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Messages - rj2

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Investors - LC / Best way to measure true return?
« on: August 07, 2017, 11:00:00 PM »

We all know that ANAR is pretty useless. What do people do instead.

I looked at my July statement, being half way through the year: $13003 account value, $814.77 in interest, $640.96 in charge-offs, $173.81 net return.

$173.81/$13003 = 1.34% or about 2.69% annualized. Weighted Average Return 16.5%.
Investors - LC / LC raises rates 10/2016 and updates loss forecast #s
« on: October 22, 2016, 11:00:00 PM »
I think what's driving this is fraud. The grifters have figured out how to get a loan from LC and they are binging.

Investors - LC / LC should offer interest on the cash account
« on: August 19, 2016, 11:00:00 PM »

I know, it's supposed to be peer-to-peer lending, not a bank. But why not? Why not turn the cash account into a high-interest savings account. Pay us something like 0.75% to 1% on our cash balances. I'm sure that LC can find something to do with the money, and when we use it to buy a note they see the cash transfer coming a few days in advance--so they could easily manage their investments.

Why would I want this? Here's why:

I"m continually debating whether to transfer another $10k to lending club in my IRA. I have had good returns on the $7k I have invested at LC now, and I'd like to add to my investment. BUT, I just can't see how I can get $10k invested in $25 notes in any reasonable amount of time given the paltry number of notes being listed.

So I don't transfer my money, even though LC is offering me a $100 bonus if I do. I just can't see how I would get my money invested in any reasonable amount of time.

So how does paying interest on cash balances help? Well, at least I'd be getting SOMETHING for my money while I wait to invest it.

If they don't want to pay cash balances on the cash account, they could offer a savings account on the side, and move cash in and out of it between the "checking" type main account balance. I don't know.
Investors - LC /
« on: August 15, 2016, 11:00:00 PM »
I would like to clarify how this works as well.

Here's what I believe and I'm hoping someone can confirm: If I list a note that is 31-120 days late with a steep discount, and then the borrower submits a payment to bring the note current again, my offer to sell that note will be removed from folio as soon as LC sees that payment processing.

Is that correct? I believe that this exists so that I don't wind up with a note that is now current, but steeply discounted as if it were 31+ days late. Obviously, those would immediately sell.

Can someone confirm that this is how the payment processing logic works, that it prevents notes from selling when they change status between current/late?
Investors - LC / Another thing to restore investor confidence
« on: May 19, 2016, 11:00:00 PM »

I think we are all familiar with the "straight rollers"who make at most a payment or two and then never pay another cent. There's a perception, likely a reality, that this is often fraud. Borrowers who never intended to pay, taking advantage of the lax collections efforts of LC.

What would restore my confidence?

Greater transparency around what is being done to crack down on this fraud. I'd like to hear that at least sometimes people are prosecuted. I'd like to know that some examples are made.

I get that is unprofitable to go after every fraudster, but it's ALSO unprofitable (for us) to let crooks think they can do it with impunity. There has to be a real chance of consequences.

In general I have doubts that LC collects as aggressively as if it were their own money being stolen. If it were their own money they'd seek that happy balance of writing most cases off but making a real example out of some.
Investors - LC / Expected chargeoff rates skyrocketing?
« on: May 05, 2016, 11:00:00 PM »

Lending Club certainly thinks so because if you use their Automated Investing tools, they have drastically reduced the expected returns. For the allocation that I use (10% B, 20% C, 30% D, and 40% E) they previously projected a 9% return based on historical charge off rates. Now they project 7.37% return for the same allocation because they project an increase in the number of charge-offs.

I posted about this on another thread where I noted I had seen a dramatic spike in late payments in the past few months, and a lot of members here chimed in to say that I must not be looking at statistically valid data, blah blah blah.

Well, while it's true that I didn't have a sample size large enough to be statistically valid (none of us do) it's evident now that something is happening.

Theories? I think that crooks have learned you can get a loan from LC and just not pay. I see an increasing number of "straight rollers" who make no or only a few payments and then just stop paying. My guess is that the only reason for the few payments they do make is that they are waiting for additional loans to go through with Prosper, perhaps other lenders, before walking off with the cash.
Investors - LC / How does Default status work?
« on: February 18, 2016, 12:00:00 AM »
"As a lender, the following is enough: Lending Club reports delinquent borrowers to credit bureaus every month."

Why is that enough? It takes what, seven years for bad debt to roll off a credit report? So if a fraudulent borrower hits up both LC and Prosper for, say, $70k, then just doesn't pay, they have effectively added $10k/yr to their income. Tax free.

Then they can do it again in seven years.

Doesn't seem like reporting is enough unless there is additional legal action being taken people will eventually come to see LC as a giant online ATM.

Rising interest rates never directly impact the returns of someone who holds a fixed income security to maturity. Where it will hurt is in the resale market where the purchase price of a loan will drop dramatically as interest rates rise. You will take a bath if you attempt to sell off your portfolio.

The other impact is lost opportunity -- as interest rates rise borrowers on the platform will start paying more. Someone who previously would have been offered a 5% loan will be offered a 7% loan, etc., and so new loans coming on the market will come in with higher rates. Money already locked up in existing loans won't be able to participate in the new higher rates, so you will miss the new higher opportunity by already being invested at the lower rate.

A third impact would be loan volumes. As rates rise you can expect fewer people to borrow and so you may see an overall decline in the number of people seeking loans. Though, that's hard to predict -- rising rates off the platform could push more people to seek debt consolidation. But in theory, overall, in the total market, there will be less borrowing.

General P2P Lending Discussion / Morality question - medical expenses
« on: June 13, 2015, 11:00:00 PM »

This is my first post -- I've just signed up with Lending Club and transferred one of my IRA's there. I think it's fantastic, and I have lurked through this forum as I've learned and gotten myself started. Thanks for all the useful information!

Wanted to kick off a debate on ethics on a particular topic, loans for medical expenses.

First, I want to say that I think P2P lending in general is a fantastic thing, and that overall I feel very good about participating, both in terms of it being a good way to diversify some of my investments into a new asset category, and secondly in terms of it being a valuable and excellent service. I generally feel happy that at some level I'm helping people sort out their lives - many people who move to get a debt consolidation loan are doing the right thing, taking their situation seriously, and working to improve their lives. From an ethical perspective I feel happy to be part of it, I see it as a big win-win.

Where I become a little troubled is when I see someone taking out a loan at a high interest rate to pay a medical expense. We aren't told who is behind these loans, we only see some statistics about their credit profile. But some of these stories must be heartbreaking: people in crisis, facing an illness they cannot afford to treat, seeking a loan in order to pay for treatment for themselves or for their children.

How do you feel about funding these sorts of loans, and what in your opinion is the most ethical position to take:

a) Pure business transaction, ignore the ethics - somebody will fund these may as well be me!

b) Always fund medical loans, be more permissive - lend a hand!

c) Never fund medical loans, exclude them with filters - don't take advantage of people!

d) ?

Currently I have taken the position of always funding medical loans. Since I have tended to invest in higher yield / higher risk loans, this means I have gone back into the 'A' and 'B' category and funded some medical loans that I otherwise wouldn't have. However, my wife said I am a "blood sucker" and  "vampire" for taking advantage of people by lending to medical loans in the 'F' and 'G' categories with very high interest rates.

What are your thoughts?

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