Author Topic: non issued loans are wasting my time  (Read 15833 times)

Bilgefisher

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non issued loans are wasting my time
« on: July 26, 2013, 11:14:07 AM »
How much money have you not gained due to non issued loans.  Around 25-50% of my loans go 2 weeks of "in funding" only to be canceled.  Two weeks of interest across a significant amount of my portfolio begins to add up.  This does not even account for lost time in locating new loans.

I appreciate the fact that LC is vetting these loans, I just wish they would do it prior to the funding point.  They have to vet the loans anyway, why not do it on the front end prior to the investor even seeing those loans?

Is there something I am missing?

RollWave

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Re: non issued loans are wasting my time
« Reply #1 on: July 26, 2013, 11:59:40 AM »
Lending Club IS vetting the loans up front, you don't see them if they don't get through LC's screening. 

They go 2 weeks and get cancelled because other lenders are doing their vetting and decide not to fund these loans.

LonghornSF

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Re: non issued loans are wasting my time
« Reply #2 on: July 26, 2013, 01:30:20 PM »
I've never had much of a problem with loans sticking around "in funding" for too long. You must be funding some really low quality loans if it's a big problem.

I HAVE had a huge problem with loan sticking around in review - approved" status too long. Someone else posted on here, and I think they're right about this, that LC slows down loan disbursements at the end of every month so they can hit a smooth origination growth figure. I have ~10 loans that have sat in approved status now for over a week. Funny how this seems to happen every month and they get issued on the first day of the next month.  >:(

TonySaunders

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Re: non issued loans are wasting my time
« Reply #3 on: July 26, 2013, 02:48:20 PM »
It can be annoying but I think it's an unavoidable mechanic of this kind of investing. And honestly, it's not very serious.

For example (compounding monthly):
  • If I invest $10,000 for a year and earn $1000 then my interest rate was 9.56%.
  • If 4% of my $10,000 were idle for the whole time (or "In Funding"), then I would earn $959.06 instead, for an effective rate of 9.20%

Not a big difference.

You can account for this issue by using "Internal Rate of Return" to evaluate your return. In other words, calculate your return based on the total amount of money in your LC account, and not the principle of your active notes.

EDIT:
4% seems reasonable to me... but if we turn it up to 15%:

  • If 15% of my $10,000 were idle for the whole time (or "In Funding"), then I would earn $849.17 instead, for an effective rate of 8.18%

Still not bad I think, considering that 15% of one's investments are turning over constantly.
« Last Edit: July 26, 2013, 02:56:45 PM by TonySaunders »

GS

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Re: non issued loans are wasting my time
« Reply #4 on: July 26, 2013, 02:52:17 PM »
"You must be funding some really low quality loans if it's a big problem. "

I mostly invest in A-B-C, and I've had a 36% cancellation rate on my notes since I started keeping tract last month (after a 10K IRA deposit).  Most notes get cancelled within a week or two, but I'd say about 5% hang around for a month.  I think LC must have a policy to remove notes after a month when the barrow stopped cooperating (i.e., the barrow stopped responding to LCs request for additional information), because I've noticed many get removed exactly a month after they were first posted.  I've never seen an unapproved note hang around longer than a month.

I'm wondering if A-B-Cs get a high cancellation because the people are not desperate barrows and may just be shopping a rate.

I also have posted in the past about the "approved" notes getting back logged, usually starting around the 20th of each month, then the all get posted on the 1st, 2nd or 3rd of the next month. 

I'll be happy when I get my initial IRA deposit invested and only have to worry about reinvesting the payments.  The last two months have been frustrating.
« Last Edit: July 26, 2013, 03:01:52 PM by GS »

LonghornSF

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Re: non issued loans are wasting my time
« Reply #5 on: July 26, 2013, 02:54:28 PM »
I currently have 7% of my LC account stuck "in review" status, the majority of which has been approved but not issued. It's a much bigger drag than you're portraying because my weighted-average interest rate is 18.2%. So the drag on return is 18.2% * 7% = -1.3%. For a $100k account that's $1,300 per year wasted because LC wants to smooth their growth figures.

