Author Topic: Worst Month Yet  (Read 207386 times)

Rob L

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Re: Worst Month Yet
« Reply #480 on: October 04, 2017, 03:51:23 PM »
More of the same. Another losing month. Delinquencies near all time highs.
Better times are on the way though; LC said so.





au88

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Re: Worst Month Yet
« Reply #481 on: October 07, 2017, 08:32:23 AM »
Yep, I am negative for the year now.

michael49

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Re: Worst Month Yet
« Reply #482 on: October 14, 2017, 08:37:08 AM »
Iím letting my taxable account slowly wind down naturally.  I continue to have negative months, but thankfully not losing much.

Question: how do I move money out of my IRA acct (thankfully only about 5k) without inciting a penalty?

Rob L

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Re: Worst Month Yet
« Reply #483 on: October 14, 2017, 10:43:25 AM »
If by "penalty" you mean IRS penalty then I think the safest way is as follows:

1) Log into your LC account and use "TRANSFER" and "WITHDRAW FUNDS" to move cash from your LC IRA account to your LC IRA custodian account (typically SDIRA).

2) If you do not already have it, open the same type of IRA account (Traditional, Roth, etc.) where you want the LC money to be moved. That institution will have a form for you to use to request a direct "trustee-to-trustee transfer" of assets from SDIRA to them. This is NOT a rollover (see https://www.irs.gov/retirement-plans/ira-one-rollover-per-year-rule).

3) Fill out their form and return it to them signed and possibly notarized.

4) Upon receipt they will sign it as the receiving custodial trustee and then mail it to SDIRA requesting the transfer of cash to them.

5) When SDIRA receives the form they will send them your money as a "trustee-to-trustee" direct transfer".

All of this will take quite a while. You should first contact the institution to where you want your money moved and verify the correct procedure; it's been a while and I may have it wrong.

I believe SDIRA charges $100 for each transfer (partial account termination) $250 to close an account (see https://quikforms.com/viewform/zpWO-bdqRaBQN). LC only pays your $100 annual SDIRA account fee if your LC balance is above a certain amount (I forget how much). You should keep this in mind when timing your exit and possibly use Folio to sell notes at the end to avoid paying an annual SDIRA fee yourself. I've never seen a post by anyone who has completely closed out their LC and SDIRA accounts. Once all the notes are fully paid or charged off there's still the possibility some small amount will accrue to an LC account due to recoveries. Wonder how this works after the accounts are closed?

thezfunk

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Re: Worst Month Yet
« Reply #484 on: October 14, 2017, 11:44:02 AM »
Well, I am about to find out as I am currently dumping my notes on Folio.  I have about $1K left.  Someone has been getting good deals on mature notes.

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lascott

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Re: Worst Month Yet
« Reply #485 on: October 14, 2017, 01:56:15 PM »
...
I believe SDIRA charges $100 for each transfer (partial account termination) $250 to close an account (see https://quikforms.com/viewform/zpWO-bdqRaBQN). LC only pays your $100 annual SDIRA account fee if your LC balance is above a certain amount (I forget how much). You should keep this in mind when timing your exit and possibly use Folio to sell notes at the end to avoid paying an annual SDIRA fee yourself. I've never seen a post by anyone who has completely closed out their LC and SDIRA accounts. Once all the notes are fully paid or charged off there's still the possibility some small amount will accrue to an LC account due to recoveries. Wonder how this works after the accounts are closed?
I think the amount is $10K to avoid the $100 fee. My kid has a ROTH IRA with less than that which he was going to push over $10K to avoid it.  Now we are looking to close that account down and you make a good point on the recoveries!
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HalfABubbleOff

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Re: Worst Month Yet
« Reply #486 on: October 14, 2017, 02:44:57 PM »
Yep, I am negative for the year now.
Ouch!
I'm not there yet, but it wouldn't take much.  YTD for me only $0.28 of every interest dollar of mine is making it to the total line after charge offs, and if I have one more month like August I will around $0.00 of every interest dollar. 

