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Finally had my first defaut—

Started by Peter, July 22, 2013, 11:00:00 PM

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gmaxwell

8 months in and I've finally had my first default,

https://www.lendingclub.com/foliofn/loanPerf.action?loan_id=1593902&order_id=3468742&note_id=14464818" class="bbc_link" target="_blank">https://www.lendingclub.com/foliofn/loanPerf.action?loan_id=1593902&order_id=3468742&note_id=14464818

Beyond the high revolving utilization are there any obvious red-flags there that I was missing?

I don't think I would have made that loan now simply because in later stats I ran it looked like CC consolidation loans where the loan amount was so off the the reported revolving did less well.  But I always try to learn more...

brycemason

Some defaults are just a random process. You're going to get a few.

TravelingPennies

it does say processing $.92 on 4/15/13 thats odd....

TravelingPennies

The monthly payment is quite high compared to the salary, especially when you consider that after using the $16k to pay down debt, he'll still have another ~$20k worth of debt to make payments on. He could well be owing more than half his take home pay in debt payments, which is going to be unsustainable for most people. That is a pretty huge red flag to me.

High DTI and revolving line utilization, along with the low FICO, are also not a good sign.



New Jersey Guy

"8 months in and I've finally had my first default,"

Here's my first clue:

Revolving Credit Balance    $35,937.00
Revolving Line Utilization    95.80%

And I got to agree with Fred and Sarah.  He was carrying way too much debt vs. income when you consider other things like mortgage and day-to-day cost of living.

lender_john


There are a few problems with the loan that would keep me from investing, but I wouldn't have expected only one payment. Sounds like someone may have tried to game the system or there was some extraordinary event..

Two inquiries, high payment relative to income, loan doesn't cover half the revolving debt, high DTI and it is FL.


PennySaved

This loan would not have made my revised filters.  DTI=30.64%  I try to loan only to DTI < or = 20%
Inquiries in last six months=2.  I try and keep inquiries to 0, learned this from Peter's advice.  Monthly income= $3453 per month.  I loan only  for monthly income> $5000/month   Revolving credit balance= $35,937.  I avoid loans with revolving credit balance > $30,000 even if they have high income.






TravelingPennies

Thanks Randawl & AnilG,

This question intrigues me quite a bit, so I decided to use LC loanstats data to see it myself.

A table showing charged-off rates by states is attached.

It seems like NE is now (mid-April 2013) the worst offending state: 3 out 11 (27%) loans from NE are charged off.

The top 10 worst charged-off states are highlighted; FL is on the 5th.  WY is the best.

I didn't use Default status, since default is a transient state & since default rates are universally smaller than those of charged-off.

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