So what is going to happen with the loans now? Is LC going to package and sell them to someone else now or hold them on their books?
Good question. Since you mentioned selling, I'm wondering what happened to all of the notes that changed hands on Folio between the time of this mysterious bug and now. Are they going to go back and unwind all the trades? (I doubt it.) So that means sellers who got rid of these "bad" notes early when they went into grace period got screwed, and the buyers hit the jackpot by getting full par value. I haven't received any credits today, for what it's worth. I find it hard to believe I didn't end up with any of these if ~1% of notes are affected.
I wonder what this "system error" was and think of how incredibly easy it would be to claim "system error" for a multitude of questionable actions.
Indeed. Interest rates go down, they can just claim "system" error and buy back notes, repackage them under the lower prevailing rates, and issue them back to institutional investors. LC pockets the difference in the two interest rates and it's risk-free money for them.
If one uses some imagination one can come up with many scenarios. What is now painfully clear though is your notes are your notes only as long as Lending Club wants you to have them. You can lose them at any time, and you will only receive par value even though your good ones might be worth +5% on the open market.
It's odd that this "system error" happened over such a time span without being detected. Obviously it wasn't a one-day event or else the payment dates wouldn't all be different. It's odd that they intentionally don't tell us precisely which loans were affected. Everything about this is odd.