Author Topic: Finally had my first defautó  (Read 13156 times)

gmaxwell

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Finally had my first defautó
« on: April 17, 2013, 11:35:50 PM »
8 months in and I've finally had my first default,

https://www.lendingclub.com/foliofn/loanPerf.action?loan_id=1593902&order_id=3468742&note_id=14464818

Beyond the high revolving utilization are there any obvious red-flags there that I was missing?

I don't think I would have made that loan now simply because in later stats I ran it looked like CC consolidation loans where the loan amount was so off the the reported revolving did less well.  But I always try to learn more...

brycemason

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Re: Finally had my first defautó
« Reply #1 on: April 18, 2013, 12:27:13 AM »
Some defaults are just a random process. You're going to get a few.

Show Me The $

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Re: Finally had my first defautó
« Reply #2 on: April 18, 2013, 12:39:43 AM »
it does say processing $.92 on 4/15/13 thats odd....

SarahV

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Re: Finally had my first defautó
« Reply #3 on: April 18, 2013, 12:44:31 AM »
The monthly payment is quite high compared to the salary, especially when you consider that after using the $16k to pay down debt, he'll still have another ~$20k worth of debt to make payments on. He could well be owing more than half his take home pay in debt payments, which is going to be unsustainable for most people. That is a pretty huge red flag to me.

High DTI and revolving line utilization, along with the low FICO, are also not a good sign.

Fred

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Re: Finally had my first defautó
« Reply #4 on: April 18, 2013, 01:40:51 AM »
Beyond the high revolving utilization are there any obvious red-flags there that I was missing?

I usually do not invest in notes where AmountRequested/MonthlyIncome > 3.

Fred

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Re: Finally had my first defautó
« Reply #5 on: April 18, 2013, 01:47:02 AM »
it does say processing $.92 on 4/15/13 thats odd....

Yes, it seems there is an inkling of hope on this loan.  :)

Otherwise, having only made one payment, this borrower might have tried to game the system ....   >:(

New Jersey Guy

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Re: Finally had my first defautó
« Reply #6 on: April 18, 2013, 08:14:07 AM »
"8 months in and I've finally had my first default,"

Here's my first clue:

Revolving Credit Balance    $35,937.00
Revolving Line Utilization    95.80%

And I got to agree with Fred and Sarah.  He was carrying way too much debt vs. income when you consider other things like mortgage and day-to-day cost of living.
Return over deposits:   66.82%
IRR:   86.54%
As of April 30, 2014

lender_john

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Re: Finally had my first defautó
« Reply #7 on: April 18, 2013, 10:37:22 AM »

There are a few problems with the loan that would keep me from investing, but I wouldn't have expected only one payment. Sounds like someone may have tried to game the system or there was some extraordinary event..

Two inquiries, high payment relative to income, loan doesn't cover half the revolving debt, high DTI and it is FL.


PennySaved

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Re: Finally had my first defautó
« Reply #8 on: April 18, 2013, 10:49:56 AM »
This loan would not have made my revised filters.  DTI=30.64%  I try to loan only to DTI < or = 20%
Inquiries in last six months=2.  I try and keep inquiries to 0, learned this from Peter's advice.  Monthly income= $3453 per month.  I loan only  for monthly income> $5000/month   Revolving credit balance= $35,937.  I avoid loans with revolving credit balance > $30,000 even if they have high income.

Fred

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Re: Finally had my first defautó
« Reply #9 on: April 18, 2013, 11:32:29 AM »
... 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.

Laslow

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Re: Finally had my first defautó
« Reply #10 on: April 18, 2013, 11:57:39 AM »
... 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.

Search the forum and you'll find a post with a historical lookback on default rates per state. I don't personally use it as a filter.

Fred

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Re: Finally had my first defautó
« Reply #11 on: April 18, 2013, 12:12:25 PM »
Search the forum and you'll find a post with a historical lookback on default rates per state. I don't personally use it as a filter.

If you are referring to this link (http://www.lendacademy.com/forum/index.php?topic=509.msg1483#msg1483), this only provides analysis based on each investor's notes.csv -- not market-based.

Or, perhaps I am missing something else?

Randawl

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Re: Finally had my first defautó
« Reply #12 on: April 18, 2013, 01:51:55 PM »
Search the forum and you'll find a post with a historical lookback on default rates per state. I don't personally use it as a filter.

If you are referring to this link (http://www.lendacademy.com/forum/index.php?topic=509.msg1483#msg1483), this only provides analysis based on each investor's notes.csv -- not market-based.

Or, perhaps I am missing something else?

I believe it was something Anil posted.  He showed us some excellent graphs of the data.  IIRC, it was in a thread with some posters thinking CA was the state with the highest % defaults but his graphs of the data showed that it is NV and UT.

AnilG

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Re: Finally had my first defautó
« Reply #13 on: April 18, 2013, 02:30:29 PM »
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 covered default rate by states based on historical data several times on my blog http://andirog.blogspot.com/search?q=state. Also, take a look at forum thread on state at http://www.lendacademy.com/forum/index.php?topic=733.0.

Based on PeerCube historical performance review, NV currently has 4.61% default rate with negative average ROI.
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Fred

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Re: Finally had my first defautó
« Reply #14 on: April 18, 2013, 03:11:58 PM »
Thanks Randawl & AnilG,

This question intrigues me quite a bit, so I decided to use LC loanstats data to see it myself.

A table showing charged-off rates by states is attached.

It seems like NE is now (mid-April 2013) the worst offending state: 3 out 11 (27%) loans from NE are charged off.

The top 10 worst charged-off states are highlighted; FL is on the 5th.  WY is the best.

I didn't use Default status, since default is a transient state & since default rates are universally smaller than those of charged-off.

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