Author Topic: Give up some numbers.  (Read 41572 times)

SeanMCA

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Re: Give up some numbers.
« Reply #60 on: June 06, 2015, 11:06:59 PM »
I think it's healthy to regularly question the numbers anyway. The sheer number of defaults is eye opening. Lots of bankruptcies and disappearing consumers who are never heard from again after a couple of payments.

Historically, 80% of the notes that I've ordered have been issued. But that number dropped recently to below 40% and for an entire two week period, I had more notes enter the 16-30 days late category than I was able to buy. They're actually defaulting faster than I can pick them up.

And the Grace Period category is continuing to swell. I don't think I can buy new ones fast enough to outpace the ones likely to move from Grace Period to 16-30 days late.

I am mostly giving up on high risk notes and shifting to As and Bs.
I'm a merchant cash advance veteran exploring the p2p lending waters.

Lovinglifestyle

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Re: Give up some numbers.
« Reply #61 on: June 07, 2015, 03:17:36 PM »
Mine are also going late faster than they are issuing, and the overall total dropped as well due to a rash of early payoffs a week ago.  The total issued and current climbed by only 6 in the last week, whereas the late count climbed by 19.  But this is Sunday, and on Tuesday the numbers seem to change a lot.

AnilG

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Re: Give up some numbers.
« Reply #62 on: June 07, 2015, 03:32:43 PM »
Loan defaults are part of normal lending business, you can't avoid defaults. My concern is the timing of such defaults. Sooner loans default, larger fraction of original lent amount is lost. Frequent occurrence of such defaults indicate problems in Loan Origination Process. Recently, there appears to be rash of loans defaulting quickly on Lending Club.

Mine are also going late faster than they are issuing, and the overall total dropped as well due to a rash of early payoffs a week ago.  The total issued and current climbed by only 6 in the last week, whereas the late count climbed by 19.  But this is Sunday, and on Tuesday the numbers seem to change a lot.
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Lovinglifestyle

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Re: Give up some numbers.
« Reply #63 on: June 07, 2015, 09:46:33 PM »
Loan defaults are part of normal lending business, you can't avoid defaults. My concern is the timing of such defaults. Sooner loans default, larger fraction of original lent amount is lost. Frequent occurrence of such defaults indicate problems in Loan Origination Process. Recently, there appears to be rash of loans defaulting quickly on Lending Club.

Mine are also going late faster than they are issuing, and the overall total dropped as well due to a rash of early payoffs a week ago.  The total issued and current climbed by only 6 in the last week, whereas the late count climbed by 19.  But this is Sunday, and on Tuesday the numbers seem to change a lot.

WOW!  I see what you mean!  Hmm.  I wondered how I got so lucky as to have 13/14 issued on one order on May 18.  Makes me a little nervous instead of a lot glad now.  I noticed on your site that my orders issued/orders placed ratio in the past 30 days is 78%, vs. the usual 60% or less.

Fred

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Re: Give up some numbers.
« Reply #64 on: June 08, 2015, 02:54:21 AM »
Recently, there appears to be rash of loans defaulting quickly on Lending Club.

Can you please  quantify:
1. recently: past N quarters, weeks, days
2. rash: increased by  x%
3. quickly: defaulting in month n

RazzleDazzle

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Re: Give up some numbers.
« Reply #65 on: June 08, 2015, 04:21:51 PM »
A Velocity graph may be? Interesting inference nonetheless if true.

lascott

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Re: Give up some numbers.
« Reply #66 on: June 08, 2015, 04:53:36 PM »
Recently, there appears to be rash of loans defaulting quickly on Lending Club.

Can you please  quantify:
1. recently: past N quarters, weeks, days
2. rash: increased by  x%
3. quickly: defaulting in month n
I think he was trying to show that by providing the graph. Every couple weeks he saw his daily return drop. % on vert and dates on horiz.

http://i.imgur.com/e7285Sa.png


His graph explanation from his site:

Quote
How to interpret Daily and Rolling 30-Day Returns Chart?

* Typically, daily return curve will have small fluctuations around 0%. These fluctuations are result of daily changes in portfolio value. These changes can be result of payments received or notes being charged off or secondary market transactions.

* The large negative peaks of daily return curve typically indicate the remaining principal being written off due to charged off loans. While loans being charged off is part of consumer lending, users may want to pay attention to the frequency of such charge offs and magnitude of impact on daily return. Large frequent fluctuations may indicate underlying issues with loan selection criteria and/or changes in credit underwriting.

* The Rolling 30-Day Return curve shows the change in portfolio value over 30-day period. This curve will always show 0% for first 30 days as PeerCube starts calculating rolling 30-day returns from 31st day.

