Worst Month Yet

[rawraw]

What evidence is there that we lend on the fringe?

[nonattender]

What evidence is there that we lend on the fringe?

I'd be curious to know that, too;  I see pretty broad market.
(I'm also not buying into the recession talk; things look OK!)

[mchu168]

What evidence is there that we lend on the fringe?

I'd be curious to know that, too;  I see pretty broad market.
(I'm also not buying into the recession talk; things look OK!)

I also want to clarify what I said earlier. I think the credit cycle might be peaking soon, but a recession is probably a few years out. And given the potential for lower taxes, less regulations and other stimulus being proposed by the new administration, I think the credit cycle has been extended. Rather than imminent recession, I think the greater risk today is overheating in the economy and potentially a more pronounced boom/bust cycle sometime down the road.

[anabio]

What evidence is there that we lend on the fringe?

Come on...we are the last resort before payday loans. Now that banks are getting involved LC will be even more into the fringe. Banks will take the A-B and maybe C away.

I followed these threads in the past. Up until very recently a lot of you were buying e-f-g loans so you could get your ANAR sky high. Most of the time there were always A-B loans to be had. Don't tell me that someone borrowing at D (17%) E (23%) F (29%) G (30%) are not fringe. Who in their right mind would pay those ridiculously high rates unless they were on the fringe? The answer to that can only be those who have 20%+ credit card rates. These days, who do you think only qualifies for those high rates?

[rawraw]

We are nowhere near a peak for the credit cycle. On nearly any metric, we are still near all time lows. I'd be careful to keep this in mind when framing your expectations.

What evidence is there that we lend on the fringe?

Come on...we are the last resort before payday loans. Now that banks are getting involved LC will be even more into the fringe. Banks will take the A-B and maybe C away.

I followed these threads in the past. Up until very recently a lot of you were buying e-f-g loans so you could get your ANAR sky high. Most of the time there were always A-B loans to be had. Don't tell me that someone borrowing at D (17%) E (23%) F (29%) G (30%) are not fringe. Who in their right mind would pay those ridiculously high rates unless they were on the fringe? The answer to that can only be those who have 20%+ credit card rates. These days, who do you think only qualifies for those high rates?

Well it seems like you haven't read many of my posts. But you are quite the prophet, pointing out the errors in people decisions after the results have occurred.

You are offering no basis for your claims. But you are free to operate whatever perception of reality you like!  The good thing about it, is I can make predictions before they happen and be pretty sure I'm right. I will take you on the other side of this trade any day!

Merry Christmas everyone

[mchu168]

We are nowhere near a peak for the credit cycle. On nearly any metric, we are still near all time lows. I'd be careful to keep this in mind when framing your expectations.

Peak means nearing the point where defaults are nearing a cyclical low.  You think this can get a whole lot better?

https://www.federalreserve.gov/releases/chargeoff/delallsa.htm

[anabio]

What evidence is there that we lend on the fringe?

Come on...we are the last resort before payday loans. Now that banks are getting involved LC will be even more into the fringe. Banks will take the A-B and maybe C away.

I followed these threads in the past. Up until very recently a lot of you were buying e-f-g loans so you could get your ANAR sky high. Most of the time there were always A-B loans to be had. Don't tell me that someone borrowing at D (17%) E (23%) F (29%) G (30%) are not fringe. Who in their right mind would pay those ridiculously high rates unless they were on the fringe? The answer to that can only be those who have 20%+ credit card rates. These days, who do you think only qualifies for those high rates?

.... But you are quite the prophet...
Not quite sure why you are calling me a prophet on this particular post. You asked me for my evidence on why we lend to fringe and i gave it. No fortune telling involved.

You are offering no basis for your claims.
I gave a basis to my fringe claim. If you believe this is not sufficient evidence that we lend to the fringe, then we will agree to disagree.

Merry Christmas everyone

[fliphusker]

The average household owes $16k in credit card debt.  That is $747B total.  They pay an average of almost $1,300/yr of interest alone.  Total personal debt of Americans is over $12 trillion.  The average American has a FICO score at 695.  For many Americans getting an LC loan is a step in the direction of rebuilding their credit score and saving themselves money. 
Debt consolidation can save hundreds of dollars a month, just in interest alone for a lot of these people.  You call them fringe, I call them typical Americans from all walks of life.  Could they get better loans from Banks?  Why are they not there and are here instead?  A and B are definitely the safest, no disputing that, but there are also plenty G notes that are safe too. 
On a personal note, I have 6 credit cards, not one of them under 22%.  I would not care if they were all over 40%, I do not carry a balance.  I have not asked for an APR reduction, just no need to.  Do I consider myself on the fringe?  I guess if having over 750 FICO, fringe. 
Not many of my notes I buy on FOLIO are under C.  But it is not the grade I care about its the YTM.  Yes, it is because of the ANAR.  My ANAR is killed by having so many A/B notes that were accidently bought when I opened my account. 

What evidence is there that we lend on the fringe?

Come on...we are the last resort before payday loans. Now that banks are getting involved LC will be even more into the fringe. Banks will take the A-B and maybe C away.

