionaire Next Door', which (among other things) gives a depressingly accurate description of high-income/low-wealth people.   The pressure to live in nice neighborhoods, and "look the part" makes it hard for them to live under their means, even if they have objectively high incomes.

[rawraw]

I've found a lot of 40X/U IR scores among very high-income but otherwise really sketchy loans...

Well, are you saying that rich people should have the same expenses you have?  And that very high income isn't a useful variable?

Wow, you're reading quite a bit into my statement that wasn't there! I'm saying that I've found a lot of high IR01/unknown IR04 scores among high-income but otherwise really sketchy loans. No more and no less. I made no comment or judgment on "rich people" or whether or not it's a useful variable. Clearly it is, or I wouldn't use income in most of my filters.

But if you have an F or G loan with multiple recent delinquencies, a huge amount of debt, major derogatories, 3 or more inquiries, etc. but they have a high income... it surprises me that it would get a 408 or 409 score because that's literally as high as you can get in that ranking system, and it seems like there must be better loans out there. I mean, obviously if they have major derogatories and recent delinquencies their high income is not cutting the mustard for them. (Or maybe they are lying about the income?)

But, hey, I'm not a statistician! What do I know. You can buy up all those notes if you like them  

Edit: Adding some examples of the loans I'm referring to... these are all 409/U with 5-6% expected loss. Maybe that's right, but it seems crazy to me.

http://www.lendingclub.com/account/loanDetail.action?loan_id=5938548 ($100k income, 4 delinquencies, major derog)
http://www.lendingclub.com/account/loanDetail.action?loan_id=5844991 ($120k income, 4 inquiries, 99.8% utilization)
http://www.lendingclub.com/account/loanDetail.action?loan_id=5446235 ($150k income, 5 inquiries, delinquency/major derog, 1 year employment... although bonus points for working pest control in a town called "Locust Grove," no wonder he makes a lot of money!)
http://www.lendingclub.com/account/loanDetail.action?loan_id=5694641 ($250k income, 4 delinquencies, major derog, 95.8% utilization, $90k revolving credit - and he's borrowing this for home improvement, not to reduce debt!)

That is interesting.  I guess even statistics can't produce SarahV quality notes

Honestly what it suggests to me is that high income may be disproportionately weighted in these loan scores

[SeanMcD]

Yeah, this is one problem I have with the IR04 "U" score.  I understand that it means that one or more attributes are far enough outside the norm that the IR01 score skips them.  What I can't tell is how many attributes are not considered in IR01, or how far out those attributes are.

[cfb]

I'm rather late to this (reading through a lot of older posts to educate myself further) but I'm guessing the borrower is including income from the 15 rental properties in his annual income results, and is putting the pool into one of those rental properties.  They may also be paying the utilities on some or all of those properties, especially if they're condo's.  It would be unusual for a landlord to not pay common area fees, landscaping fees, water bill, taxes, etc.  Those aren't exactly utilities, but he may lump the costs together that way.

This is more like helping fund a small business than a home improvement.  He's may be putting the pool into a rental house as a pool is fairly desirable in Florida, and the borrower could get more rent for it.  If his rent improvement is equal to or higher than the monthly loan amount, its a win.