Worst Month Yet

[lascott]

As a comparison here are my charts for my conservative accounts.  Currently not reinvesting.

Ouch!

I was chalking it up to my accounts 'coming of age'?  Make sense?!?
See loss rate and average age.

Taxable account



ROTH account

[Rob L]

As a comparison here are my charts for my conservative accounts.  Currently not reinvesting.

Ouch!

I was chalking it up to my accounts 'coming of age'?  Make sense?!?
See loss rate and average age.

Yeah, makes sense to me. Probably multiple factors.

[investor88]

what's the update for July?

[jheizer]

In my case it was about what I was expecting. 



I think next month should improve some.

[Rob L]

On 5/9 I stopped reinvesting and a month or so later started selling on Folio. All sales have been "Current" notes.
My amount invested is roughly 50% of what it was on 5/9.
This activity clearly reduced interest income, but the charge offs were already baked in.
To compensate and make the graph somewhat meaningful I used the trailing 5 months average interest for July, rather than actual interest.

[SeattleSun]

.
.
There is not enough time in the day and unfortunately keeping up with this forum is what gets missed.  My bad.

Will update my spreadsheet this weekend and post BUT

Just took a peak at my account which has been naturally unwinding since 1 June and the LATE numbers jumped out at me.

In June had 49 loans late out of 1250 or 3.92%

Now have 72 loans out of 1150 or 6.26%, many of these people do have a history of paying late but so far they has paid.

A fifty percent increase, 

SHOULD I BE CONCERNED OR IS THIS TYPICAL VARIATION?

TIA

[michael49]

Am I the only one here who is still actively investing in LC?   

FYI, here are my charge offs as a percentage of interest in 2016:

January  52.94%
February 55.08%
March     35.53%
April        41.70%
May        22.58%
June      25.83%
July       37.59%

[dr.everett]

No. But I've moved away from new notes as much as possible and buying solely off of Folio. With so many people heading for the exits, I can't purchase the good notes fast enough. Buying about $1k of notes each day in 2 accounts, and still running out of money by mid morning. I have zero idle cash, and am thrilled.

May jinx myself by saying that I may have finally found a strategy that works for me. Will have to wait and see how things go after all my previously purchased bad notes finally shake out. I'm in the camp that saw a lot of bad notes over the last few years and am watching while they either default,CO, or go Bankrupt. Really want them to finish up so I know how the new strategy is working.

[michael49]

^ - the folio strategy is probably a good one.  I'm still buying new notes but only 36m for right now.

I just feel like there is so much of a "the sky is falling!!" attitude here.  My returns have gone down some like most peoples but I'm still earning more than I would in my savings account.

Lending club is only a small portion of my investments (as I hope is the case for most here) - its a place to try to make at least something off the money that I don't want to put into stocks/bonds.

[Fred93]

Just took a peak at my account which has been naturally unwinding since 1 June and the LATE numbers jumped out at me.
In June had 49 loans late out of 1250 or 3.92%
Now have 72 loans out of 1150 or 6.26%, many of these people do have a history of paying late but so far they has paid.
A fifty percent increase, 
SHOULD I BE CONCERNED OR IS THIS TYPICAL VARIATION?

The peak in lates occurs around 6-7 months after loans originate.  If you bought a lot of loans around 6-7 months ago, that natural bump might be contributing.  Also, depending on credit grade (ie especially in DEFG), credit quality did dip during 2015, so if you added money in 2015, so are heavy in 2015 vintage notes, then this will also drive a move up in your portfolio late fraction.

So when you say "typical variations", these are some things that may be driving your numbers, in a fashion that is similar to everybody else, and in that sense may be typical.

OTOH, maybe you chose a bad filter.

Lates are a step toward chargeoff, so if you're seeing substantial increase in lates now (as many are due to 2015), you will likely see an increase in chargeoffs a few months from now.

[dr.everett]

I just feel like there is so much of a "the sky is falling!!" attitude here.  My returns have gone down some like most peoples but I'm still earning more than I would in my savings account. .

Agreed. Not sure why everyone is so down. Yes the returns aren't anywhere as good for me as when I started, but they are better than elsewhere. And there aren't any stocks that interest me beyond LC so may as well put it in my account and lend it out. And buy out the "sky is falling" folks at a discount.

