Worst Month Yet

[ThinleyWangchuk]

I'm giving up on P2P unless the interest rate on C loans and below increase 10%+. Same underwriting standards but going to earn ~0% net of losses. Disappointed.

http://247wallst.com/banking-finance/2016/11/16/surge-in-online-loan-defaults-sends-shockwaves-through-the-industry/

[jz451]

If you read the whole article it says that subprime auto loans are at a six year high for defaults, so it's not just a P2P thing, but an industry wide problem. In any case won't stop me or many others to continue to lend.

I'm giving up on P2P unless the interest rate on C loans and below increase 10%+. Same underwriting standards but going to earn ~0% net of losses. Disappointed.

http://247wallst.com/banking-finance/2016/11/16/surge-in-online-loan-defaults-sends-shockwaves-through-the-industry/

[Larry321]

I have lost as much money to defaults as I have made in Lending Club.
I am still ahead and have made money, but I would make more money if I shifted my money to Fidelity and polaced it in a DJ linked fund.
Slowly, I am moving my funds out, not reinvesting.

[rawraw]

I have lost as much money to defaults as I have made in Lending Club.
I am still ahead and have made money, but I would make more money if I shifted my money to Fidelity and polaced it in a DJ linked fund.
Slowly, I am moving my funds out, not reinvesting.

Did you know that the average retail investor receives half of the average returns of mutual funds because of them leaving and entering at inopportune times? I've always found that statistic fascinating. Good luck but just chasing returns never seems to work out well for the majority who try.

Sent from my SAMSUNG-SM-G935A using Tapatalk

[daniel2023]

My charge offs are currently higher than my interest earned YTD -- but that's because I've been selling off performing notes to exit the LC market.

LC doesn't even respond to simple bug fixes, like the attached screenshot of my e-mail account on a weekly basis when all my Folio notes get de-listed -- though 200+ notes are done in a single transaction, they insist on blowing up my e-mail account and phone with a random smattering of 40+ emails over 10 minutes.  Complained about this issue in March and several other times -- they claimed they would address it, but that was last March.

In the last 4 years, I've averaged 7.3 percent return -- ultimately decided there is really not a market exposure/diversification benefit to this and its not worth the hassle.

[fliphusker]

FOLIO is not ran by LC.  When they come into my gmail account I can click on the first one and delete them all. 

My charge offs are currently higher than my interest earned YTD -- but that's because I've been selling off performing notes to exit the LC market.

LC doesn't even respond to simple bug fixes, like the attached screenshot of my e-mail account on a weekly basis when all my Folio notes get de-listed -- though 200+ notes are done in a single transaction, they insist on blowing up my e-mail account and phone with a random smattering of 40+ emails over 10 minutes.  Complained about this issue in March and several other times -- they claimed they would address it, but that was last March.

In the last 4 years, I've averaged 7.3 percent return -- ultimately decided there is really not a market exposure/diversification benefit to this and its not worth the hassle.

[SMWinnie]

New "investor" here. I started an account with $8K of mad money about a month ago as an educational project. I wanted to see what a passive source of funds would experience, so I let LC auto-invest for me evenly split A/B/C/D.

I thought I would share the experience here, since this isolates mid-to-late October issuance. First month quality:

165  issued notes
  3  notes paid in full in first month
 22  notes have not reached 1st payment (or are processing/current)
  7  notes IGP

So, payment on 7 of the 140 notes which have come up on their first payment date failed.

Collection logs indicate most were NSF, but a couple of the logs showed no entry for the type of payment failure. One collection log is completely blank.

[apc3161]

New "investor" here. I started an account with $8K of mad money about a month ago as an educational project. I wanted to see what a passive source of funds would experience, so I let LC auto-invest for me evenly split A/B/C/D.

I thought I would share the experience here, since this isolates mid-to-late October issuance. First month quality:

165  issued notes
  3  notes paid in full in first month
 22  notes have not reached 1st payment (or are processing/current)
  7  notes IGP

So, payment on 7 of the 140 notes which have come up on their first payment date failed.

Collection logs indicate most were NSF, but a couple of the logs showed no entry for the type of payment failure. One collection log is completely blank.

Jesus, what is LC thinking with lowering their lending standards /underwriting so badly? Sure, you get a few quarters of increase loan volume/fees/revenue, but long term all the capital is going to leave...