* The Rolling 30-day Return curve is a good visualization for the monthly returns of user's portfolio and the impact of charge offs on monthly returns. The sharp drop in monthly return curve and subsequent time period for recovery is a good indicator of impact on the monthly returns.

* The displayed returns assume that no external funds were added to nor internal funds withdrawn from portfolio. As PeerCube doesn't receive information about fund transfer to and from account using Lending Club API, we are unable to adjust displayed returns for cash inflow and outflow.

* Users may be able to identify cash inflows and outflows as unusually large positive and negative peaks on the chart. In addition, PeerCube caps daily and rolling 30-day returns to +/-10% to lessen the impact of large cash inflow and outflow in visualizing return data.
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

kya

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Re: Give up some numbers.
« Reply #67 on: June 08, 2015, 06:51:09 PM »
for what its worth i have also (for the first time in three years) started to buy more A,B and C notes. I have experienced the same recent trend of very quick defaults only 2-3 payments in on D,E,F & G notes no matter how good they looked when purchased. I am now also requiring a 700 plus fico score minimum. What is concerning is my LC account has far more deliquincy than my Prosper account currently. I have been buying with very similar filters and the accounts have almost the same number of notes so Im starting to believe Prosper is doing a better job underwriting right now. It also seems like many more delinquint notes pay there way back to current status on prosper rather than just tumbling down the delinquint chute to default status on LC. I am watching close and wonder since going public if LC isnt cutting corners for volume sake.

SeanMCA

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Re: Give up some numbers.
« Reply #68 on: June 08, 2015, 10:39:05 PM »
I am watching close and wonder since going public if LC isnt cutting corners for volume sake.

Just about every lender I've ever witnessed firsthand that was under pressure to produce volume has cut corners on underwriting. I don't think LC would be any different. Unfortunately nobody is that honorable.
I'm a merchant cash advance veteran exploring the p2p lending waters.

SeanMCA

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Re: Give up some numbers.
« Reply #69 on: June 08, 2015, 10:44:24 PM »
Also there's a saying in the b2b lending world. It's easy to lend money. The only thing that matters is being able to get it back.

Lending Club isn't under as much pressure to collect, just originate. It's incredibly easy to find people who want money. Immensely easy (doesn't mean they're all qualified). Let's not pat Lending Club on the back for volume when the only thing that matters is underwriting and collections. Any startup with money to burn can find borrowers.
« Last Edit: June 08, 2015, 11:09:35 PM by SeanMCA »
I'm a merchant cash advance veteran exploring the p2p lending waters.

nonattender

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Re: Give up some numbers.
« Reply #70 on: June 09, 2015, 11:27:46 AM »
Also there's a saying in the b2b lending world. It's easy to lend money. The only thing that matters is being able to get it back.

Lending Club isn't under as much pressure to collect, just originate. It's incredibly easy to find people who want money. Immensely easy (doesn't mean they're all qualified). Let's not pat Lending Club on the back for volume when the only thing that matters is underwriting and collections. Any startup with money to burn can find borrowers.

Actually, it tooks years for LC to hone their marketing channels to be not only high volume but cost efficient. I know what you're saying,
I see all of the new entrants burning irrational dollars on $15/click Adwords that are grossly unsustainable, but LC has lots of channels.

(That's one of the very important things that all of the "fine, fine - but LC's business doesn't have a moat" people do not understand...)
A little nonsense now and then is relished by the wisest men.

AnilG

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Re: Give up some numbers.
« Reply #71 on: June 09, 2015, 05:49:05 PM »
You will need to wait until Lending Club releases historical loan performance data and payment data.

My observations are based on daily variations in account value of different users (similar to the chart I posted before). What stood out in the posted chart are the frequent significant drop in account values in April-May and impact on portfolio value. These drops were not result of cash withdrawals from account. These drops not only wiped out all the gains from previous month but also took gains from next 6 weeks just to recover loss in portfolio value. Scott post does a good job for the source of the chart and potential interpretation.

Can you please  quantify:
1. recently: past N quarters, weeks, days
2. rash: increased by  x%
3. quickly: defaulting in month n
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AnilG

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Re: Give up some numbers.
« Reply #72 on: June 09, 2015, 06:21:27 PM »
Do you have information on the marketing channels used by Lending Club? What channels do they use?