LonghornSF

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Re: non issued loans are wasting my time
« Reply #6 on: July 26, 2013, 02:56:15 PM »

I mostly invest in A-B-C, and I've had a 36% cancellation rate on my notes since I started keeping tract last month (after a 10K IRA deposit).  Most notes get cancelled within a week or two, but I'd say about 5% hang around for a month.  I think LC must have a policy to remove notes after a month when the barrow stopped cooperating (i.e., the barrow stopped responding to LCs request for additional information), because I've noticed many get removed exactly a month after they were first posted. 

To clarify - are you loans getting stuck in the "in funding" status or "in review" status? I thought you were saying they never got fully funded. I totally agree with you that the cancellation rate is high for loans that reach fully funded, in review status.

GS

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Re: non issued loans are wasting my time
« Reply #7 on: July 26, 2013, 03:07:09 PM »
Of the ones that get "cancelled",  they all get fully funded pretty quickly, and get stuck "in review" for up to a month, before getting cancelled.  Many of them even get "verify income" status before being cancelled, which leads me to believe that in most cases, for the higher quality/lower interest notes, it's the barrower that lost interest rather than LC cancelling the loan.
« Last Edit: July 26, 2013, 04:38:31 PM by GS »

LonghornSF

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Re: non issued loans are wasting my time
« Reply #8 on: July 26, 2013, 03:11:41 PM »
Of the ones that get "cancelled",  they all get fully funded pretty quickly, and get stuck "in review" for up to a month, before getting cancelled.  Many of them even get "verify income" status before being cancelled, which leads me to believe that in most cases, for the higher quality/lower interest notes, it's the barrow that lost interest rather than LC cancelling the loan.

Yep I agree with this. Of my loans that get cancelled, it's about 50/50 between those that get cancelled before income verification vs. after.

Dennis

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Re: non issued loans are wasting my time
« Reply #9 on: July 26, 2013, 09:16:06 PM »
I currently have exactly 1,215 notes between my 2 Lending Club accounts, and of those 91 are currently hanging "in review," some for weeks.  I've noticed that during the last several days of every month, very few notes in my account will get issued.  But once the new month begins, the process speeds up greatly and many of those hanging notes will get issued in the first business day or two of the new month.  It almost seems like there's an intentional holding back by LC to control the rate of issuance from month to month.

Bilgefisher

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Re: non issued loans are wasting my time
« Reply #10 on: July 29, 2013, 12:03:50 PM »
I'm talking about fully funded loans waiting review.  Just seems that they could review the loans prior to funding them.  They have to take the step either way, why do it first prior to investors taking their time to invest in those loans that will never be issued.

Amelia

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Re: non issued loans are wasting my time
« Reply #11 on: July 30, 2013, 07:05:31 PM »
Taking a look at my account I haven't had an approved loan moved to Issued since July 18. 10 notes approved  and just sitting there with 10 more in review.  I'm going to test the "end of the month" hypothesis and see what moves on 8/1.

LonghornSF

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Re: non issued loans are wasting my time
« Reply #12 on: July 30, 2013, 08:43:39 PM »
Taking a look at my account I haven't had an approved loan moved to Issued since July 18. 10 notes approved  and just sitting there with 10 more in review.  I'm going to test the "end of the month" hypothesis and see what moves on 8/1.

I've had a few loans issued in the past week or so, but many more just sitting in approved status without being issued. If history holds we will see a flood of loans issued on Thursday.

GS

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Re: non issued loans are wasting my time
« Reply #13 on: July 30, 2013, 08:46:54 PM »
At the end of last month, I had only 3 loans issue between the 18th and the 30th, and about 80-100 issue on the 1st, 2nd, and 3rd of this month.

415ab

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Re: non issued loans are wasting my time
« Reply #14 on: July 30, 2013, 08:49:35 PM »
I had 2 of my 46 that are waiting issued today (July 30), so it hasn't come to a complete standstill, but just about.