Author Topic: My hardship loan experience  (Read 491 times)

JDII

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My hardship loan experience
« on: June 26, 2020, 10:48:20 AM »
Good morning all,

I have been seeing a lot of comments in the forum in regards to hardship loans. Most of the discussion seems to be based around the secondary market. I have not yet entered that area of trading but thought I would give you my limited view from my account.

Over the past two months I've had about twenty loans in hardship pay off completely.  I'm always a bit surprised to see that but it is a pleasant surprise.  Why is someone in hardship if they can gather up the money to pay off the whole loan? I'm sure there are many reasons and theories.

It seems, from my limited view through the keyhole, that the hardship loans are not a death sentence for your investment. Not as of yet anyway.


JDII

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Re: My hardship loan experience
« Reply #1 on: July 21, 2020, 08:11:47 PM »
I've had two loans in hardship status in the past two days that have paid off in full.  That is good I guess.

jrl

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Re: My hardship loan experience
« Reply #2 on: July 30, 2020, 10:12:28 PM »
Why is someone in hardship if they can gather up the money to pay off the whole loan? I'm sure there are many reasons and theories.

They're likely taking hardship withdrawals from their retirement accounts to reduce their monthly debt payments. People I'm working with are taking these withdrawals due to the waiver of the 10% penalty, regardless of whether they really need it or not. I also have friends and relatives in different industries doing the same. The ones paying off their loans with it are smart; it's better in the long run to pay off debt with interest rates of 10% or more, than to earn 6% or less and possibly lose money in this casino of a stock market.

JDII

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Re: My hardship loan experience
« Reply #3 on: August 01, 2020, 05:06:49 PM »
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They're likely taking hardship withdrawals from their retirement accounts to reduce their monthly debt payments. People I'm working with are taking these withdrawals due to the waiver of the 10% penalty, regardless of whether they really need it or not. I also have friends and relatives in different industries doing the same. The ones paying off their loans with it are smart; it's better in the long run to pay off debt with interest rates of 10% or more, than to earn 6% or less and possibly lose money in this casino of a stock market.

That would be one course of action.  Thanks for bring it up.

I had two more hardship loans pay off this week.

jrl

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Re: My hardship loan experience
« Reply #4 on: August 02, 2020, 05:39:46 AM »
LC also added a "View hardship notes only" checkbox on the notes page. I think it's just the recent Covid-related notes because none are charged off. In any case, it shows I have 92 total, 13 Paid, 3 IGP, 1 Late 16-30, and 2 Late 31-120. (Out of 4,182 notes, of which only 1,242 are current, 39 IGP, 11 Late 16-30, and 22 Late 31-120 with 782 C/O)

Under 10% being hardship and less than 10% of those being delinquent seems really good, seeing as how 20% of the country has lost their jobs.

I'm also seeing higher recoveries, and less late notes, although IGP is back to the normal level this month. IGP was also high last month, but most wound up paying or deferring (hardship but marked current). I have one note showing a payment due date in October and one in November, but they're fully paid. That's odd. All the rest are currently only deferred until end of September at the latest.

Recoveries from my taxable account:

https://i.imgur.com/CaajuQw.png

Which I've drawn down by around 50% since September. 50% D grade, 30% C, 10% E, 6% B and the remainder F & G.

For some context of how it's been going, here's my detailed breakdown of the past 4 years:

https://i.imgur.com/thhEjve.png

I'm actually doing better than before, though I'm not sure if that's more related to not reinvesting... Over the life of the account, I've had A few negative months, but it's been a lot better than what I was expecting reading this forum 4 years ago on the heels of the scandal. Too bad my state got barred from the primary market or I'd still be investing in this account. (Don't want the headache of folio investing on a taxable account. Getting even better results in folio on my Roth IRA though.) Besides, it's like supplemental unemployment income! lol

LC has been a good hedge IMO, just need to put in the time back-testing to develop good loan filters and reevaluate them every few months.

You mentioned and interest in Folio, so i'll just say that my account with NO Folio exposure is doing great now, and my other account which is now about 50% Folio since switching from 0% to 100% Folio in September is doing even better from just buying never late notes with the same filters. Though it's still early, it seems like the expected outcome.

Good luck out there.

Fred93

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Re: My hardship loan experience
« Reply #5 on: August 02, 2020, 07:21:19 PM »
Under 10% being hardship and less than 10% of those being delinquent seems really good, seeing as how 20% of the country has lost their jobs.

Be careful with the interpretation of those percentages.  Loans default over time. 

That means you should look at delinquency in units of "% per year", not just "%".   If you don't get the time element in there you will confuse yourself.  Covid hardship status hasn't been around for very long, which means there hasn't been much time for many of them go late yet.

I'm happy to see the "hardrship only" check box.  LC owes us visibility.

JDII

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Re: My hardship loan experience
« Reply #6 on: August 03, 2020, 12:59:38 PM »
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I'm also seeing higher recoveries, and less late notes

I am seeing the same.

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I'm actually doing better than before, though I'm not sure if that's more related to not reinvesting

I am also doing better than before but I am reinvesting.  It will be interesting to see how our accounts compare over time.




JDII

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Re: My hardship loan experience
« Reply #7 on: August 03, 2020, 01:04:37 PM »
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I'm happy to see the "hardrship only" check box.  LC owes us visibility.

I didn't notice that box.  Thank you bringing it to my attention.

Using that tool I can see that I currently have 24 notes in Hardship status.  7 of them are fully paid so I guess I should say I have 17 in Hardship status.


JDII

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Re: My hardship loan experience
« Reply #8 on: August 07, 2020, 01:54:32 PM »
As of 08.07.20

22 Total hardship

15 "current" (for lack of a better term)

7 fully paid




macroman7799

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Re: My hardship loan experience
« Reply #9 on: August 07, 2020, 09:43:52 PM »
I've had two loans in hardship status in the past two days that have paid off in full.  That is good I guess.

FYI the secondary portal is closing with last trades 8/26 and last settlement 8/27... this was just announced today.