Author Topic: Finally had my first defautó  (Read 13176 times)

AnilG

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Re: Finally had my first defautó
« Reply #15 on: April 18, 2013, 04:52:49 PM »
I didn't use Default status, since default is a transient state & since default rates are universally smaller than those of charged-off.

Can you elaborate what do you mean by "default is transient state"? I combine the loans with charged off and default status to calculate default rate.

Actually NE default rate is over 50% when loans with default and charged off status are considered together. But the loan volume for NE is insignificant so I wouldn't put much faith in high default rate for NE or any other state that has less than couple of hundred loans issued to date.
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edward

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Re: Finally had my first defautó
« Reply #16 on: April 18, 2013, 05:33:15 PM »
Looks like the states with the highest default rates really aren't significant in their number of loans, and of course, as you remove states from your list, you lower the number of loans available to pick from. Actually, it's not all that bad since the vast majority of states are under 4%. Not that 4% default is good, but it seems state selection, in my humble opinion, really doesn't matter as much as does borrower credit characteristics. But it's a great discussion regardless.

Fred

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Re: Finally had my first defautó
« Reply #17 on: April 18, 2013, 06:24:38 PM »
Can you elaborate what do you mean by "default is transient state"? I combine the loans with charged off and default status to calculate default rate.

Transient in the sense that it is not the final state.

The progression of LC loan statuses: Current --> Late 15-30 --> Late 30-120 --> Default --> Charged Off.

You can see the separation between Default and Charged Off statuses on the "Account Details" page https://www.lendingclub.com/account/lenderAccountDetail.action.

Lastly, it seems that LC includes Default loans in the "Outstanding Principal" numbers, which leads me to suspect that LC may still accrue interests on Default loans.

rawraw

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Re: Finally had my first defautó
« Reply #18 on: April 18, 2013, 06:34:01 PM »
This project's DTI is too high and the global DTI is too high.

Fred

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Re: Finally had my first defautó
« Reply #19 on: April 18, 2013, 08:08:40 PM »
This project's DTI is too high and the global DTI is too high.

Sounds like a CFO talking.  8)

GS

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Re: Finally had my first defautó
« Reply #20 on: April 20, 2013, 01:16:30 AM »
They made $3400/mo and their payment was $608.  That is 18% of their income.  I keep that ratio at less than 10%.

edward

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Re: Finally had my first defautó
« Reply #21 on: July 17, 2013, 09:49:01 PM »
Earlier in this thread, Fred said:
The progression of LC loan statuses: Current --> Late 15-30 --> Late 30-120 --> Default --> Charged Off.

Has anyone done any research on the percentages of loans that follow this specific pattern, versus those that move, say, directly from Current to Charged Off (as in filed bankruptcy)?

SeattleSun

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Re: Finally had my first defautó
« Reply #22 on: July 17, 2013, 11:06:07 PM »
... and it is FL.

Anybody else uses borrower's State as a risk factor?

If so, how do you define a risky state?  I am keen to know data/evidence, please do not share anecdotal support.


I have been looking at the unemployment rate by state as a guideline but will use data in this thread going forward.  I figured one of the reason to fail to pay your loan is you lost your job.  So to me the unemployment rate is an indication of how easy it would be to find a new job.  Following that logic I like lending to nurses as I know they can quit their job in the AM and have a new job in the PM.

I do shy away from lending into Nevada (NV) as 50% of the people who live in NV are actually in Clark County i.e. Las Vegas.  I just spent the better part of the last 7 years in Las Vegas and I can honestly say it is one sick place and I loved every minute of it.  But lend those guys money, no way.   lol

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« Last Edit: July 17, 2013, 11:11:14 PM by SeattleSun »

LonghornSF

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Re: Finally had my first defautó
« Reply #23 on: July 18, 2013, 01:19:46 AM »
A couple of things I notice that wouldn't pass my filters:

1) Debt / income > 100% - automatic disqualify

2) Amount requested < 50% of total debt - would never do such a loan if the stated purpose is for refinancing. To me this signifies a desperation loan - no intent to pay off the original debt just trying to keep their head above water.

