Author Topic: Months Since Last Major Derogatory  (Read 10925 times)

william

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Months Since Last Major Derogatory
« on: November 29, 2012, 10:06:01 PM »
I have just notice this new information was added to borrower credit history when I was trying to invest today. For those of you who are not familiar with major derogatory, its basically a delinquent of 120 days or more. Since there is no way of back testing major derogatory for LC or prosper, I did some research and found that it is difficult for people to get loans who have had a major derogatory that is less than 24 months old. That is going to be what I uses as a filter until it can be back tested. So what do you guys think? Will this effect your strategy?

yojoakak

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Re: Months Since Last Major Derogatory
« Reply #1 on: November 29, 2012, 11:10:11 PM »
LendingCub appears to be using "n/a" to mean both "0" and "no information". Lovely.

I don't know when they added that field.

I found one note where that field is not "n/a" as far back as 8/26/12 (before I stopped looking, there could be older ones):
https://www.lendingclub.com/account/loanDetail.action?loan_id=1503155



I had never heard of this before so I looked it up. I hadn't been thinking of "a payment plan" as being that severe! Half my notes are in Payment Plan. ZOMG!!!!!!!!1!!


"A minor derogatory status is a payment delinquency of 30 days to 119 days. A major derogatory status is a delinquency of 120 days or more, a payment plan, repossession, charge-off, collection action, bankruptcy, fore-closure, or adverse judgment by a court."

http://www.federalreserve.gov/pubs/bulletin/2003/0203lead.pdf
« Last Edit: November 30, 2012, 02:15:14 AM by yojoakak »

nonattender

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Re: Months Since Last Major Derogatory
« Reply #2 on: November 30, 2012, 08:28:47 AM »
I had never heard of this before so I looked it up. I hadn't been thinking of "a payment plan" as being that severe! Half my notes are in Payment Plan. ZOMG!!!!!!!!1!!

What does it mean when an LC note is in "Payment Plan" status?  That the note is "Current" - even though it's not paying as agreed?
A little nonsense now and then is relished by the wisest men.

Peter

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Re: Months Since Last Major Derogatory
« Reply #3 on: November 30, 2012, 12:42:37 PM »
On Payment Plan can mean many things. For example, a borrower who changes their ACH withdrawal date from say the 10th to the 24th of the month will be officially On Payment Plan for two weeks even though they have not officially missed a payment. Borrowers who are on Payment Plan are typically late in some fashion and my be in the 16-30 day category or 31-120 day category depending on the amount they are behind.
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nonattender

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Re: Months Since Last Major Derogatory
« Reply #4 on: November 30, 2012, 01:11:59 PM »
On Payment Plan can mean many things. For example, a borrower who changes their ACH withdrawal date from say the 10th to the 24th of the month will be officially On Payment Plan for two weeks even though they have not officially missed a payment. Borrowers who are on Payment Plan are typically late in some fashion and my be in the 16-30 day category or 31-120 day category depending on the amount they are behind.

Under what circumstances will an On Payment Plan note finally charge off?

(Corollary:  Do "payment plans" stack/extend the final date of charge off?)
A little nonsense now and then is relished by the wisest men.

yojoakak

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Re: Months Since Last Major Derogatory
« Reply #5 on: November 30, 2012, 01:39:15 PM »
For example, a borrower who changes their ACH withdrawal date from say the 10th to the 24th of the month will be officially On Payment Plan for two weeks even though they have not officially missed a payment.

Heck, I've seen Payment Plans where the borrower just schedules a large payment to pay off the loan.

And that gets ranked the same as a "bankruptcy, fore-closure, or adverse judgment by a court" by the Federal Reserve?

SCARY!!!

(Or did LendingClub just pick an incredibly poor choice of words for the changed schedule?)
« Last Edit: November 30, 2012, 01:45:44 PM by yojoakak »

SeanMcD

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Re: Months Since Last Major Derogatory
« Reply #6 on: November 30, 2012, 03:14:53 PM »
(Or did LendingClub just pick an incredibly poor choice of words for the changed schedule?)

This.  I've seen some of the loans Peter is talking about, where Payment Plan is just used to change the payment date, and their credit scores the next month were unaffected.