This seems to apply to institutional investors as well. The fact that institutionals held their notes in the cart for 25 minutes before committing the orders seemed to indicate that humans were still involved.
I find some good value in reading the titles and the comments, if any. Those usually lean on the side of damning. But if I see a loan with just a small wart on it but the title is all in caps, mis-spelled, and/or says something weird I take that as a sign and pass on it.
This sounds like a good project to do. If you have done an in-depth analysis, I'd love to see what quantitative results you found.
Other than reading the past loan data (and I take that like past stock performance, not necessarily an indicator of future performance) I did dig into a few areas that I found little info on or made me curious. I don't ding people for living in certain states like Florida and California. Those had a lot of influence from overinflated home prices that popped, and unless that repeats I doubt that the default rate in those states will be much higher than norm. While cost of living is high, job availability is also high and so are the incomes. But someone making $3500 a month living in San Francisco would concern me. I try to think about what economic circumstances may have influenced defaults and late payments, and consider whether those are likely to recur in the next 3-5 years, or if there may be different influences that might turn a source of defaults into regular payers.
I looked into the self employed (employer NA) and did a little research into historic credit card defaults on those, and it turns out that they sometimes pay late, but have a much higher rate of eventually paying. Cash flow issues.
Most of the rest of my influence in looking at these was derived from the stories of lenders from the distant past. The wise ones recognized people who were overburdening themselves with debt and tried to avoid being greedy and making their problems worse. Because the borrowers problems tend to become the lenders problems, eventually.
Other thing that I seem to regularly spot is people who are trying to refi their small business debt as 'major purchase' or 'credit card consolidation' when its really a small business loan. Sometimes its just something in the title, or its in the comments. So maybe the institutional/autobuyers like to look at the titles or comments and chuck back a percentage of those since the SBL's default at a high rate. That would explain why they sit in the cart for a while and some come back. Probably makes good sense.
Dennis - my filters are pretty detailed, so not much ends up in my basket and what does is the cream. I was kind of joking about the high speed filling making it easier to pick loans, but I do find that what doesn't fill right away, on further detailed examination, has an issue caught by the eye but not filterable. Like a credit card loan titled 'buying new equipment for my business'. But I do find that most of what passes my filters AND sells out right away generally look like very good notes. Its an extra data point.
LC site was reeeeallly slow this morning.
