LC's support of the retail market is taking a big hit a few days from now. This doesn't affect most of you directly, but it does affect me in a big way.
As most of you know, in the retail market, there are two kinds of notes sold by LC. "fractional" notes represent a fraction of a loan, and "whole" notes represent an entire loan.
LC has advised me that beginning 2/1/2020, LC will no longer offer whole notes.
In the beginning (2008), LC offered their product only in the form of notes, but as time went on and LC acquired more institutional customers, hedge funds, banks, etc, they evolved new forms of their product, where they sell the loans themselves (instead of an LC-issued note), or things called "certificates" or syndications. Most institutional customers moved to these new forms of product. Now the selling of notes is a small part of their business.
They haven't said what this will mean for the volume of product made available to the retail market. I suspect that it means I will be forced to greatly reduce the size of my account, because I simply won't be able to keep the money invested. I deposited my first money with LC on 1/24/2008. Its been a nice run.
I suspect that there aren't very many of us whole-note-buyers any more, and it has become a burden to LC to support this niche containing few customers.
LC has suggested that I open an institutional account, and buy loans rather than notes. This would require me to create an LLC, which would require me to pay LLC fees and taxes to the state, and file an additional tax return to both state and federal govt, and thus take on new accounting costs, and some new legal issues related to owning "loans" which I don't yet fully understand. I've been intending to hire a lawyer to educate me about those regulatory issues and liabilities, but I haven't made that happen yet.
