Author Topic: Over 200 loans and flat return after ~ 3 months  (Read 3296 times)

Pennsteric

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Over 200 loans and flat return after ~ 3 months
« on: June 15, 2016, 06:45:24 AM »

I am a new investor in LC loans, and essentially have been invested with majority of money in over 200 loans for about 2-3 months. I already have 5-6 late payments (which after I count as zero value) ate all my interest away.

Either statistically I am the unluckiest investor on here per historical return data or something is different on the platform with the current vintage.

I essentially randomly chose loans of B-D grade and credit scores of 700+ with no other criteria.

Anyone else who recently began investing getting defaults well above the historical norm?

twigster

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #1 on: June 15, 2016, 07:52:01 AM »
Quote
I already have 5-6 late payments (which after I count as zero value)

It may easier to compare your results with others if you use the default loan loss ratios as opposed to custom ratios.  In grace period (late) loans, for example, have an expected default loss rate of 28%. 

anabio

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #2 on: June 15, 2016, 10:36:34 AM »

I essentially randomly chose loans of B-D grade and credit scores of 700+ with no other criteria.

I am sure others will jump in here too...but my 2 cents worth is that you really need to tighten/create filters. Do you really want to fund someone who is borrowing on LC just to take a $10,000 vacation?, especially when they don't make that much money and have high credit card debt. Probably most investors on LC mainly invest in borrowers using the money to payoff credit debt...which I think is the only reason for anyone to borrow money on LC. Also, do you want to fund a $10,000 note to someone who is only making $20,000 per year? Sometimes climbing out of the hole is almost impossible and you don't want to be stuck in that hole with them.
As Will Rogers stated: : I'm not as concerned about the return on my money as I am the return of my money

Fayte

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #3 on: June 15, 2016, 11:30:28 AM »
I am fairly new as well. I am on month one with 52 notes, with another 40 on the way. But I have a tight restriction on what I invest in. Even though they are on the riskier spectrum (C-Es notes) I by all means do not do random. I look at credit, inquiries, income, loan amount, years at job. There are many factors that I look at the more picky I am the better. That way when someone does default hopefully I learn a thing or too. I know there will be defaults but hopefully less then just looking at credit score...
« Last Edit: June 15, 2016, 11:41:09 AM by Fayte »

Fred93

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #4 on: June 15, 2016, 01:16:06 PM »
I am a new investor in LC loans, and essentially have been invested with majority of money in over 200 loans for about 2-3 months. I already have 5-6 late payments (which after I count as zero value) ate all my interest away.

You said "late payments", but I will assume that you mean % of your loans that are late at the present time.

My account sits with about 2% of loans late at any given time.  You have 5/200 = 2.5% late.  Doesn't seem that unusual.

GregTexas

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #5 on: June 15, 2016, 04:24:27 PM »
My account sits with about 2% of loans late at any given time.

This makes me happy with my .25% past due ratio.

fliphusker

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #6 on: June 15, 2016, 04:47:01 PM »
My account is 2.7 months old
160 current notes. 3 paid early 1 I wrote off already due to bankruptcy.  1 was IGP, but paid yesterday.  :)  (both notes bought with bad filter on 3rd party site)

I have very stringent filters though, which I strongly suggest doing.  Check out NSR and backtest there. 

AnilG

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #7 on: June 15, 2016, 05:05:15 PM »
You are afflicted with, what I call, "excessive monitoring" that most new lenders contract. Just relax and let your portfolio build up and achieve steady state. There is nothing wrong with your loan selection strategy of B-D grade with 700+ FICO score. The Grade and FICO are two highly relevant parameters. Though it is simple and effective, I will suggest adding DTI < 20% - 25% to your selection strategy. FICO doesn't incorporate Income and Grade is mildly influenced by DTI.
« Last Edit: June 15, 2016, 05:32:53 PM by AnilG »
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Rob L

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #8 on: June 15, 2016, 05:57:43 PM »
I am a new investor in LC loans, and essentially have been invested with majority of money in over 200 loans for about 2-3 months. I already have 5-6 late payments (which after I count as zero value) ate all my interest away.

You said "late payments", but I will assume that you mean % of your loans that are late at the present time.

My account sits with about 2% of loans late at any given time.  You have 5/200 = 2.5% late.  Doesn't seem that unusual.

Mine's at 5% and it's a quite mature portfolio. Not a problem. It's all risky D's and E's so I'm not surprised. Usual months my charge offs are around 50% of my interest earned. Take your best shot, diversify and let the law of large numbers work it's thing.

Fred

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #9 on: June 15, 2016, 10:57:43 PM »
My FOLIO portfolio has 100% late, because I bought late notes.  ;)

Joe6Luck

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Re: Over 200 loans and flat return after ~ 3 months
« Reply #10 on: June 16, 2016, 01:11:32 AM »
but my 2 cents worth is that you really need to tighten/create filters. Do you really want to fund someone who is borrowing on LC just to take a $10,000 vacation?

I don't understand why people talk about tightening other filters than loan grade from time to time. Personally, the only filter that I (who don't believe I would have a notably better risk model than Lending Club has built over year) would consider is the grade (A1 - G4), based on how I consider risk vs. reward. I would assume factors like "borrower taking a vacation, etc." have been incorporated in LC's model. LC's mode has been improved over years with more and more data inputs and, I would assume, is better than what most of us can figure out merely based on gut feeling.

In short, I have fair confidence in LC's model on loan grade. Just to be clear, this is irrelevant to what happened in May (where I am very disappointed by LC, just like many people here.)