Author Topic: Throwing in the Towel  (Read 4678 times)

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Re: Throwing in the Towel
« Reply #15 on: October 21, 2017, 09:38:19 PM »
A lot of the guys on the forum have graphs to try to explain what went wrong, what is happening, etc.. The answer is not to be found in a graph. It is much simpler. Paying a debt to your debtor is a moral obligation as well has a financial obligation. How does one quantify morality on a graph? It's impossible. You are making a bet that the debtor will honor his/her obligation. Many will not. When a person who takes out a loan doesn't make one penny of payment, no one can tell me that this debtor's intention was clear-take the money and run. No moral obligation to pay back, to honor or even to acknowledge that someone put his/her money on the line to help this person. This person boldly took the money and never paid a penny. This is stealing and fraud.


Ya know...that's exactly how I felt at first with my LC involvement. I am luckier than most on this board. Because of an interpretation error I stopped buying notes in Jan, 2016 and missed the 2016 loan debacle, but I still have plenty of charge offs, 1 of which was that "0 payment fraud" you mentioned. At first I was upset at "those conniving sobs" but that attitude eventually changed. It's true that someone making none or only a few payments probably  gamed the system; those making less than 12 payments probably never "mended their ways" after getting an LC loan to payoff credit card excesses. But what do you say about those who made more than 12 payments?

Of the 1,426 loans I have bought 190 have charged off so far. The majority of those charge offs (130) paid more than 12 payments. I guess some of those could have been credit card excesses who just held on longer than others but, how can you explain someone who made 24 (or even 34) payments and then stopped?

LC opened my eyes to that fact that there are many hurting people out there who through little or no fault of their own are having problems. Maybe sickness, maybe job loss, maybe hurricanes, maybe earthquakes, maybe fires, etc. They held on as long as possible but eventually reality sets in and they just can't do it anymore.

@anabio
I think you Nailed it!! I think you are exactly correct with you analysis of reality, morality, and fraud.  I've been with LC for approx. 32 months and my returns have heavily tanked in the past 12 months.  I've been very skeptical of LC's tactics in approving/acquiring loans and too many default quickly.
It doesn't pass the smell test - profits over morality.  FWIW.

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Re: Throwing in the Towel
« Reply #16 on: October 21, 2017, 10:10:01 PM »
I have to admit, I place enormous faith in FICO scores.  Maybe this is naive but I feel that someone with a FICO of 800+ worked for and earned that, and is a lot less likely to game the system and trash that kind of a score unless they're planning suicide or a run to Canada.  It's not necessarily that high scorers are more moral than other people, but they have something significant to lose with gaming shenanigans. So far I haven't been burned on any new loans to the 800 club.  (Have to admit I'm still considering leaving, as these more reliable loans net about 4% after fees and I can do better with an insured muni bond with No Work Whatsoever and the possibility of a better return than the stated rate if I time it well.  oh yeah, and almost no tax liability either.  Jeez ... why on earth am I here?

Great thinking about investing in FICO of 800+, doing something right with finances.  I've been with LC for approx. 32 months and my ANAR has significantly tanked in the past 12 months.  Given, that someone in a 15%+ tax bracket, LC earned interest & high defaults, you end up negative returns.  I have expended way to much time in managing my account, only having to pay more in taxes.  Also, often I consider jumping the LC ship and moving to Stocks, Index Funds or other investments. You mentioned insured muni bonds for investments; do you have any advice on how or where to invest in good bonds? Thanks

SLCPaladin

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Re: Throwing in the Towel
« Reply #17 on: October 22, 2017, 07:56:38 PM »
I have to admit, I place enormous faith in FICO scores.  Maybe this is naive but I feel that someone with a FICO of 800+ worked for and earned that, and is a lot less likely to game the system and trash that kind of a score unless they're planning suicide or a run to Canada.  It's not necessarily that high scorers are more moral than other people, but they have something significant to lose with gaming shenanigans. So far I haven't been burned on any new loans to the 800 club.  (Have to admit I'm still considering leaving, as these more reliable loans net about 4% after fees and I can do better with an insured muni bond with No Work Whatsoever and the possibility of a better return than the stated rate if I time it well.  oh yeah, and almost no tax liability either.  Jeez ... why on earth am I here?

You are probably right to pay attention to FICO scores. A while back SOFI was bragging about their newfangled "FICO-free zone." They claimed to have proprietary data that gave a better look into an applicant's credit risk, and was therefore more precise, than what FICO provided. It turns out that was wrong.

SoFi's FICO Free Zone Loan Process Was Acutally Rather Full of FICO

dbsb3233

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Re: Throwing in the Towel
« Reply #18 on: October 24, 2017, 10:09:30 AM »
My experiences mirror many mentioned here.  I'm now using S&P500 Index Funds for nearly all of most stock holdings.  I used to try to juggle many funds in many accounts across various sectors trying to beat the market averages, but I usually ended up with about an equal number of hits vs misses.  Ultimately I came to the conclusion that it wasn't worth the effort.  Much simpler just to consolidate all the stock holdings into S&P500 funds with low fees (like Vanguard's). 

That's about 60% of my portfolio.  The other 40% I've poured into LC, Prosper, and Peer Street, with the intent of that being a less volatile hedge to the stock market.  While the hedge strategy itself remains solid, the returns at LC have not.  I started liquidating my non-IRA LC account in January, rolling those proceeds to Peer Street.  But it will take 3 years to complete. 

I still have a big chunk in a LC IRA ($260k) that's doing poorly.  The 3-year timeline to liquidate notes combined with the many-months process to transfer IRA funds makes it really hard to cut and run.  I turn 59 1/2 next May though so I may just start routine withdrawals instead to convert funds to non-IRA where they're easier to move around, for part of it anyway (depending on my tax situation each year).

My Prosper account seems to be holding up with reasonable returns though (~6-7%).  Same with Peer Street. 

LC has turned out to be a major disappointment.  I've still made money overall but the returns have been so poor that I'm well short of what alternate investments would have produced.  Ironically, I liked LC much better than PR initially.  Now it's PR that I'm happy with (relatively) and LC that sucks.