I followed these threads in the past. Up until very recently a lot of you were buying e-f-g loans so you could get your ANAR sky high. Most of the time there were always A-B loans to be had. Don't tell me that someone borrowing at D (17%) E (23%) F (29%) G (30%) are not fringe. Who in their right mind would pay those ridiculously high rates unless they were on the fringe? The answer to that can only be those who have 20%+ credit card rates. These days, who do you think only qualifies for those high rates?

[lascott]

We are nowhere near a peak for the credit cycle. On nearly any metric, we are still near all time lows. I'd be careful to keep this in mind when framing your expectations.

Peak means nearing the point where defaults are nearing a cyclical low.  You think this can get a whole lot better?
https://www.federalreserve.gov/releases/chargeoff/delallsa.htm

I cut-n-pasted that credit card data into a google sheet for a chart.  Credit cards delinquency rates are low.

[BruiserB]

We are nowhere near a peak for the credit cycle. On nearly any metric, we are still near all time lows. I'd be careful to keep this in mind when framing your expectations.

Peak means nearing the point where defaults are nearing a cyclical low.  You think this can get a whole lot better?
https://www.federalreserve.gov/releases/chargeoff/delallsa.htm

I cut-n-pasted that credit card data into a google sheet for a chart.  Credit cards delinquency rates are low.

I guess because people are refinancing them with LendingClub and then defaulting!  :-/


Sent from my iPhone using Tapatalk

[AnilG]

Delinquency rate is hard to interpret without knowing whether magnitude of delinquent amount is low or magnitude of outstanding balance is high and without knowing the growth rate in delinquent amount and in outstanding balance. Based on recent news articles, I believe delinquency rate is low not because delinquencies are down but because outstanding balance on credit cards is rising at faster rate. Delinquency rate is not going to rise significantly until credit card issuers slow down extending credit that will make delinquency rate a trailing indicator.

We are nowhere near a peak for the credit cycle. On nearly any metric, we are still near all time lows. I'd be careful to keep this in mind when framing your expectations.

Peak means nearing the point where defaults are nearing a cyclical low.  You think this can get a whole lot better?
https://www.federalreserve.gov/releases/chargeoff/delallsa.htm

I cut-n-pasted that credit card data into a google sheet for a chart.  Credit cards delinquency rates are low.

[rawraw]

Anil, some of the credit agencies publish vintage delinquency curves. May be a good place to look. From what I've seen as I haphazardly read the reports, most credit metrics are still exceptionally good.

Sent from my SAMSUNG-SM-G935A using Tapatalk

[Rob L]

I log a daily snapshot of my account details (well, my software does) and I thought it would be interesting to take a look at Adjustments for Past Due Notes as a percentage of Principal Balance. This data isn't available in the monthly statements. Adjustment percentages are the standard LC 9 month loss estimates for In Grace, Late 16-30, Late 31-120 and Default: https://www.lendingclub.com/account/investorReturnsAdjustments.action.

The following chart takes a look at my account since February this year on a weekly basis:



All things equal the adjustment percentage should fall back to the 3% level at some point in time after the principal balance stabilized in mid-September. However all things aren't equal and in my view the percentage has remained stubbornly high (5.2%). Doesn't look like it's coming down to 3% anytime soon. It's likely another confirmation of the erosion of loan performance since late May and it will be very interesting to see where this value finally settles out. At this level my account essentially breaks even. I'd sure be interested in the value others are seeing, particularly those with WAIR's in the 17% area.

[jheizer]

WAIR 15% on 1670 active notes average age of 14.8 months mine is at 4.0%   And I stopped everything just over 2 months ago so not really many new notes to skew that value much vs the average age.

[dr.everett]

Are you seeing that FICO has really dried up?  Might actually start having to buy notes with a markup that meets my YTM. 
Sure wish I would have just started out with FOLIO as notes from the primary market just continue to tank. 

I too have just been buying aged notes on the secondary platform with Lending Robot, and in addition selling my notes that have FICO issues. Unfortunately I've had many (1k or so) FICO notes in each account. This year will largely be a loss in terms of income when the FICO sales are combined with my charge offs. Buying very few new notes as many don't meet my criteria.  Hoping once the FICO sales are done my returns will return to positive.

Nope- still pretty strong buying for my FICO criteria on Folio. I just can't get my problem FICOs sold fast enough for my liking. I'm not willing to take more of a bath on them than I already am.

Adding to my earlier statement- fliphusker's question made me take a closer look at my automation strategy- and in what I can only describe as a moment of rare clarity- realized I was missing purchasing in a section of notes that I should be. Ran some tests using the missing criteria and found about 70 or so more notes a week I could be purchasing. So yes- there are still quite a few good buys out there on Folio for even the most stringent buyers. And yes- I now have 2 more filters in each account to catch additional notes. While they won't purchase as high of YTM notes as my other rules, when the high YTM notes aren't there- they'll get fed with slightly lower YTM notes with less of a premium. (And if my testing holds true possibly no premium at all)