Author Topic: Excess interest payments  (Read 2554 times)

nevermore

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Excess interest payments
« on: September 21, 2017, 08:36:25 PM »
I'm analyzing LC's large payments file (from Additional Statistics) for a research project and I've noticed instances where the final payment is larger than necessary. For example, this loan (screencap below) has interest rate 7.9% and made a final interest payment of $40.58, even though .079/12 * 3990.06 is only $26.27. It also seems that the borrower paid an extra $2.65 of principal. Can somebody explain why this might happen?

Column P_inv is the outstanding principal balance at the beginning of the period.


Fred93

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Re: Excess interest payments
« Reply #1 on: September 21, 2017, 11:48:09 PM »
Was there a late payment in there somewhere?

storm

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Re: Excess interest payments
« Reply #2 on: September 21, 2017, 11:58:53 PM »
Paying off an amortized loan is rarely precise.  The pay-off amount greatly depends on what day in the payment cycle the last payment was processed.  Also, many lenders will perform a lengthy review of the loan to make sure all principle and accumulated interest is received before declaring the loan paid.

I suspect the pay-off amount was overestimated, and the borrower was credited the difference after the review, but is not reflected in the example.  I've also seen many loans go late only to be fully paid shortly thereafter.  (It is incredibly frustrating if you do any selling on Folio.)  In that case, my guess is LC cancels the regular monthly ACH withdrawal and schedules a new withdrawal with the pay-off amount or instructs the borrower to mail a check which is processed well after the regular monthly payment is due.  In the meantime, the interest continues to accumulate.

Tomp

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Re: Excess interest payments
« Reply #3 on: September 22, 2017, 06:16:55 PM »
lol...LC doctored loan documents (i.e.. committed fraud) I have zero doubt that they take over payments into income and never refund the borrower. Their business is built on churn, charging origination fees and prepayment fee to investors.

On that note, what is the status of the springstone write-off. LC ran that business into the ground. No doubt overstated value on the balance sheet now

Tomp

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Re: Excess interest payments
« Reply #4 on: September 22, 2017, 06:18:30 PM »
Ha! then again their CFO comes from Wells Fargo......giving you comfort yet?    lol

yojoakak

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Re: Excess interest payments
« Reply #5 on: September 23, 2017, 11:39:08 AM »
My guess would be that a 31st payment got combined into that 30th payment in the records, like maybe it came in a couple days before the scheduled 31st payment. So there was a $26.27 interest payment, and then a few weeks later there was a $14.31 ($40.58 - $26.27) interest payment. You could even use that $14.31 to figure out what day the payment came in on.

You see stuff like this on the website all the time, especially for big payoffs. Can you bring up the Payment History for one of this loans notes on the website? It should have those listed as separate payments.

For example:

https://www.lendingclub.com/account/loanPerf.action?loan_id=43550202&order_id=97705667&note_id=75382251
« Last Edit: September 27, 2017, 06:13:29 PM by yojoakak »

nevermore

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Re: Excess interest payments
« Reply #6 on: September 27, 2017, 05:35:36 PM »
Was there a late payment in there somewhere?

No late payments.