Author Topic: Verified salary?  (Read 2878 times)

sk24iam

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Verified salary?
« on: January 10, 2013, 04:07:05 PM »
Are all salaries verified by Lendingclub before the loan is issued? I see a lot of loans that are not yet verified; does LC require that the salary is verified even if it is fully funded?

Lloigor

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Re: Verified salary?
« Reply #1 on: January 10, 2013, 04:47:16 PM »
No, in fact the majority are never verified.

AnilG

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Re: Verified salary?
« Reply #2 on: January 10, 2013, 04:57:43 PM »
According to prospectus, in past 12 months only 60% of borrowers either had employment or income verified. Based on the info that only 60% of requested borrowers satisfactorily respond to verification, you can assume only 36% of borrowers listed are honest and 64% fudge the employment or income information.

https://www.lendingclub.com/fileDownload.action?file=Clean_As_Filed_20121128.pdf&type=docs

"Approximately 60% of the applicants during the 12-months ended September 30, 2012 had their employment or income verified by us by requiring the borrower to submit paystubs, IRS Forms W-2 or other tax records between the initial posting of a loan request and the issuance of a Member Loan."

"For the year ended June 30, 2012 of the borrower members undergoing income or employment verification:
approximately 60% of requested borrowers provided us with satisfactory responses;
approximately 8.4% of these borrowers withdrew their applications for loans; and
approximately 31.6% of these borrowers either failed to respond to our request in full or provided information that failed to verify their stated information."
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Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

yojoakak

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Re: Verified salary?
« Reply #3 on: January 10, 2013, 04:57:55 PM »
They'll be marked with an asterisk if they are.

Quote
The main reason why we do not perform income verification on 100% of the loans is to avoid adverse selection: the borrowers who have perfect credit history and do not exhibit any particular risk factors (who fall into the 40% we do not verify) are also those who have the least tolerance for a cumbersome income verification process, and are most likely to abandon that process and seek funding elsewhere. They are, however, the exact kind of borrowers we want to retain.
http://blogs.reuters.com/felix-salmon/2011/02/07/lending-clubs-loss-rate-numbers/

SeanMcD

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Re: Verified salary?
« Reply #4 on: January 10, 2013, 06:52:32 PM »
According to prospectus, in past 12 months only 60% of borrowers either had employment or income verified. Based on the info that only 60% of requested borrowers satisfactorily respond to verification, you can assume only 36% of borrowers listed are honest and 64% fudge the employment or income information.

That's only a safe assumption if LC randomly determined which borrowers to ask for verification.  It seems more likely that LC would ask for verification in cases where the other information doesn't match up or when borrowers were on the borderline of qualifying for a loan, which would heavily skew the percentages.