3) credit card utilization > 95% - I've done a few of these but usually only at higher rates (E,F,G). Not worth the risk at 19% interest rate. In general I would pass regardless of the interest rate though.

4) DTI ratio > 30% - automatic disqualify


Also the income is pretty low, not below my cutoff but I'd be looking for a higher quality loan at that income level.

Fred

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Re: Finally had my first defautó
« Reply #24 on: July 18, 2013, 02:30:57 AM »
A couple of things I notice that wouldn't pass my filters:

1) Debt / income > 100% - automatic disqualify

2) Amount requested < 50% of total debt - would never do such a loan if the stated purpose is for refinancing. To me this signifies a desperation loan - no intent to pay off the original debt just trying to keep their head above water.

3) credit card utilization > 95% - I've done a few of these but usually only at higher rates (E,F,G). Not worth the risk at 19% interest rate. In general I would pass regardless of the interest rate though.

4) DTI ratio > 30% - automatic disqualify


Also the income is pretty low, not below my cutoff but I'd be looking for a higher quality loan at that income level.

What's the difference between "Debt / income" in 1) and "DTI ratio" in 4) ?

thezinfan

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Re: Finally had my first defautó
« Reply #25 on: July 18, 2013, 10:37:03 AM »
"What's the difference between "Debt / income" in 1) and "DTI ratio" in 4) ?"


I think he is multiplying the monthly income by 12 ( Total Income), then comparing the revolving debt balance number. DTI is (monthly debt payment)/(monthly income). The debt payment could be pretty low, since it could be minimum payments on credit cards.

LonghornSF

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Re: Finally had my first defautó
« Reply #26 on: July 18, 2013, 02:44:13 PM »
A couple of things I notice that wouldn't pass my filters:

1) Debt / income > 100% - automatic disqualify

2) Amount requested < 50% of total debt - would never do such a loan if the stated purpose is for refinancing. To me this signifies a desperation loan - no intent to pay off the original debt just trying to keep their head above water.

3) credit card utilization > 95% - I've done a few of these but usually only at higher rates (E,F,G). Not worth the risk at 19% interest rate. In general I would pass regardless of the interest rate though.

4) DTI ratio > 30% - automatic disqualify


Also the income is pretty low, not below my cutoff but I'd be looking for a higher quality loan at that income level.

What's the difference between "Debt / income" in 1) and "DTI ratio" in 4) ?

DTI is based upon payment due whereas debt to income is based upon the amount owed. DTI will always be lower than debt to income. Granted this is a confusing, but very important, distinction.

Fred

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Re: Finally had my first defautó
« Reply #27 on: July 19, 2013, 03:19:54 AM »
What's the difference between "Debt / income" in 1) and "DTI ratio" in 4) ?

DTI is based upon payment due whereas debt to income is based upon the amount owed. DTI will always be lower than debt to income. Granted this is a confusing, but very important, distinction.

I see.

Not sure if this is your intention or not, but if you  divide #4 by #1, you'd get essentially the aggregate interest rate of all debts.

pplinvestor

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Re: Finally had my first defautó
« Reply #28 on: July 19, 2013, 09:31:50 PM »
But when total # of loans is only 10 - 30, there is no statistical significance.  So you'll eliminate the top 3.  That's leave FL as #2 high charge-off (default) state.

slypete

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Re: Finally had my first defautó
« Reply #29 on: July 23, 2013, 10:26:26 PM »
I have a lot of questions while trying to understand what happened with this note. How can the borrower just simply walk away with $16k of our money? It's kind of infuriating.

Why would Lending Club write this off after only five months and no bankruptcy filing? What happens to the borrower's credit in this scenario?

Imagine for a moment that the borrower does the right thing and starts paying on this note again in a year or so, would the investors receive the payments?