Lending Club Collection Actions

[Shawnthgreta]

A few questions:

1. What does a borrower telling LC "cease and desist" mean, does this mean LC will no longer attempt to collect?

2. What does the typical collection cycle look like?

3. What is an "advanced collector"?

Feel free to give any other insight into the collection process LC uses.

Thanks

[Fred93]

1. What does a borrower telling LC "cease and desist" mean, does this mean LC will no longer attempt to collect?

There's a federal law called the "Fair Debt Collection Practices Act" (FDCPA) which limits what debt collectors can do.  One of the things it says is that if you send a letter to a debt collector which tells him to stop contacting you, then he must stop.  Doesn't matter whether you owe the money or not.  If you say stop, he has to stop.  There are exceptions.  Debt collector  can send you a letter saying he filed a lawsuit, or some similar things.  You can read about FDCPA online in a lot of places.  Many government web sites give advice for borrowers being called by debt collectors.  None however, give advice for lenders who are not being paid back.
http://www.consumerfinance.gov/askcfpb/329/are-there-laws-that-limit-what-debt-collectors-can-say-or-do.html
https://www.consumer.ftc.gov/articles/0149-debt-collection

https://en.wikipedia.org/wiki/Fair_Debt_Collection_Practices_Act

3. What is an "advanced collector"

I believe it's just a higher pay grade.  The first level people are like the folks who answer when you call the cable TV company.  If they can't solve your problem by telling you to plug in the TV, they pass you to 2nd level support.

[dbailey75]

1. What does a borrower telling LC "cease and desist" mean, does this mean LC will no longer attempt to collect?

There's a federal law called the "Fair Debt Collection Practices Act" (FDCPA) which limits what debt collectors can do.  One of the things it says is that if you send a letter to a debt collector which tells him to stop contacting you, then he must stop.  Doesn't matter whether you owe the money or not.  If you say stop, he has to stop.  There are exceptions.  Debt collector  can send you a letter saying he filed a lawsuit, or some similar things.  You can read about FDCPA online in a lot of places.  Many government web sites give advice for borrowers being called by debt collectors.  None however, give advice for lenders who are not being paid back.
http://www.consumerfinance.gov/askcfpb/329/are-there-laws-that-limit-what-debt-collectors-can-say-or-do.html
https://www.consumer.ftc.gov/articles/0149-debt-collection

https://en.wikipedia.org/wiki/Fair_Debt_Collection_Practices_Act

3. What is an "advanced collector"

I believe it's just a higher pay grade.  The first level people are like the folks who answer when you call the cable TV company.  If they can't solve your problem by telling you to plug in the TV, they pass you to 2nd level support.

Are these advanced collectors on lendingclubs payroll or outsourced?  very often after being sent to the "advanced collector", we end up paying additional collection fees on the next payment.  This has bugged me a little, as our service fees are increased by lending club for doing something they should already be doing.

[lascott]

See thread and old article I mentioned here http://forum.lendacademy.com/index.php/topic,3656.msg32425.html#msg32425

[Shawnthgreta]

See thread and old article I mentioned here http://forum.lendacademy.com/index.php/topic,3656.msg32425.html#msg32425

I have read through this. I was curious if there was any more details available somewhere. So once the borrower since "cease and desist" the loan is effectively an automatic charge off, or can it still be worked by a 3rd party agency?

[anabio]

  So once the borrower since "cease and desist" the loan is effectively an automatic charge off, or can it still be worked by a 3rd party agency?

No, its not an automatic write off...but I must say the writings on the wall. All it means is the collection agency cannot contact the consumer (except for a few specialized usages). The agency can still sue in court, garnish wages (if allowed to by state), report to  credit agency... can do all the "good bad" things that a collection agency can do...but...that being said...if the consumer has demanded cease and desist you know where that loan is going to end up.

[fliphusker]

I am curious to expand this thread a bit, not trying to derail it. 
I am curious about how bankruptcies are handled.  My very first BK note was a straight roller for $10k after 1 payment and LC stated

Charged off. Bankruptcy: economically infeasible to recover

My question is, do you notice in your recoveries that you ever see much from BK?  Do you ever get more from the different kinds of BK?  Does certain BK yield more recoveries?  Just had a note go Chapter 13.  I do not expect anything from a BK note, so anything is just gravy. 

[Shawnthgreta]

I am curious to expand this thread a bit, not trying to derail it. 
I am curious about how bankruptcies are handled.  My very first BK note was a straight roller for $10k after 1 payment and LC stated

Charged off. Bankruptcy: economically infeasible to recover

My question is, do you notice in your recoveries that you ever see much from BK?  Do you ever get more from the different kinds of BK?  Does certain BK yield more recoveries?  Just had a note go Chapter 13.  I do not expect anything from a BK note, so anything is just gravy.

Is there anywhere where the collection log/recovery information can be harvested into a data file? I would be willing to investigate this, I find it interesting. From what I have read the visibility into "post charge-off" behavior is very limited. It seems visibility into collections in general is. From what I have read, we cannot even get time-series data on loan progression through the statuses, we have to rely on LC's graph.

