Title: Has LC loan quality dropped?
Post by: investforfreedom on December 21, 2012, 11:00:00 PM
Post by: investforfreedom on December 21, 2012, 11:00:00 PM
I don't know if my observation is correct. It seems that the quality of LC loans has dropped lately. I have noticed more loans with "Last Major Derogatory" coming on their pipeline than before. And I have not been able to find loans that fit my criteria as quickly as I did in the past. I was able to find at least 1 or 2 loans using the same criteria just a couple of months ago but now I have to go for days without being able to put any money to work. (And it seems that there are more 60-month C loans coming on the platform as well.)
Can someone shed some light on this?
Can someone shed some light on this?
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
This seems to confirm my observation: http://www.p2panalytics.com/december-18th-2012-is-lending-club-starting-to-run-out-of-riskier-notes/
I continue to find A-B grade loans to be plentiful, but that is not the case with the other grades.
I continue to find A-B grade loans to be plentiful, but that is not the case with the other grades.
Title: Has LC loan quality dropped?
Post by: william on December 31, 1969, 06:00:00 PM
Post by: william on December 31, 1969, 06:00:00 PM
Yea I have noticed this for D-G loans. I don't invest in A-C loans so can't say anything about them but for D-G it is much harder to find loans that fit my filters. November was fine it all started in December.
Title: Has LC loan quality dropped?
Post by: Lovinglifestyle on December 31, 1969, 06:00:00 PM
Post by: Lovinglifestyle on December 31, 1969, 06:00:00 PM
Could it be that more responsible people have learned that trying to borrow your way out of debt is a bad idea?
Title: Has LC loan quality dropped?
Post by: DanB on December 31, 1969, 06:00:00 PM
Post by: DanB on December 31, 1969, 06:00:00 PM
Actually the average interest rate paid on 3 year loans has gone down in the last few weeks (by around 1%) so would it not in fact be accurate to say that average LC loan "quality" has gone up? Don't worry though, the lower grade loans will be back. After all we are talking about the American consumer. 
Lovinglifestyle...........Maybe they're just taking a break from feeding us the BS about how they're taking out these 20-24% loans to "consolidate" or pay down their even "higher" interest loans. Yeah right, I believe that.
Lovinglifestyle...........Maybe they're just taking a break from feeding us the BS about how they're taking out these 20-24% loans to "consolidate" or pay down their even "higher" interest loans. Yeah right, I believe that.
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: rawraw on December 31, 1969, 06:00:00 PM
Post by: rawraw on December 31, 1969, 06:00:00 PM
If you track the average FICO on LC's website has been trending downward, although not by much.
Title: Has LC loan quality dropped?
Post by: yojoakak on December 31, 1969, 06:00:00 PM
Post by: yojoakak on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: viking on December 31, 1969, 06:00:00 PM
Post by: viking on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: faeriering on December 31, 1969, 06:00:00 PM
Post by: faeriering on December 31, 1969, 06:00:00 PM
I've also been having more trouble finding notes that I like, though there seems to be plenty of notes listed overall. I usally use my filters and then hand select for the loan amount being close to the indebted amount (this shows a better ROI with my filters, Ron I'm not necessarily saying that they will use the money to pay off the debt, only that there's a good correlation between this ratio being close to 1, and a loan having a good ROI). I also like to make sure that the loan payment isn't more than 10% of their monthly income, but I have some flexibility on this if their DTI is lower, or if they have an absurdly high income for their geographic region. And then I factor in what their delinquency history is like. I used to be able to get more notes a day than I could invest in, now I find myself having to choose which notes I dislike the least which is making me a bit nervous.
Did LC change how they were setting their interest rates recently? Or did they change who they were recruiting to be borrowers? or the good loans just getting picked up faster when they are released to the marketplace?
Did LC change how they were setting their interest rates recently? Or did they change who they were recruiting to be borrowers? or the good loans just getting picked up faster when they are released to the marketplace?
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
I'd have to look, as the site has changed lately. But this blog post talks about it: http://www.nickelsteamroller.com/blog/2012/02/featured-filter-revolving-credit-balance/
Title: Has LC loan quality dropped?
