A number of people asked us to add recommendations for secondary market notes because they can't buy on the primary market. We just launched the service today.
Basics:
All notes recommended must pass these criteria:
- Pass our model's qualifications (based upon info at note approval)
- Current on payments
- FICO score hasn't dropped more than 15 points from original FICO score
You can click a 'history' link to see full details on the note. This is always free.
Clicking 'invest' button has same pricing structure as primary market notes. It takes you to Foliofn with that note ready to add to your cart.
Full info and screenshots:
http://blog.peertopeerquant.com/2015/02/note-recommendations-for-lending-club.htmlThis is a new feature so please give us your feedback.
The model takes into account the premium/discount and fee?
The note is selected based upon the original credit data, status = "current", and FICO score not dropping too much since approved.
We do not take into account original interest rate or YTM in our recommendations. We show that info to users when the see our recommendations. Below is a screenshot.
Does that make sense now?
Yes. For NeverLate notes. That is a great way to look at it.
DEFINITELY CHECK RECENT FICO CHANGES THOUGH. We only compare most recent vs original. Sometimes FICO can decline a lot in short term but still stay above original.
Would recent FICO change be useful to you as a criteria?
Now that I understand, I still don't get why the model doesn't change to use current YTM instead of interest rate. Seems like the same logic would hold -- comparing how it is priced to its default probability to find notes that meet whatever hurdle rate you have set. But I may be missing something
Also, a bit of unsolicited advice. I somehow think this current offering may come back to haunt you. While it's noble you are making an effort to meet customer demands, if they don't acutely understand what these suggestions are and are not they may fault the entire model for being broken just because of user error. May be something to consider