[anabio]

The peak in lates occurs around 6-7 months after loans originate.  If you bought a lot of loans around 6-7 months ago, that natural bump might be contributing. 

I need to present the other side of the picture from Fred93. As I have specified in another topic I no longer believe there is a "bump" at 6 (or 9 months) at which point you can breath easier. At one time I bought that mantra but not anymore. The majority of my loans are 24-26 months old. I agree that bad filters could cause a bump at 6 months...but bad filters can't be blamed for loans that have reached 1 or 2 years old but are going bad. In that other post I showed that almost half my charge offs had more than 12 months of payments. If I included my 30-120 day lates (the vast majority of which will default) more than half of my charge offs are from loans over 12 months old.

I have 7 loans 16-30 days late and 6 of the 7 have 24-25 months worth of payments. One has 20 months worth.

I have 19 30-120 lates. 9 of which have 20-25 months worth of payments. Another 8 have between 16 and 19 months worth of payments. The other 2 have 12-14 months worth of payments. To add perspective, I currently have about 700 loans left.

The silver lining is the fact that since these loans are quite old the remaining principal is low so the shock is not as great as for loans going bad in 6 months. But still when they go bad they more than wipe out any interest I had made on them.

I guess I won't really know what the final score is for "mature" loans for another 8 months when my loans are paid off (or not...)

[Rob L]

I need to present the other side of the picture from Fred93. As I have specified ianother topic I no longer believe there is a "bump" at 6 (or 9 months) at which point you can breath easier. At one time I bought that mantra but not anymore. The majority of my loans are 24-26 months old. I agree that bad filters could cause a bump at 6 months...but bad filters can't be blamed for loans that have reached 1 or 2 years old but are going bad. In that other post I showed that almost half my charge offs had more than 12 months of payments. If I included my 30-120 day lates (the vast majority of which will default) more than half of my charge offs are from loans over 12 months old.

I have 7 loans 16-30 days late and 6 of the 7 have 24-25 months worth of payments. One has 20 months worth.

I have 19 30-120 lates. 9 of which have 20-25 months worth of payments. Another 8 have between 16 and 19 months worth of payments. The other 2 have 12-14 months worth of payments. To add perspective, I currently have about 700 loans left.

The silver lining is the fact that since these loans are quite old the remaining principal is low so the shock is not as great as for loans going bad in 6 months. But still when they go bad they more than wipe out any interest I had made on them.

I guess I won't really know what the final score is for "mature" loans for another 8 months when my loans are paid off (or not...)

There is great comfort in investing in high interest rate loans. We receive so much interest in those first 12 months or so that the payments they make cushion the blow of a charge off / default later. We get killed on loans that charge off on the first few months but after a year it's pretty much all profit.

[Fred93]

I need to present the other side of the picture from Fred93. As I have specified in another topic I no longer believe there is a "bump" at 6 (or 9 months) at which point you can breath easier.

Note that I never said "at which point you can breath easier", or anything like that.

Payment failures occur in every month. 

However, the curve is smooth, with a bump in the middle.  For LC loans that bump is around 6-7 months.  (And if you read the literature on credit, you will find this same shape appears for other kinds of loans, mortgages whatever.)

Some people casually interpret this as meaning that if you get past some date, the loan won't go bad, but that interpretation is of course silliness.

You can see the bump as easily as anybody else.  Just download the data from LC and process it yourself.

There is a blog, I think it is lendingrobot, that shows a curve.  His curve is slightly different.  I believe it shows chargeoffs rather than delinquency.  Of course chargeoffs happen a little later than the first nonpayment event, so the bump in that curve is a few months later.
 

[Rob L]

There is a blog, I think it is lendingrobot, that shows a curve.  His curve is slightly different.  I believe it shows chargeoffs rather than delinquency.  Of course chargeoffs happen a little later than the first nonpayment event, so the bump in that curve is a few months later.

The Lending Robot "Lifetime Distribution" curve doesn't seem to have a bump.
The curve is based only on loans that charged off over a certain period and shows when they did.
It flattens dramatically after age 0.5 (at 18 months for 36 month loans or at 30 months for 60 month loans):

http://blog.lendingrobot.com/research/predicting-the-number-of-payments-in-peer-lending/