Account Liquidation- How did you get the last of your notes to sell?

[Lovinglifestyle]

Today I went to -35% and sold a Grace with a perfect 47 payment record and a green arrow.  Started at -10, yesterday.

Short answer, previously stated:  if it isn't sold, drop the price.  Investors know what they're looking for.

I can't find my own notes for sale on Folio either.  Crazy system. 

[SLCPaladin]

This is a general question for those of you who are selling IRA accounts to liquidate. Were you trying to clear out your entire IRA so you could do a one lump sum transfer of all idle cash from the IRA custodian (Millennial Trust) to another institution?

I looked at the fee schedule and, as best I can tell, it is a $150 fee to transfer out assets to a new custodian. I have a local credit union IRA in 5-year term deposits at 3.2% that I want to move my money too. The problem is that I have about $7k in idle cash in one of my Lending Club IRA accounts and I have about 400 other notes (approximately $4k) with some time to go before the notes will mature.

The dilemma I face is that I think I've already bitten the bullet for the worst of any defaults. So if I want to sell notes to get a clean IRA exit in one fell swoop, I'll probably have to discount those notes on Folio, some heavily. But I am reluctant to do this though because my reasoning is that I think what remains is has made it this far and the yields are pretty good (survivorship bias- most of the bad stuff is already charged off). However, if I keep pulling out money every so often out of the IRA, then I'll get nickel and dimmed by the IRA custodian for each asset transfer as far as I understand. So essentially I'm trying to figure out which will be less painful:

1) Do nothing: let idle cash sit in my LC account earning no interest while I'm waiting for the portfolio to wind down
2) Transfer out IRA money periodically without selling notes on Folio and get hit with IRA transfer fees each time
3) Take the losses that will occur by liquidating notes on Folio and get out in a one-and-done fashion

Any insight as to what you did and why would be appreciated.

[Fred93]

I don't understand this discussion about a $150 fee.  I moved a chunk of my LC IRA funds from Strata to a broker, and Strata charged me $25+$20.  The $25 was for "asset/cash transfer fee", and the $20 was for "overnight processing fee".

The "overnight processing fee" is an obscenity.  They didn't do anything overnight.  They actually took ONE MONTH.  Strata told the broker that they would not accept a fax, so the broker sent the paperwork via an overnight service.  On the first attempt, this paperwork was lost.  A month later I intervened, asked Strata for status, found out they couldn't find the paperwork, and had the broker send it again.  Then Strata charged me $20 for the extreme burden of RECEIVING a package sent via an overnight service.

While this is obscene, it isn't anything like $150., so I have no idea what you fellows are talking about.

[Rob L]

I've seen it both ways!
On 11/01/2016 I was charged $100 real time transaction fee for a $75k check disbursement.
On 03/28/2018 I was charged $25 real time transaction fee for a $55k check disbursement.
They both look pretty much identical in my Strata transactions register (except the amount).
Both were initiated by a Fidelity TOA letter.
Go figure.

[dr.everett]

This is a general question for those of you who are selling IRA accounts to liquidate. Were you trying to clear out your entire IRA so you could do a one lump sum transfer of all idle cash from the IRA custodian (Millennial Trust) to another institution?

I looked at the fee schedule and, as best I can tell, it is a $150 fee to transfer out assets to a new custodian. I have a local credit union IRA in 5-year term deposits at 3.2% that I want to move my money too. The problem is that I have about $7k in idle cash in one of my Lending Club IRA accounts and I have about 400 other notes (approximately $4k) with some time to go before the notes will mature.

The dilemma I face is that I think I've already bitten the bullet for the worst of any defaults. So if I want to sell notes to get a clean IRA exit in one fell swoop, I'll probably have to discount those notes on Folio, some heavily. But I am reluctant to do this though because my reasoning is that I think what remains is has made it this far and the yields are pretty good (survivorship bias- most of the bad stuff is already charged off). However, if I keep pulling out money every so often out of the IRA, then I'll get nickel and dimmed by the IRA custodian for each asset transfer as far as I understand. So essentially I'm trying to figure out which will be less painful:

1) Do nothing: let idle cash sit in my LC account earning no interest while I'm waiting for the portfolio to wind down
2) Transfer out IRA money periodically without selling notes on Folio and get hit with IRA transfer fees each time
3) Take the losses that will occur by liquidating notes on Folio and get out in a one-and-done fashion

Any insight as to what you did and why would be appreciated.