Rob L

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Re: Worst Month Yet
« Reply #487 on: October 14, 2017, 05:33:34 PM »
...
I believe SDIRA charges $100 for each transfer (partial account termination) $250 to close an account (see https://quikforms.com/viewform/zpWO-bdqRaBQN). LC only pays your $100 annual SDIRA account fee if your LC balance is above a certain amount (I forget how much). You should keep this in mind when timing your exit and possibly use Folio to sell notes at the end to avoid paying an annual SDIRA fee yourself. I've never seen a post by anyone who has completely closed out their LC and SDIRA accounts. Once all the notes are fully paid or charged off there's still the possibility some small amount will accrue to an LC account due to recoveries. Wonder how this works after the accounts are closed?
I think the amount is $10K to avoid the $100 fee. My kid has a ROTH IRA with less than that which he was going to push over $10K to avoid it.  Now we are looking to close that account down and you make a good point on the recoveries!
If $10k is the limit and your account is $5k then the $100 annual fee is 2% of your investment. When under the limit the best strategy has to be to completely liquidate using Folio and then close the account before incurring another annual fee. Doesn't have to be in a big rush depending on time remaining until next annual fee charge, but ultimately that's the deadline. 

lascott

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Re: Worst Month Yet
« Reply #488 on: October 15, 2017, 01:27:39 AM »
...
I believe SDIRA charges $100 for each transfer (partial account termination) $250 to close an account (see https://quikforms.com/viewform/zpWO-bdqRaBQN). LC only pays your $100 annual SDIRA account fee if your LC balance is above a certain amount (I forget how much). You should keep this in mind when timing your exit and possibly use Folio to sell notes at the end to avoid paying an annual SDIRA fee yourself. I've never seen a post by anyone who has completely closed out their LC and SDIRA accounts. Once all the notes are fully paid or charged off there's still the possibility some small amount will accrue to an LC account due to recoveries. Wonder how this works after the accounts are closed?
I think the amount is $10K to avoid the $100 fee. My kid has a ROTH IRA with less than that which he was going to push over $10K to avoid it.  Now we are looking to close that account down and you make a good point on the recoveries!
If $10k is the limit and your account is $5k then the $100 annual fee is 2% of your investment. When under the limit the best strategy has to be to completely liquidate using Folio and then close the account before incurring another annual fee. Doesn't have to be in a big rush depending on time remaining until next annual fee charge, but ultimately that's the deadline.
Indeed, I understood it was a lot and in this example I was paying that fee for them to help pave their way to retirement. Just realized that there are better and simpler choices than LC now.
In our case it looks like the fee does not reoccur until the end of July.  Here is what the 'Transaction' looks like on the Strata (formerly SDIRA) site:

https://innovue21.innovestsystems.com/r4.1prod/sdi/Portfolio/Transactions
Code: [Select]
Date Transaction# Transaction Code Amount Security Additional Information Tax Code
7/28/2017 21720902539 Fee Invoice Generated Fee Invoice Generated Amount:($100.00) Annual Fee - Basic IRA
« Last Edit: October 30, 2017, 11:31:31 PM by lascott »
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

AnilG

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Re: Worst Month Yet
« Reply #489 on: October 15, 2017, 02:35:04 AM »
Has anyone looked into the possibility of selling notes in IRA and buying same notes in Taxable account as IRA liquidation strategy? I don't know the IRS/tax consequences of such strategy and not a tax expert but can't imagine anything being wrong with an exchange at fair market value. Sell your Current notes at par value from IRA and then buying same notes in taxable account might speed up the IRA liquidation. Sell delinquent notes at maximum discount listed on Folio for same loan or at LC claimed loss rates might be a fair value exchange between IRA and Taxable account.
 
Indeed, I understood it was a lot and in this example I was paying that fee for them to help pave their way to retirement. Just realized that there are better and simpler choices than LC now.
In our case it looks like the fee does not reoccur until the end of July.  Here is what the 'Transaction' looks like on the Strata (formerly SDIRA) site:

https://innovue21.innovestsystems.com/r4.1prod/sdi/Portfolio/Transactions
Code: [Select]
Date Transaction# Transaction Code Amount Security Additional Information Tax Code
7/28/2017 21720902535 Fee Invoice Generated Fee Invoice Generated Amount:($100.00) Annual Fee - Basic IRA
---
Anil Gupta
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PennySaved

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Re: Worst Month Yet
« Reply #490 on: October 15, 2017, 02:13:47 PM »
Interesting idea.  I have been liquidating both my regular and Roth IRA LendingClub accounts for a little over a year now.  I am now down to about $8,000 in the Roth IRA account.

