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Default rate seems to be busted

Started by Peter, September 13, 2013, 11:00:00 PM

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cfb

I put two loans in my cart, an E and an F and the suggested default rate was 4.9%...hmmmm...

I also may have figured out why more than half of my notes don't fill.  It seems that the amount the borrower requests is a maximum amount and when the note fills, they ask the borrower how much (up to that amount) they REALLY want, and frequently the actual loan is lower than the 'shopped' amount.  My bet is the last orders that come in get canceled if the loan amount is less than the original requested amount.



core

It seems like it should be rather easy to check this hypothesis.  Just go back and check on the loan IDs for which you got funds returned.  If any of them are now active then you'll have your answer, along with the updated total loan amount.  I would certainly be interested in seeing one of these.

TravelingPennies

I'd have to dig to find that, but I'm fairly sure it said somewhere that the borrower may choose to take a reduced amount.  Its the only reason I can see as to why there are so many 35,000 loans.

If that isn't the reason, then we have a larger specter...why among the carefully curated 10% 'cream of the crop' are half the loans I select either being refused by LC or not being accepted by the borrower?

LC accepted them when they were bogus/fraudulent/etc
They applied for a loan and then decided they didn't want it.  I've never applied for a loan with LC, is it really that easy that its a throw-away action?
LC oversold the loan
The loan amount was subsequently reduced

Any other options?

The only one I don't dislike intensely is the last one, and I'm not thrilled with that one either.  It would mean that people hand picking loans like me will end up last in the queue most of the time.

The first two indicate flaws in the loan selection process that completely rules out the line of thinking that 'LC curates these well and we're seeing the cream of the crop so its safe to just buy with some basic filtering'.

If they're just overselling loans like airline seats, then half my hard work is going to waste.

Still very interested in the primary issue, that it gave me a default rate about half of what it should be.


TravelingPennies

Well then that leaves only that half the loans I'm picking (the cream of the alleged cream) are made by borrowers who aren't serious or have decision making issues, or they're incorrect/fraudulent.

Neither one particularly comforting.


Lloigor

Also, rate can change substantially based solely on loan amount, so if the loan amount changes the rate should change, and that can't happen once a note has been purchased.

NEW LOANS:   | 804.eth 2.500 Ξ | remoraid.eth 0.299 Ξ | remoraid.eth 0.299 Ξ | ALL