Author Topic: LC loan quality shift April 2019  (Read 2071 times)

Fred93

  • Hero Member
  • *****
  • Posts: 2142
    • View Profile
LC loan quality shift April 2019
« on: June 04, 2019, 05:01:45 AM »
Starting in the first few days of April 2019, I am suddenly unable to reinvest the loan payments being deposited in my account.  Cash is piling up.

The cause of this is a shift in the notes that LC is offering.  I invest via the LC API in both whole and fractional notes.  The total number of loans LC is offering these days is lower than it has been in the past, and the quality has shifted.  Very few notes now meet my criteria.  I bid on all of the ones that do, and win a significant fraction of those I bid on, and yet cash keeps building up in my account.

I complained to LC.  Told them they were driving customers away.  They denied it.  The usual "You are very important to us." nonsense. 

As a result of this, I've been transferring money out of my LC account.  Does no good to keep it there if I can't invest.

I have loosened my filters a bit, but this has not produced any significant improvement. 

I told LC they are driving retail customers away.  They deny it.  ...but it's true. 

My theory is that as their business shifts to mostly one of selling packaged products to banks, they are intentionally ramping down the note business.

WES

  • Jr. Member
  • **
  • Posts: 79
    • View Profile
Re: LC loan quality shift April 2019
« Reply #1 on: June 04, 2019, 11:59:33 AM »
Yep. I saw this two years ago -- I was a manual investor with very strict criteria. My yield over ten years plus is 9%, with several accounts, so I can't complain, but there's no way I could continue that now, and it's too much work to compete with the bots. Some time ago, I sold all my 60 month notes via Folio, at a small discount. I have a handful of notes left and should be fully withdrawn by year-end. Good-bye Lending Club. IMO things went downhill for the retail investor after the Renaud Laplanche scandal became known.

PS -- getting out of Strata (the IRA trustee) was a true PITA, and further evidence that LC doesn't want to bother with the retail segment anymore.

.Ryan.

  • Jr. Member
  • **
  • Posts: 68
    • View Profile
Re: LC loan quality shift April 2019
« Reply #2 on: June 04, 2019, 06:27:30 PM »
In my IRA my 2018 idle cash average was $73. In 2019, my average is $175. Something is very different.

MarinBB

  • Jr. Member
  • **
  • Posts: 83
    • View Profile
Re: LC loan quality shift April 2019
« Reply #3 on: June 22, 2019, 01:49:22 PM »

As a result of this, I've been transferring money out of my LC account.  Does no good to keep it there if I can't invest.

I have loosened my filters a bit, but this has not produced any significant improvement. 

I told LC they are driving retail customers away.  They deny it.  ...but it's true. 

My theory is that as their business shifts to mostly one of selling packaged products to banks, they are intentionally ramping down the note business.

Same story here. I relaxed my criteria about as far as I'm willing to go (tax-equivalent predicted yield roughly equal to muni bond ETF yield), but cash keeps piling up. I've been taking money out too.

Fred93

  • Hero Member
  • *****
  • Posts: 2142
    • View Profile
Re: LC loan quality shift April 2019
« Reply #4 on: July 01, 2019, 05:54:15 PM »
As of late June, my software is suddenly able to buy >10 notes/day most days. 

They won't admit it, but they make sudden policy shifts. 

I've told them there's a guy sitting inside LC who turns some big knobs from time to time, and sometimes just turns off the flow toward me (ie toward the API).  They won't admit it, but my guess is that this happens when they're building up an inventory for a securitization or some such thing.  I've gotta work on getting them to share more info about that process.

.Ryan.

  • Jr. Member
  • **
  • Posts: 68
    • View Profile
Re: LC loan quality shift April 2019
« Reply #5 on: July 18, 2019, 09:51:59 AM »
I thought things were getting better in terms of quality loan availability, but now I see cash piling up again. What are you seeing Fred93?

Fred93

  • Hero Member
  • *****
  • Posts: 2142
    • View Profile
Re: LC loan quality shift April 2019
« Reply #6 on: July 18, 2019, 12:18:57 PM »
In July it looks like they're making more notes available than in the preceding few months, but there is heavy competition for them.  On the whole-loan market they are bought instantly.

MarinBB

  • Jr. Member
  • **
  • Posts: 83
    • View Profile
Re: LC loan quality shift April 2019
« Reply #7 on: July 20, 2019, 02:10:17 PM »
In July it looks like they're making more notes available than in the preceding few months, but there is heavy competition for them.  On the whole-loan market they are bought instantly.

That's probably a good thing in the current situation. If the listings linger too long on the fractional and whole loan platforms, they wouldn't be too incentivized to channel more loans to these platforms.

investny

  • Jr. Member
  • **
  • Posts: 87
    • View Profile
Re: LC loan quality shift April 2019
« Reply #8 on: August 07, 2019, 05:43:20 PM »
I noticed a huge drop in number of fractional notes back in October.
It's been pretty bad until second half of July when they made more fractional notes available.
Below graph from Peercube proves what i have been seeing in my account
http://prntscr.com/oprhit

Reginald

  • Newbie
  • *
  • Posts: 34
    • View Profile
Re: LC loan quality shift April 2019
« Reply #9 on: September 05, 2019, 12:48:43 PM »
It does indeed seem that LC is sending the better quality (lower liklihood of late/non payment) to Institutional Investors. The quality has dropped, and along with the any hope of a reasonable return given the risk  :-\

Fred93

  • Hero Member
  • *****
  • Posts: 2142
    • View Profile
Re: LC loan quality shift April 2019
« Reply #10 on: September 06, 2019, 08:44:43 PM »
It does indeed seem that LC is sending the better quality (lower liklihood of late/non payment) to Institutional Investors. The quality has dropped, and along with the any hope of a reasonable return given the risk  :-\

Your thesis is what is known as a "conspiracy theory".  There is zero evidence that LC is intentionally steering "better" (whatever that means) loans to some other group, and the "badder" loans to retail customers. 

My theory is that they're all badder than they usta be.

JDII

  • Newbie
  • *
  • Posts: 5
    • View Profile
Re: LC loan quality shift April 2019
« Reply #11 on: September 07, 2019, 12:57:28 PM »
It does indeed seem that LC is sending the better quality (lower liklihood of late/non payment) to Institutional Investors. The quality has dropped, and along with the any hope of a reasonable return given the risk  :-\

I haven't had any issues finding quality loans as of late.  My account is smaller than many others on here and perhaps I'm not using as strict parameters as others.