Author Topic: Recent and Upcoming Changes on the Lending Club Platform  (Read 16672 times)

cfb

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Re: Recent and Upcoming Changes on the Lending Club Platform
« Reply #30 on: August 24, 2014, 03:06:41 PM »
I especially dislike
18% of the delinquent amount recovered if the loan is at least 16 days late and no litigation is involved

I had noted last month that my account had been stuffed full of collections the last couple of months where I had few before.

Now we know why.

pplinvestor

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Re: Recent and Upcoming Changes on the Lending Club Platform
« Reply #31 on: August 24, 2014, 03:14:48 PM »
Quote, "

    18% of the delinquent amount recovered if the loan is at least 16 days late and no litigation is involved

is simply marginal, IMO."

Fred,
It is not marginal to me.  I can understand charging 30% fee for loans went out external collection agency.  18% for 16 days late is just not right!  The service LC provides for 16 days loan are merely email and calling by LC which is supposed to included in 1% fee for all loans.  This is double charge to me.  Also, there are many more loans that are 16 days late than 60 days late.  On top of that, LC hardly charges any late fees for those late payments.  That means I'll have to 18% of principal for that one month.  It is likely I'll pay LC more than interest (18% principal > interest).

Well, LC has more lenders than borrowers evidently.  Hence, LC is trying to charge more from investors.  Until LC can not find enough money to lend, then we can see the trend reverse.  Meanwhile, my money will go elsewhere that provides better and safer returns than LC.

Fred

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Re: Recent and Upcoming Changes on the Lending Club Platform
« Reply #32 on: August 24, 2014, 04:09:35 PM »
Late notes just got a lot less valuable.

As a FOLIO trader, I welcome this valuation.

rawraw

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Re: Recent and Upcoming Changes on the Lending Club Platform
« Reply #33 on: August 24, 2014, 05:16:02 PM »
I suppose you could be right. One might run a collections department by putting less effort into the formerly higher quality borrowers, and then whatever remains of their propensity to make good winds up equalizing LGD. So far, however, lending has not shown to have very many coefficient reversals such as in the social sciences. Lending is comparatively boring, except it pays more.
Yea, I can't say how LC is doing it.  But I know big banks use collection score cards.  A typical uninformed approach is just to use amounts past due and age to determine who to put more effort into.  But collection scorecards find that some people can have large amounts past due, but represent minimal risk.  Others can have smaller balances but represent more risk.  So the score cards use various variables (some credit, some borrower behavior/response to contacts and such) to find which borrowers need more attention sooner.  My hypothesis is that this is more G's than A's.  But we'll see how it goes, I may email LC and see if they are willing to share anything else about the collections process.   I'd imagine they have to be using a scorecard given the volume

rawraw

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Re: Recent and Upcoming Changes on the Lending Club Platform
« Reply #34 on: August 24, 2014, 05:18:34 PM »
I've got a feeling the impact of those collection fee estimates will also be adjusted higher in the coming months/years.  One more way to extract more money from investors when they take zero of the risk.  They could just charge a baseline "service fee" on all payments instead, even on current notes - oh wait.

Late notes just got a lot less valuable.  It's going to gut a large chunk of the returns of penny note collectors.
Well those are probably based on recent performance.  And we are at a low point in terms of defaults, so probably.

Come on guys.  LC has been charging the following collection fees structure for years:
Quote
The stated collection fee is a percentage of the amount recovered:
- 30% if the loan is less than 60 days past due and was made to the borrower during the previous 90 days;
- 35% in all other cases, except where litigation is involved; or
- 30% of hourly attorneys' fees in the event that litigation is involved, plus costs.

The fact that they now add:
Quote
18% of the delinquent amount recovered if the loan is at least 16 days late and no litigation is involved
is simply marginal, IMO.
Well, they were waiving those fees weren't they?  At any rate, I don't think its a huge deal but is worth noting

Quote, "

    18% of the delinquent amount recovered if the loan is at least 16 days late and no litigation is involved

is simply marginal, IMO."