Were you trying to clear out your entire IRA so you could do a one lump sum transfer of all idle cash from the IRA custodian (Millennial Trust) to another institution?

Yes- that was my thought initially but the amount of time it took to sell significant amounts of notes changed this idea- I waited until I had 100K to transfer and then initiated it. Was only charged $25 and it took 2 weeks to complete. After that I decided I would do a smaller transfer (40K), same results, and now recently a 10K transfer. At the rate I'm going, I anticipate one more depending on how quickly I can sell any remaining notes in the IRA.

Answers to your other questions:

1. This is why I've done the transfers that I have. I was missing out on 8% over at Fundrise- given the minimal transfer costs this made sense for me.
2. I've only spent $100 on transfer fees- 90% of my transfers are done. Just have to remember to write the fees off next year on taxes.
3. Easier said than done. I've been at this for a year. As said earlier- trying to do this in a way that minimizes loss and effort. I've managed to lose about $30K according to Folio and their "whatever" method of accounting they use, but I'm still up according to what I've transferred. Losses get deducted and life goes on. Moving the discount on the notes on  daily basis as others have suggested seems to work, again not as fast as I would like, but it is still working.

Ask away if you'd like to know anything else.

[SLCPaladin]

Thanks Fred, Rob, and Dr. Everett for your insight. I think the LC appointed custodian for my LC IRA is Millennium Trust. I recall talking with a customer service rep from Lending Club a few weeks ago and they said they were in the process of migrating all Millennial Trust IRA customers over to Strata at some point. I think the rep mentioned that I might be able to request to have my custodian changed sooner, though I might just be making that up; I'll have to call back to confirm. If I find anything out, I'll be sure to post to this thread.

Based on the insight that I have received thus far, it seems like the best thing for me to do will be to just move the idle cash over at periodic intervals into my new IRA set up at a credit union. That seems to make the most sense since it appears that their transfer fees are quite a bit less. I don't think I'll mess with liquidating with Folio because I'm sure that any buyer on the other end of the transaction is going to have a lot more experience than I will be as a seller and will, as a result, likely get a better deal in the transaction. Unlike others, I'm ultra conservative at this point so I'm find just going for something that is a guaranteed 3.2% and risk-free to move my savings to at this point in the economic cycle.

[Rob L]

 Answers to your other questions:

2. I've only spent $100 on transfer fees- 90% of my transfers are done. Just have to remember to write the fees off next year on taxes.

Since we're talking about moving IRA money, can one write off these or other similar fees?
I didn't know one could do that.

[lendingprosper23]

Im still selling months later between 5 and 15% and still have about 5% of my notes left to go. Any late loans I instantly mark at a 75% discount and they still dont go.

All of this makes me realize how much time I wasted with private lending. The returns were bad compared to the general market and if the market tanks, loan defaults would go up even more as people get demolished. And couple that with the fact that it takes forever to liquidate an account... imagine handling an estate where someone has 50k or more loans?

Cant wait for this last 5% to go, unfortunately I cant say the same for my prosper account where I have to wait years to get my money out. Oh to be young and dumb.

[dr.everett]

 Answers to your other questions:

2. I've only spent $100 on transfer fees- 90% of my transfers are done. Just have to remember to write the fees off next year on taxes.

Since we're talking about moving IRA money, can one write off these or other similar fees?
I didn't know one could do that.

Turbo Tax allows for deduction of financial planning fees. YMMV and IANAL.

[OleBill]

This is a general question for those of you who are selling IRA accounts to liquidate. Were you trying to clear out your entire IRA so you could do a one lump sum transfer of all idle cash from the IRA custodian (Millennial Trust) to another institution?

I have two reasons for closing my IRA. First, I'm old and in poor health. I wanted to simplify my wife's life after I go so I quit buying new notes. I also started selling the notes that had the longest to run so she could shut the account sooner than later. Then I did a periodic review of my investments and found Lending Club was far behind investments in the stock market and cryptocurrencies. So, I decided to sell all of my notes.

