it may be easier to totally restrict out all the "Dubious Transactions" which may ensnare all sorts of "non-Dubious Transactions" as collateral damage and just allow the original transactions Folio was created for. The Emergency exit for a portfolio.
I see. So it is acceptable to sell notes to cover some unexpected medical bills (emergency), but it's
not OK to sell notes if you want a new kitchen and are a bit short on cash (non-emergency). I think I'm with you so far.
Now we just need a way to determine what's a bona fide emergency and what is not. I don't know about you guys, but when a borrower's FICO drops from 720 to 560 in a single month that's an emergency to me!

I could probably think up several hundred emergencies per day if I put my mind to it. Sick cow. Chicken pecked my eyeball out.
I propose that when you go to sell a note, you have to answer a series of questions randomly selected from a question pool:
What is your intended use of the note sale proceeds?
If you have posted a note for sale in the past 2 years, please explain the reason.
What are your current monthly expenses (rent, transportation, utilities, phone, insurance, food, etc)?
Please explain the reason you carry such a large portfolio of notes for sale.
Unfortunately this does not prevent the note seller from lying when answering the questions. We will need to distribute USB lie detector devices to each investor. That seems expensive. An alternative might be for LC to conduct 15 minute phone interviews with the investor before each note sale. They could charge a 20% fee to cover the costs of this time.
I think we're getting somewhere now.
I do not believe the intent had ever been to create a robust fully transparent "Note Exchange"
Without a robust market, just who do you think is going to buy your notes when you do have that emergency?? Create a secondary market just so they can say there's a way out but then prevent anyone from actually using it? That's ingenious, in a dark sort of way. I like it.