IMO, only marketing channels used by Prosper and Lending Club that are not accessible to other platforms are their own borrowers for refinancing and exclusive referral partnerships such as Sam's Club and community banks. Lending Club recently announced roll out of the small business financing through Sam's Club. They are offering 20% discount in origination fee to member requesting loan through Sam's Club. I am also aware of how discount superstores like Costco squeeze the vendors for referral fees for Costco referral programs for cars, kitchen remodeling, and appliances etc, I doubt these referral leads are "cheap" in any way for Lending Club.

Just an hypothetical example for brain gymnastics: Origination fees on LC business loans is 1 - 6% without referral, that is $1,000 - $6,000 for $100,000 loans. The referral lead from Sam's Club at 20% discount to borrower already costing $200 - 1,200 on such loans. I doubt Sam's Club taking less than 20-30% of origination fee as referral fee for each successfully issued loan, i.e. another $200 - 900 referral fee to Sam's Club. I would guess fees for referral leads are the major portion of borrower acquisition cost, doesn't matter who is originating loans.

My understanding is that most platforms including Lending Club use variety of marketing channels including online advertising (adwords, banner ads, referral ads), lead generation sites such as Credit Karma, direct mailing, tv and print ads, and users checking their interest rates on platform and affiliate websites. You might get an idea of marketing channels used by different platform and their effectiveness by looking at marketing channel codes in Prosper historical data.

The borrower lead generation is very interesting business, more qualified the leads more expensive the leads. Some borrower lead generation vendors use auction style system. There are lot of scammy operations in this space. I can't find the source but there was an article in one of the publications (WaPo, NYT) about the underbelly of borrower lead generation business. There are hundreds of sites (credit repair, quick loans, etc) online whose sole purpose is to capture enough information about you to request credit check and then auction off the leads based on quality. The article mentioned how the unsold leads get sold to scammers who buy such leads for $10-50 per 1000 leads.



Actually, it tooks years for LC to hone their marketing channels to be not only high volume but cost efficient. I know what you're saying,
I see all of the new entrants burning irrational dollars on $15/click Adwords that are grossly unsustainable, but LC has lots of channels.

(That's one of the very important things that all of the "fine, fine - but LC's business doesn't have a moat" people do not understand...)
« Last Edit: June 09, 2015, 06:23:01 PM by AnilG »
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SeanMCA

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Re: Give up some numbers.
« Reply #73 on: June 10, 2015, 01:08:15 AM »
In the business lending space, buying a good "lead" can cost a lender or broker $200 (or more). And that's just for information collected on a website. The odds of reaching that business by phone or email is low and the odds of them turning into a closed deal is lower. http://www.bloomberg.com/bw/articles/2014-09-02/larry-king-s-business-loans-will-cost-you

The online lead gen business is huge. The Larry King campaign was run by an Internet lead gen company. They did no lending themselves.

Less than a year ago I believe Prosper's Ron Suber said in front of a conference audience that until recently they were almost entirely dependent on direct mail. I found that shocking but I believe that's still the bread and butter for consumer lending.

I'm a merchant cash advance veteran exploring the p2p lending waters.

nonattender

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Re: Give up some numbers.
« Reply #74 on: June 10, 2015, 03:27:28 PM »
In the business lending space, buying a good "lead" can cost a lender or broker $200 (or more). And that's just for information collected on a website.

In consumer, prime-ish, the metric is CPFL (cost per funded loan), and you'll note that cost is tied to the lead being funded ("listed", for
LC, though as 100% of the listings fund, it's functionally equivalent).  One starts to see pay-per-lead as one goes past around 600 fico,
though the payperleads for a sub-600 consumer are nowhere near the $200 (or more) levels, commensurate w/small xaction amounts.

Less than a year ago I believe Prosper's Ron Suber said in front of a conference audience that until recently they were almost entirely dependent on direct mail. I found that shocking but I believe that's still the bread and butter for consumer lending.

Ever since CreditKarma (Chris Larsen's rather genius leadgen op, which he funded while running Prosper) started doing TV, they're big
player in the online leadgen game.  Especially as they have such transparency into each consumer's file and can target vs scorecard of
any platform partner, effectively guaranteeing that their users will only see offers for which they will actually qualify = huge conversion.

That's one company I'd absolutely love to own as they are sitting on a pile of data - and sit in the middle btwn consumers and finance,
effectively just letting the platform run and arbing the cost of credit pulls for x consumers against value of same taking financing offers.

BTW, you quasi-randomly liked something I posted today, another site, re: SPLP...  Very funny when I made connect;  I like debanked!

(And god bless you, finance have happened to us lately, jesus will provide, we just got ouf of hospoital, we are desperate; fund now!)
« Last Edit: June 10, 2015, 03:32:32 PM by nonattender »
A little nonsense now and then is relished by the wisest men.