I found the same problem as others. Most notes wouldn't sell without heavy discounts. I did another analysis and convinced myself that the losses due to discounting weren't significantly more than the losses I was experiencing due to loans going bad. That led me to increasing the discounts. I sold my last two active notes at 62% and 39% discounts. I have 4 very late notes remaining and will wait until they are charged off before closing the two accounts (Lending Club and Strata).

[Edward Reid]

if the market tanks, loan defaults would go up even more as people get demolished.

Before I started P2P investing, I dug through the LC stats. It was clear that during the 2008-2009 crisis, D+ loans tanked, but A-C loans did not. I'm sure that in a similar crisis, my investment (mostly C) would barely hold rather than continuing the consistent 8% I'm getting now. But it would take something even worse for me to lose money, and in that case just about anything but treasury bonds would be even worse. And 2008-2009 was a true economic crisis, not just the market tanking, which is unlikely to directly affect the great majority of LC borrowers.

And couple that with the fact that it takes forever to liquidate an account... imagine handling an estate where someone has 50k or more loans?

An estate with 50K notes is likely worth at least half a million dollars even if all notes are $25. (I'm assuming a steady state of investment, hence notes of average value around half the face value, and perhaps investment halted some time before death.) Anyone who has that much to invest should be putting it in notes of at least $1000 (that's still over 1000 notes, and the stats show that's far more than needed to spread the risk), so for an investor acting reasonably, the account is likely worth $20-25 million.

I could deal with managing that estate ... even if my fee were only 1%. And that size estate would likely take at least three years to unravel anyway, so I would just let it age out. Took almost that long to close my mom's estate, and it was simple by comparison.

Edward

[hashiryu]

If you don't mind keeping the Taxable account open longer, you can simply transfer notes from your IRA to Taxable account through FOLIOfn. This will unblock you from closing the IRA account with LC. You can let these unwanted notes mature in your Taxable account.

You might wanna read the IRS rules on self-dealing before using this strategy.

I tried to do this early on and ran into the thing that others have talked about- not being able to find your notes when they are listed. I never had luck with it- even when downloading the entire Folio note list to Excel- I found few if any of my notes.

At this point in the game I have two concerns- how long does it take me to sell the remaining notes with a minimal loss, and how much effort does that method require.

I managed to sell a few more notes in the IRA this weekend, but I think my taxable account is done. It's down to about 25 notes and they seem to be the ones that no one wants. Thinking based on what others have said I may eventually go to 20% discount but not planning to go further at this time.

Did you try to make an API call? SecondaryMarketAllNotes.csv is not 100% accurate. Even though your note is not showing up in the Folio inventory, it's there. You should be able to purchase by making a purchase call directly via API. If you are not faimilar with the process, use a 3rd party service such as PeerCube. You can link your accounts and purchase through them.

[OleBill]

I've been trying to get rid of all of my remaining notes in my Lending Club IRA and had only 3 very late notes remaining. I contacted Lending Club to see if there was an alternative to waiting for these notes to be charged off. There is, forfeiture. They sent me the form required to do this and close my IRA and Strata accounts. I completed it and submitted it today. All of the details are on my blog, billlanke.blogspot.com.

[Rob L]

Hey, that's great to know. Thanks for the information.

[OleBill]

I completed it and submitted it today. All of the details are on my blog, billlanke.blogspot.com.

Lending Club notified me a couple of hours after I had submitted the close accounts form that they had sent it along to Strata. I checked daily with both accounts and nothing changed. A week later I called Strata to see what else needed to be done. They said I needed to close my Lending Club account. I pointed out that I did and they should have the paperwork. Guess what, they found it and indicated they would process it. I got a check after the weekend. All in all, 13 days and one phone call to get both accounts closed and my remaining funds.

There was a $50 fee from Strata to close the account. The history of my return rates has been posted on my blog, billlanke.blogspot.com, today. Tomorrow I plan on posting a summary of my Lending Club experience over the past 3 years.

I'd like to thank the other members of this forum for your continual feedback on Lending Club. It's been quite helpful to me.