NSR Invest blog post - the improperly issued loans

[Zach]

Just wanted to share our latest blog post on the recent Lending Club news and looking at some of the 32 loans issued to Renaud and his family in 2009.

https://www.nsrinvest.com/i-think-i-found-the-loan-files/

[Rob L]

Nice work.

[SeanMCA]

Great share Zach!

[Fred93]

This is nonsense.  You have no evidence.  There is no logic to connect RL to these loans.

[Zach]

This is nonsense.  You have no evidence.  There is no logic to connect RL to these loans.

From my analysis, it's clear to me that these loans were taken out by the same borrower. As far as I'm aware, Lending Club's credit policy has only ever permitted a maximum of two concurrent loans to one borrower at any given time - and only after at least 6 on-time payments on the first loan. Here we see 4 loans issued all within a few days. These sets of loans stood out pretty easily by looking at a frequency chart by the borrower's earliest credit line.

If nothing else, these loans did not adhere to their own underwriting policies.

[PhilGD]

It's interesting that the number of inquiries in last 6 months was zero for all four loans

[Zach]

It's interesting that the number of inquiries in last 6 months was zero for all four loans

It's not uncommon for hard credit inquiries to take up to 30 days to reflect on a credit report. Additionally, we don't know to what extent (if at all) there may have been tampering with data beyond the yes/no approval of the loans.

[Fred93]

This is nonsense.  You have no evidence.  There is no logic to connect RL to these loans.

From my analysis, it's clear to me that these loans were taken out by the same borrower.

Yea, it sure looks like the same credit file.  That's interesting.  However, that's not the same thing as evidence that this was RL.

You've jumped to an unsubstantiated conclusion. 

[Fred]

Just wanted to share our latest blog post on the recent Lending Club news and looking at some of the 32 loans issued to Renaud and his family in 2009.

Even if the loans you found really belonged to RL and his family, IMO, this is still the wrong tree to bark up.

I don't really care what, why, when, where, how LR did; I do care how LC can recover from their current predicament.

[RT45]

This is nonsense.  You have no evidence.  There is no logic to connect RL to these loans.

I disagree with the approach of your response. As you know, it is difficult putting out original ideas and information similar to your sales report work, which should be encouraged and not attacked.

If you disagree, you should state why or what still needs to be proven.

[nonattender]

Please... show me the platform that didn't use friends and familiy, initially...

The only interesting thing about this is how RL apparently used LCA funds - against the fund's stated tolerances - to buy up extra longer-duration (60 month) loans at the ends of months/quarters...  Nobody - and here I include both LC and our "journalists" - mentions that...

[RT45]

...to buy up extra longer-duration (60 month) loans at the ends of months/quarters...

How were you able to track this?

[Fred93]

...to buy up extra longer-duration (60 month) loans at the ends of months/quarters...

How were you able to track this?

You can look at the monthly reports from the funds.  They show the current allocation between 36 vs 60 month loans.  The offering materials for the funds lists a "target allocation".  For several years, the broad-based credit fund has been outside of its target allocation.  The fraction of 60 month loans has been growing.  Because this was a target and not a hard limit, I don't think this is a violation of anything, but it doesn't look like best practice.  I will also note that this allocation has been reported to investors every month.  Wasn't hidden.

The recent 8K from LC said ...

In addition, as previously disclosed, at December 31, 2015, the investment parameters of one of the LCA Funds, with respect to the allocation of 60-month loans, were exceeded. The Company’s review has found that this was due to non-adherence to the fund’s investment strategy, including in part due to the purchase of loans in the first quarter of 2016 that were about to expire on the Lending Club platform.

The Company and LCA have made several changes to improve the governance and the operations of the Funds as a result of this additional review. In June 2016, LCA established a majority independent Governing Board (the "LCA Board") for the Funds. The LCA Board will provide fiduciary oversight and make binding determinations for certain actions and activities of the Funds including approval of valuation policies and procedures, and review and adherence to respective investment strategies. Further, we are realigning responsibilities for accounting and financial reporting for the Funds within the Company.

It didn't mention anything about "ends of months/quarters".  It said that in 2016Q1, the fund bought up some loans that were about to expire.  Note that the allocation outside the goals was there for many years.