I know there was a long thread some time ago about selling and buying between the regular and Roth IRA accounts.  I think the conclusion was it was not a good idea and  probably violated the self-dealing restrictions on IRAs.  But I remember that discussion being about theoretically selling regular LC notes at a loss in the regular account and taking the losses off your taxes.  One's LC IRA would buy them at the discount price and reap the profit (with no taxes if a Roth IRA) in the higher true value.  Which is not what you are suggesting, of course.

The other thing that bothers me about the IRA account is that I have some recovery money coming in from old chargeoffs.  Someone else said you can still close the IRA account to get out of paying fees, but you have to agree to forfeit future recoveries from charged off IRA Notes.  Probably not worth it to pay a $100 annual fee plus $50 fee if one wants to transfer the money to my Vanguard IRA.  My net recovery amount for Sept 2017 was about $10.

PennySaved

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Re: Worst Month Yet
« Reply #491 on: October 15, 2017, 02:33:13 PM »
Here are a couple of threads about selling notes between regular and IRA accounts:

http://forum.lendacademy.com/?topic=506

http://forum.lendacademy.com/?topic=883

This thread below was about someone selling from IRA to regular account, selling at inflated price in order to get more money into the IRA than the annual contribution limit (so not relevant to our liquidation discussion here, but interesting otherwise).

http://forum.lendacademy.com/?topic=1130

Rob L

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Re: Worst Month Yet
« Reply #492 on: October 16, 2017, 09:30:18 AM »
Probably not worth it to pay a $100 annual fee plus $50 fee if one wants to transfer the money to my Vanguard IRA.  My net recovery amount for Sept 2017 was about $10.
Vanguard charges $50 to transfer money into your IRA account?
I'm surprised. Don't think Fidelity charges any fees to transfer money in or out of an IRA (except if you select transfer by wire). At least I don't remember paying any.

kib

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Re: Worst Month Yet
« Reply #493 on: October 16, 2017, 10:49:51 AM »
After being on mental auto pilot for a while I took a look at my own returns and had a small stroke.  I'm sure this has been addressed, but is anyone else flaming mad over LC going public, basically creating a legal mandate for increasing their own profit that trumps profit or even any protection for the people actually taking the risk (us)?  In a nutshell, now they Have to prioritize their own profit by law, and whether they get it from the lenders or the borrowers is irrelevant.  As we can see. 

Basically, stockholders are betting on *US* to go on providing a good return for LC regardless of what the borrowers are doing, as opposed to the earning model in which the borrowers are the ones generating income for the company. We've gone from paying fees to cover the cost of the middleman to "promising" a return for investors who have nothing to do with the social process of P2P lending.  We are providing great stability for lending club's stockholders, at our own cost.  Our profit is at risk from deadbeat borrowers as has always been the case and is the risk we signed up for, but now it also gets tugged at from the other side, from the middleman twiddling with lending standards and - I think - quicker charge-offs, that leave us holding the bag.  As far as I know, we never got the option of opting out when LC decided to exchange our support for borrowers to support for profiteers, other than the arduous and sometimes expensive process of liquidating our loans one by one.  Basically, we got put in chains as far as being beholden to stockholders.

I predicted this decline in anything good for us when LC first went public, and I think the current swamp is at least in good part that chicken coming home to roost.   Good grief and, I think, good riddance already. Arduous and expensive is probably still better than being a patsy.
« Last Edit: October 16, 2017, 11:21:41 AM by kib »

apc3161

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Re: Worst Month Yet
« Reply #494 on: October 16, 2017, 01:50:42 PM »
They definitely lowered standards and lowered rates after going public to try and increase revenue, but LC has been hurting as well (just look at their profits, stock price, etc.). I think the big difference is just the increased competition in the field. Before it was just LC and prosper. Now Goldman Sachs, American Express, Discover financial, Sofi, Earnest, Bestegg, etc. are all in the same field. There is just so much competition. As a result, both LC stockholders and LC investors are hurting. The only people who are benefiting from all of this are borrowers (especially the ones who just take their $40,000 and run away, lol).
« Last Edit: October 16, 2017, 10:36:35 PM by apc3161 »