Post by: viking on December 22, 2012, 11:00:00 PM
Post by: viking on December 22, 2012, 11:00:00 PM
Title: Has LC loan quality dropped?
Post by: rawraw on December 31, 1969, 06:00:00 PM
Post by: rawraw on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Quote
Title: Has LC loan quality dropped?
Post by: AmCap on December 31, 1969, 06:00:00 PM
Post by: AmCap on December 31, 1969, 06:00:00 PM
You all need / deserve a strong glass of egg nog :-)
Title: Has LC loan quality dropped?
Post by: brycemason on December 31, 1969, 06:00:00 PM
Post by: brycemason on December 31, 1969, 06:00:00 PM
I agree on the egg-nog bit.
It's hard to have a clear discussion on the web, as the way one defines the outcomes, makes their data set, and conducts their method has much to do with the results. Often people don't lay that out clearly enough to have a fruitful discussion, or readers gloss over key words that have important meaning.
We should have an in-person conference or workshop! Then we could dig in and have more time to learn from each other.
It's hard to have a clear discussion on the web, as the way one defines the outcomes, makes their data set, and conducts their method has much to do with the results. Often people don't lay that out clearly enough to have a fruitful discussion, or readers gloss over key words that have important meaning.
We should have an in-person conference or workshop! Then we could dig in and have more time to learn from each other.
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: Lovinglifestyle on December 31, 1969, 06:00:00 PM
Post by: Lovinglifestyle on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: investforfreedom on December 31, 1969, 06:00:00 PM
Post by: investforfreedom on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Title: Has LC loan quality dropped?
Post by: faeriering on December 31, 1969, 06:00:00 PM
Post by: faeriering on December 31, 1969, 06:00:00 PM
@ rawraw & viking, sorry for causing such a stir.
I'm still using lendstats to do much of my analysis because I've been lazy and haven't wanted to build a spreadsheet and pull out my stats book. So I'm probably making choices a little less off of analytical results (ie I'm not doing a t-test or the like to see if the change that I'm seeing is just noise in the data or a real measureable difference). Many of my loans are debt consolidation, but not all. I do try to shoot for a ratio of .8-1.2, I tend to just do the math in my head instead of running it through a spreadsheet when I'm evaluating the loans for this ratio. Lendstats does have some data on this ratio and there is a bit of a difference in ROI from the loans that are close to one and those that are further off, but that is with the rest of my filters in place.
Subjectively, I know Ken L really liked loans that were close to 1 on the ratio of Loan/revolving debt as long as the fit the rest of his loan criteria as well. One of the challenges I have to this, is that not all the debt shows up in revolving debt. If the person has several lines of equity against their home, these wouldn't show up here . . . of course their interest rate on those loans should be <6% so why they would want to consolidate to a higher rate . . . doesn't make much sense to me, but I wouldn't have gotten into the situation that a lot of these borrowers are in anyways, at least I hope I don't.
I'm still using lendstats to do much of my analysis because I've been lazy and haven't wanted to build a spreadsheet and pull out my stats book. So I'm probably making choices a little less off of analytical results (ie I'm not doing a t-test or the like to see if the change that I'm seeing is just noise in the data or a real measureable difference). Many of my loans are debt consolidation, but not all. I do try to shoot for a ratio of .8-1.2, I tend to just do the math in my head instead of running it through a spreadsheet when I'm evaluating the loans for this ratio. Lendstats does have some data on this ratio and there is a bit of a difference in ROI from the loans that are close to one and those that are further off, but that is with the rest of my filters in place.
Subjectively, I know Ken L really liked loans that were close to 1 on the ratio of Loan/revolving debt as long as the fit the rest of his loan criteria as well. One of the challenges I have to this, is that not all the debt shows up in revolving debt. If the person has several lines of equity against their home, these wouldn't show up here . . . of course their interest rate on those loans should be <6% so why they would want to consolidate to a higher rate . . . doesn't make much sense to me, but I wouldn't have gotten into the situation that a lot of these borrowers are in anyways, at least I hope I don't.
Title: Has LC loan quality dropped?
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM
Post by: TravelingPennies on December 31, 1969, 06:00:00 PM