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Author Topic: How much discount is typical

g
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How much discount is typical
OP: September 25, 2013, 11:00:00 PM
I finally have a note that is 30 days late and I am thinking about selling it on Folio.  It is a 36 month $25 B4 note with a 12.25% rate.  No payments have been made, and it has been referred to a collection service.  Does anyone have some general guidelines on how to price it?

https://www.lendingclub.com/account/loanDetail.action?loan_id=6177400

Thanks,

Allen
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l
  • Posts: 29
How much discount is typical
#1: September 25, 2013, 11:00:00 PM

Personally I wouldn't buy a note that has never made a payment.

That said, you might be able to sell it for 5-10, but I doubt you could get away with 15 or more unless the buyer completely ignores the fact that there were 0 payments.
Just my thoughts..
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c
  • Posts: 227
How much discount is typical
#3: September 25, 2013, 11:00:00 PM
I don't usually get many of these so I can't offer any advice about pricing it.  Except to say it's going to go for very cheap.  Notes with 0 payments are not ones that you want to be stuck with once they get to this point.  0-payment notes are treated differently by LC's software and it always hurts the seller.  At 30 days, it's almost too late to get out for anything but a horrible price.  You definitely want to sell it before it changes to 31+ day late status.  I would be surprised if you got even $10 for it but like I said I don't usually trade these so I could be way off.  New Jersey Guy may take it off your hands. :)
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B
  • Posts: 22
How much discount is typical
#4: September 25, 2013, 11:00:00 PM
Interest radar has an interesting feature that shows notes sold on folio the previous day.  He has it broken down by grade and status.  I'm amazed, but see 30-120 day late notes sell at a premium as well as a discount.
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R
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S
  • Posts: 25
How much discount is typical
#7: September 25, 2013, 11:00:00 PM
The fact that "...it has been referred to a collection service..." indicates to me that the loan has little value.  LC has information from or about the borrower that indicates their internal collection efforts will not be successful.  LC has dumped the loan on the external collection service.

I would not buy the loan at any price.  I have junk loans that have made 2 or 3 payments and then suddenly stopped paying.  LC almost immediately dumped them to the external collection service.  I have priced these at $3 and after 30 days they are still waiting on a folio buyer.

Hope you have better luck.   

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N
  • Posts: 98
How much discount is typical
#8: September 25, 2013, 11:00:00 PM
"New Jersey Guy may take it off your hands"

Nope, not me.  I always avoid notes with no payments regardless the price.  I've seen a rash of these notes lately.  Some even have the 'ol "Borrower promises to pay" log note, and I still won't buy them.

  I always fear that "None-and-Out" scenerio.  When somebody can't even make their first payment or two?  That's scarey.

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R
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F
  • Posts: 282
How much discount is typical
#10: September 26, 2013, 11:00:00 PM
I use this LC recovery rates as a guide (from https://www.lendingclub.com/info/statistics-performance.action):



As the footnote on the page says,  23% of outstanding principal in "Grace Period" status had been charged off when observed nine months later.

Therefore, basically I discount "Grace Period" notes by 23%, "Late16-30" by 49%, etc.  You might want to adjust for notes which have no payments yet.
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T
  • Posts: 6588
How much discount is typical
#11: September 26, 2013, 11:00:00 PM
^^ The LC recovery rates as published, even if gospel truth, should have little bearing on pricing for reasons other people have already mentioned in other threads.  In particular, this just means whether some cash will be extracted after the event, not that it will be brought current ever, and not that it ever gets paid off.
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J
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