Author Topic: Getting Shafted Buying Notes?  (Read 5363 times)

JohnnyP

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Getting Shafted Buying Notes?
« on: February 26, 2017, 02:57:26 AM »
I have been buying pretty conservative notes on folio. Usually grade 'C' with level or rising FICO and never late. Usually around one year old. These usually have roughly 2% discount.

It seems like lately a lot of these have been going late right after I buy them. Is there any way that the seller may know more information than I might? Is there something I should be looking for to make sure I am not getting shafted?

Thanks for any help.

yojoakak

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Re: Getting Shafted Buying Notes?
« Reply #1 on: February 26, 2017, 09:04:54 AM »

fliphusker

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Re: Getting Shafted Buying Notes?
« Reply #2 on: February 26, 2017, 11:55:37 AM »
I have been buying pretty conservative notes on folio. Usually grade 'C' with level or rising FICO and never late. Usually around one year old. These usually have roughly 2% discount.

It seems like lately a lot of these have been going late right after I buy them. Is there any way that the seller may know more information than I might? Is there something I should be looking for to make sure I am not getting shafted?

Thanks for any help.
While a lot here saw a spike in IGP and so forth in Dec, mine came in January.  I did had a number of notes I bought on FOLIO who were at 0 or 2 payments that went IGP.  Some are still there, most came back out.  I do not buy grades on FOLIO, just YTM of over 16% with never late for the most part. 
I too have wondered if there was something I was missing.  But I do not think there is some hidden conspiracy, just the luck of the draw.  And no inside info, or the loans would not come out of IGP. 

dr.everett

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Re: Getting Shafted Buying Notes?
« Reply #3 on: February 26, 2017, 02:00:00 PM »
The suggestion I would make as someone who buys on FOLIO extensively would be to look at notes with at least 6-12 payments made, 6 for 36 month loans, and 12 or more for 60 month loans. While not eliminating all possibility of charge offs, it seems to help significantly.

trixh0

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Re: Getting Shafted Buying Notes?
« Reply #4 on: April 28, 2017, 04:02:22 PM »
Hello,

It seems like lately a lot of these have been going late right after I buy them. Is there any way that the seller may know more information than I might? Is there something I should be looking for to make sure I am not getting shafted?

Not sure if what I experience is similar to you, but at least for me, I had to modify my approach to buying on Folio. I'm also not sure if this is old knowledge and I just was not able to find it in time to prevent some loss. The strategy of the buyer goes like this:

- Find a note that will change tomorrow(!) to 'Canceled, Payment Processing' if the payment comes as planned.
- Offer this note with an attractive discount.
- If you find a buyer on the day you offer the note one of two things will happen:

  A) The loan payment comes as planned, the deal is canceled by folio and you have maintained possession of a fine paying loan.
  B) There is a problem with the loan payment, the loan is now sold with a comparatively moderate discount to the new owner who will start with a loan that is at least entering the 'In Grace' status if not worse.

Conclusion: Don't buy notes that will reach the status 'Canceled, Payment Processing' tomorrow, no matter how attractive they may be.

Best regards

Jens

rubicon

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Re: Getting Shafted Buying Notes?
« Reply #5 on: April 28, 2017, 04:38:10 PM »
this doesn't work since notes get cancelled if the status changes.
« Last Edit: April 28, 2017, 04:40:04 PM by rubicon »

trixh0

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Re: Getting Shafted Buying Notes?
« Reply #6 on: April 28, 2017, 04:41:33 PM »
Hello and,

Exactly, but you can do so the day before. If the payment comes you keep the note. If the payment is late you have sold it.

Best regards

Jens

rubicon

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Re: Getting Shafted Buying Notes?
« Reply #7 on: April 28, 2017, 04:53:30 PM »
your timeline doesn't make sense.

If you sell the note on the day before, they will get cancelled the next day if the payment comes through or the status changes.

trixh0

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Re: Getting Shafted Buying Notes?
« Reply #8 on: April 29, 2017, 01:16:16 AM »
My observations:

Note changes status and payment arrives.
OR
I buy the note and the note becomes late.

What I have not yet seen:

Notes changes status, I'm denied the buy and the note becomes late.

Lovinglifestyle

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Re: Getting Shafted Buying Notes?
« Reply #9 on: April 29, 2017, 12:00:20 PM »
My observations as a seller have been that if the note goes payment pending the sale is canceled, regardless of whether the payment gets paid or not.  To sell it again I have to re-list it if/when that becomes possible.

Rob L

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Re: Getting Shafted Buying Notes?
« Reply #10 on: April 29, 2017, 12:12:49 PM »
My observations as a seller have been that if the note goes payment pending the sale is canceled, regardless of whether the payment gets paid or not.  To sell it again I have to re-list it if/when that becomes possible.

This is my experience as well.

Rob L

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Re: Getting Shafted Buying Notes?
« Reply #11 on: April 29, 2017, 12:20:05 PM »
When do charge off's occur?
Here is a daily chart of mine from late January 2017 to date. I've had 1275 total charge offs over the life of my account.



Fred93

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Re: Getting Shafted Buying Notes?
« Reply #12 on: April 29, 2017, 03:22:12 PM »
When do charge off's occur?

As you have observed, they seem to process the transition from default to chargeoff twice a month.

Rhonda9080

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Re: Getting Shafted Buying Notes?
« Reply #13 on: September 25, 2017, 01:49:55 PM »
I have now been noting when the last payment was posted so I don't get into the cancelled, payment processing thing like I did before. Not rocket science, but I didn't understand at first why some sales or buys were cancelled. Dumb me.