[SMWinnie]

Jesus, what is LC thinking with lowering their lending standards /underwriting so badly? Sure, you get a few quarters of increase loan volume/fees/revenue, but long term all the capital is going to leave...

My uninformed guess is that the standards haven't changed, but we're starting to see what those standards do when the market tightens a bit. (LC doesn't really have a history of PTP loans in a contracting credit environment.)

My real concern is servicing. If LC scaled that for credit performance in 2014, then increased volume times increased IGP/late/default means they will be woefully understaffed to get decent recovery rates.

[Rob L]

New "investor" here. I started an account with $8K of mad money about a month ago as an educational project. I wanted to see what a passive source of funds would experience, so I let LC auto-invest for me evenly split A/B/C/D.

I thought I would share the experience here, since this isolates mid-to-late October issuance. First month quality:

165  issued notes
  3  notes paid in full in first month
 22  notes have not reached 1st payment (or are processing/current)
  7  notes IGP

So, payment on 7 of the 140 notes which have come up on their first payment date failed.

Collection logs indicate most were NSF, but a couple of the logs showed no entry for the type of payment failure. One collection log is completely blank.

I'm not usually the voice of optimism but there's a possibility you may have been the victim of simple bad luck.
165 notes is a pretty small sample size. You're only $4k into your $8k investment. (unless you're buying $50 notes) so maybe things will improve over the next 155 notes. Even 320 notes is still a rather small sample size though others here would likely disagree.
Please keep us up to date.

[rawraw]

New "investor" here. I started an account with $8K of mad money about a month ago as an educational project. I wanted to see what a passive source of funds would experience, so I let LC auto-invest for me evenly split A/B/C/D.

I thought I would share the experience here, since this isolates mid-to-late October issuance. First month quality:

165  issued notes
  3  notes paid in full in first month
 22  notes have not reached 1st payment (or are processing/current)
  7  notes IGP

So, payment on 7 of the 140 notes which have come up on their first payment date failed.

Collection logs indicate most were NSF, but a couple of the logs showed no entry for the type of payment failure. One collection log is completely blank.

Thanks for sharing. There was discussion a couple years ago that LC automated investing had a selection bias in the sense it invests in what is left over. Not sure if this is true or not, but something to keep in mind.

Sent from my SAMSUNG-SM-G935A using Tapatalk

[SMWinnie]

There was discussion a couple years ago that LC automated investing had a selection bias in the sense it invests in what is left over. Not sure if this is true or not, but something to keep in mind.

Could anyone expand on this? I went looking for the LC allocation policy on Notes and didn't find it.

[Half Right]

out of 12 portfolios my worst performing portfolio was the one invested by LC.

[Fred93]

I thought I would share the experience here, since this isolates mid-to-late October issuance. First month quality:

165  issued notes
  3  notes paid in full in first month
 22  notes have not reached 1st payment (or are processing/current)
  7  notes IGP

So, payment on 7 of the 140 notes which have come up on their first payment date failed.

That seems really bad. 

It is difficult to know how to rate your experience, because there are no good statistics for IGP.  The only data that LC publishes for "payments" is the giant payments file, and it only contains monthly information.  Was the monthly payment made or not.  Because of this, it contains almost no "IGP" or "Late16-" entries.  Most months are marked "current" or "late31-".  Just a result of the monthly sampling.  What happens on shorter time scale is lost.  Many folks have processed the payments file (including me) to try to get some stats on what happens to late loans.  While we can see the "Late31-" we can't see the shorter-lived statuses, so have computed no statistics about them. 

I therefore have no idea what fraction of loans one should expect to go IGP on 1st month for various grades etc, or whether this has increased or decreased over the years etc.

We do of course have the one number that LC has produced, which is their statement that 27% of IGP outstanding balance reaches charge off status within 9 months. 
https://www.lendingclub.com/info/demand-and-credit-profile.action

Investors can access more detailed info on the individual web pages for notes, but one can only access notes that you own, or that are offered for sale on folio.  Also, of course, LC discourages non-human consumption of these web pages (ie screen scraping).

[daniel2023]

FOLIO is not ran by LC.  When they come into my gmail account I can click on the first one and delete them all. 

Not True.  They may be separate legal entities, but it's the same engineers behind both platforms.  That's why LC staff respond to Folio issues, and it was clear from my communications with them that the same engineers work on both.