Author Topic: Where Lending Club Fails Borrowers  (Read 2928 times)

Bohb Daishi

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Where Lending Club Fails Borrowers
« on: April 24, 2014, 02:11:19 AM »
https://www.lendingclub.com/account/loanPerf.action?loan_id=2295003&order_id=13956945&note_id=16160563

The borrower negotiated a payment plan on 11/22/2013, made every payment on time as agreed, then was automatically charged-off because that agreed-upon payment amount wasn't high enough to keep it from going 120 days past due. I have several other notes like this, including these two from the recent batch of charge-offs:

https://www.lendingclub.com/account/loanPerf.action?loan_id=3034655&order_id=13270819&note_id=17904540
https://www.lendingclub.com/account/loanPerf.action?loan_id=5825282&order_id=21394555&note_id=25699798

I don't mind if Lending Club charges off a note that hasn't paid in 5 months. But when the borrower has been making recent payments, even if it's lower than the standard amount, they shouldn't be charged off. No other major lender or credit card company would charge off a borrower who is still actively trying to make good on their debt. It's utter farce.
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rawraw

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Re: Where Lending Club Fails Borrowers
« Reply #1 on: April 24, 2014, 05:49:26 PM »
This is pretty standard in consumer credit portfolios I see.  You charge it off because of the regulatory requirements and take it as recoveries.  I'm confused at how it harms the borrower?  The credit report perhaps?  But you don't know how LC is reporting the activity, as far as I can tell

yojoakak

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Re: Where Lending Club Fails Borrowers
« Reply #2 on: April 24, 2014, 11:15:05 PM »
Been like this for years. It's all automated. LendingClub's database must be a nightmare.

http://www.lendacademy.com/forum/index.php?PHPSESSID=okd0gecdkeotd23gkiqopuom64&topic=1797.0

core

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Re: Where Lending Club Fails Borrowers
« Reply #3 on: April 24, 2014, 11:36:42 PM »
daysUntilChargeoff would be a nice field to have in one of these downloadable files.  Or in general, days until a worse status change.  Of course none of that would be necessary if stuff just worked in a predictable manner.  But if there's some reason it needs to be so disorganized, fine, just tell us ahead of time for each note.

Yojo's thread about the ides of March, and others... somehow along the way it became acceptable that this is some sort of game to figure out when notes are going to be marked as charged off, defaulted, and what not.  I honestly do not see why this is tolerated.  What if you bought a stock "around" the ex-dividend date and had to guess whether you'd receive a dividend, or whether the previous guy will get yours?  Maybe the broker will just take advantage of the situation and keep it.  Would you sit around with your friends and giggle like little girls at a slumber party guessing about who's going to get their dividends this quarter shaking your magic 8 balls?  Unbelievable what LC gets away with.
« Last Edit: April 24, 2014, 11:41:43 PM by core »

Bohb Daishi

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Re: Where Lending Club Fails Borrowers
« Reply #4 on: April 25, 2014, 02:10:13 AM »
Been like this for years. It's all automated. LendingClub's database must be a nightmare.

http://www.lendacademy.com/forum/index.php?PHPSESSID=okd0gecdkeotd23gkiqopuom64&topic=1797.0

Yojo - Have you still been getting recoveries from that note? If so, were you assessed collections fees or did you get the full $0.53 each time?
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rawraw

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Re: Where Lending Club Fails Borrowers
« Reply #5 on: April 25, 2014, 06:53:50 AM »
I'm still confused how this hurts borrowers.  BTW:

Quote from: Wikipedia
A charge-off or chargeoff is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors will make this declaration at the point of six months without payment. In the United States, Federal regulations require creditors to charge-off installment loans after 120 days of delinquency, while revolving credit accounts must be charged-off after 180 days.[1]


Quote from: FDIC
The quality of retail credit is best indicated by the repayment performance of individual borrowers. Therefore, in general, retail credit should be classified based on the following criteria:

Open- and closed-end retail loans past due 90 cumulative days from the contractual due date should be classified Substandard.

Closed-end retail loans that become past due 120 cumulative days and open-end retail loans that become past due 180 cumulative days from the contractual due date should be classified Loss and charged off.2 In lieu of charging off the entire loan balance, loans with non-real estate collateral may be written down to the value of the collateral, less cost to sell, if repossession of collateral is assured and in proces

http://www.fdic.gov/regulations/laws/rules/5000-1000.html