So, now that we can get the latest status and payment information for each of the notes we hold through the new API, it's no longer necessary to download the .CSV all the time to get the info. Yeah! Among other things (like calculating ROI), I want to get better aging info for past due accounts beyond "31 -120 days". Always thought that was BS, as it tells you nothing about the trends in your notes (like are you going to have a huge write-off next month, or is this amount more evenly distributed 30/60/90/120?
So, in order to break this down, I considered using "today - last payment date = days old". Well, that's only true if the borrower pays the full amount each month until they just stopped paying. If they fall 90 behind, then make a single payment, they're still 60 days behind when the payment was only 20 days ago. So, obviously that is wrong.
Then, I thought that I would determine the aging by amount expected to-date vs. amount paid, using the method:
1) determine "loan performance days" as TODAY - issue date of the loan
2) determine "loan performance months" as "loan performance days" / 30 (truncated to the lower integer)
3) multiply amortized monthly payment by # of loan performance months to get to "payments expected to date"
4) determine payment amount past due by "payments expected to date" - (loan performance months X monthly payment amount)
5) months behind = total past due / monthly payment amount
This seems to work quite well, until I came across a loan (#1539580) where the borrower fell behind, made a huge payment, and then has skipped the last two payments. Of course, he is past due because payments are due each month (you can't just pay ahead). However, LC shows him as 31-120 when my method, of course, has him 7 months ahead.
Bottom line is, will LC write this guy off if he makes no payments for 3 more months, or will they let him go as long as he is ahead of the amortization schedule?
Anybody know?
Since LendingClub uses a bank to do the origination, it probably complies to the retail classification guidelines of banks. In that, it will have things like the 90% payment or multiple payment rules. See if this makes it work:
https://www.fdic.gov/regulations/laws/rules/5000-1000.html
Yeah, that seems to be true. I finished implementing my two-phase aging methodology, and spot-checked against loan payment histories in LC. This method works regardless of whether the loan was (essentially) paid ahead, always late, late-then-made-current-and-now-again-late, etc. and gives a more accurate look on where your delinquencies are in the process. The worst that can happen here is if someone had paid a lot down earlier on, and then became late. The alternate method kicks in and shows him (say) 60 days late, and it will age to 120+ of course eventually. Then, if LC doesn't charge it off (as in the one you mention here), it will just stay in the 120+ category, which is still accurate with LC accounting, since they put the loan into the 31-120 category in the first place at a time when the amortization schedule would have considered it "current".
Note that I am only adjusting aging for the notes that have been thrown in the 31-120 category. The rest I leave alone with LC's designation.
This one is Prosper, not LC, but I have one where the borrower made a large payment back in Feb 14 and since that payment was made the loan has shown the principle balance as 6 cents and the next payment is 7 cents not due until May of 2016.
I've seen this kind of thing before. Here's what I think happens. (hypothetical) The guy set up a separate bank account for his LC loan payment. He was often a little late transferring the monthly payment into this account, so payments completed in grace period several times. The guy makes a big payment that he THINKS has paid off the loan, but actually the extra interest from those slightly late payments have added up and he needs to pay a little more. He gets pissed that LC continues to try to draw money, calls him, etc, so he closes the account and tells them to go to hell.