[Rob L]

Is there anywhere where the collection log/recovery information can be harvested into a data file? I would be willing to investigate this, I find it interesting. From what I have read the visibility into "post charge-off" behavior is very limited. It seems visibility into collections in general is. From what I have read, we cannot even get time-series data on loan progression through the statuses, we have to rely on LC's graph.

LC provides the month by month payment history on all loans. Visit the LC web page:  http://additionalstatistics.lendingclub.com/
Click on "All payments (includes payments made to investors and to Lending Club)" to download the file.
The file is rather large (approaching 4Gbyt now) and includes all LC's loans from day one. It's too big for Excel so the only way to do anything with it is via "roll your own" software. Guess the good news is that the file includes a PCO_RECOVERY and PCO_RECOVERY_FEE column  which LC updates in the final month of the loan when/if good things happen.

FWIW, a few weeks ago I was looking at the set of all grade D 36 month term loans issued in 2013 Q1.
This was prior to the most recent update of the pmthistall.csv file:

Total PMTS Received  $27,221,921.10 
PCO Recoveries          $432,085.84       1.59% of Total PMTS Received
PCO Recov Fees          $(38,224.16)      8.85% of PCO recoveries      
                   ------------------
Net Proceeds         $27,615,782.78       Bottom line what we investors received

[dbailey75]

See thread and old article I mentioned here http://forum.lendacademy.com/index.php/topic,3656.msg32425.html#msg32425

I have read through this. I was curious if there was any more details available somewhere. So once the borrower since "cease and desist" the loan is effectively an automatic charge off, or can it still be worked by a 3rd party agency?

I have an interesting C and D.

11/23/16 (Wednesday)
Payment Solutions specialist contacted 3rd party and 3rd party agreed to pay a settled amount
9/1/16 (Thursday)
3rd party contacted Payment Solutions specialist and was unable to pay at this time
9/1/16 (Thursday)
Borrower requested that Lending Club cease and desist all communications

This is on a $35k loan, 6 payments made, D4 : 17.97%, 36 Month loan. FICO Score originally 700-704, and get this, Job Title Purchasing Manager.  Ha.

[mrwhizzard]

I have an interesting C and D.

What was the final disposition of this note? I have a note with a "settled amount" in the collection log now, as well:

5/12/17 (Friday)    Payment Solutions specialist contacted 3rd party and 3rd party agreed to pay a settled amount
5/12/17 (Friday)    3rd party contacted Payment Solutions specialist and was unable to pay at this time
5/10/17 (Wednesday)    Borrower requested that Lending Club cease and desist all communications
5/10/17 (Wednesday)    3rd party contacted Payment Solutions specialist and was unable to pay at this time

I'm curious what bucket this falls in. Would it still be a charge-off, even though a settlement was reached?

[anabio]

I'm curious what bucket this falls in. Would it still be a charge-off, even though a settlement was reached?

It gets charged off with the note: "Charge-off after settlement completed."

I had note (31727972) which 3rd party agreed to pay settled amount. As can be seen from the screen print below that 3rd party apparently made 9 additional payments and then in December 2016 no other payments. I assume that meant the 3rd party paid what he/she agreed to. As can be seen below that loan went into default a few months later.

NOTE: Interesting that LC continues to provide FICO information. The latest Fico is 25 points higher than the fico was when the loan was set as default.

[dbailey75]

I have an interesting C and D.

What was the final disposition of this note? I have a note with a "settled amount" in the collection log now, as well:

5/12/17 (Friday)    Payment Solutions specialist contacted 3rd party and 3rd party agreed to pay a settled amount
5/12/17 (Friday)    3rd party contacted Payment Solutions specialist and was unable to pay at this time
5/10/17 (Wednesday)    Borrower requested that Lending Club cease and desist all communications
5/10/17 (Wednesday)    3rd party contacted Payment Solutions specialist and was unable to pay at this time

I'm curious what bucket this falls in. Would it still be a charge-off, even though a settlement was reached?

Going back to look at this note,  Loan id: 69513508, doesn't look like the settlement amount was ever paid, a payment was posted 12/9 that was a 1/3 of the regular monthly payment, loan charged off January.

[SMWinnie]

Apologies if I missed this, but does Lending Club provide any summary data on whether/when/how often it pursues defaulting borrowers and recovery rates?

I'm wondering if LC is starting to get a larger proportion of borrowers gaming them by borrowing before a planned default. It would be nice to see if default after 0/1/2 payments has increased through 2016 and into 2017.

[mrwhizzard]

Going back to look at this note,  Loan id: 69513508, doesn't look like the settlement amount was ever paid, a payment was posted 12/9 that was a 1/3 of the regular monthly payment, loan charged off January.

Well, it doesn't look like mine is going to have a big payoff either. There's now a payment pending in the amount of $0.06 (when the monthly payment amount was previously $0.69):