Well, LC has more lenders than borrowers evidently.  Hence, LC is trying to charge more from investors.  Until LC can not find enough money to lend, then we can see the trend reverse.  Meanwhile, my money will go elsewhere that provides better and safer returns than LC.
Exactly what is that?  I've found it interesting there has been a lot of "better returns elsewhere" sentiment since the stock market has been rallying lately.  But I surely hope that isn't the actual reason why
« Last Edit: August 24, 2014, 05:21:23 PM by rawraw »

DanB

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Re: Recent and Upcoming Changes on the Lending Club Platform
« Reply #35 on: August 24, 2014, 06:06:34 PM »
Quote: " they don't even start emailing till after day 16."

Exactly!  That is why so wrong that they charge 18% for loan is 16 day late.   1% of fee on all loans is supposed to cover emailing and calling borrower.  Now, they want another 18% charge!  It is so wrong.

Peter,
Can you contact LC to express our outrage about this new charge?


Yes, as I posted in my previous post, I'm done with LC.  I'm withdrawing my money slowly.  Expect to be completely out in 3.5 yrs because of those 5 yrs notes I invested earlier.  What a mistake!

I second that request. Normally Peter would get on something like this right away,........... I'm sure.

But he's flying back from Beijing right now, where he's just finished endearing himself to, among others, the CCP & PLA*, by saying things like "The Chinese p2p lending market is flourishing and leading the world in many ways".
Being intimately familiar with China, I can assure you guys that there are no greater compliments than "leading the world", that could be bestowed upon the Chinese...............especially by a Caucasian male like our very own Peter!

I'll be in China end of November, & I'll try to report back...............though I suspect that (not being a kisser of certain parts of the anatomy) my "leading the world" remarks may end up being about pollution, filth & the number of pedestrians observed casually spitting etc. As Peter would say, stay tuned. :)

"It's no state secret that the CCP & PLA are intimately involved & entrenched in almost all facets of Chinese economic life, albeit not necessarily transparently.

Thatguybil

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Re: Recent and Upcoming Changes on the Lending Club Platform
« Reply #36 on: August 24, 2014, 08:38:58 PM »
Quote: " they don't even start emailing till after day 16."

Exactly!  That is why so wrong that they charge 18% for loan is 16 day late.   1% of fee on all loans is supposed to cover emailing and calling borrower.  Now, they want another 18% charge!  It is so wrong.

Peter,
Can you contact LC to express our outrage about this new charge?


Yes, as I posted in my previous post, I'm done with LC.  I'm withdrawing my money slowly.  Expect to be completely out in 3.5 yrs because of those 5 yrs notes I invested earlier.  What a mistake!

I second that request. Normally Peter would get on something like this right away,........... I'm sure.

But he's flying back from Beijing right now, where he's just finished endearing himself to, among others, the CCP & PLA*, by saying things like "The Chinese p2p lending market is flourishing and leading the world in many ways".
Being intimately familiar with China, I can assure you guys that there are no greater compliments than "leading the world", that could be bestowed upon the Chinese...............especially by a Caucasian male like our very own Peter!

I'll be in China end of November, & I'll try to report back...............though I suspect that (not being a kisser of certain parts of the anatomy) my "leading the world" remarks may end up being about pollution, filth & the number of pedestrians observed casually spitting etc. As Peter would say, stay tuned. :)

"It's no state secret that the CCP & PLA are intimately involved & entrenched in almost all facets of Chinese economic life, albeit not necessarily transparently.

I would not touch the China credit market with an foot pole while wearing double layer hazmat bio suit....

Unsecured Chinese consumer credit?  Yikes!

DanB

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Re: Recent and Upcoming Changes on the Lending Club Platform
« Reply #37 on: August 24, 2014, 10:44:08 PM »
Thatguybill.............I wouldn't touch the unsecured China consumer credit market with a ten foot pole either, but then I don't get paid for organizing p2p conferences in China. Conferences that would only happen if one remains in the good graces of the powers that be. So I apologize Peter, I suppose I will have to keep reminding myself that you're somewhat "compromised" & not to take what you say too seriously. :)