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Author Topic: Winding down on Lending Club

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Winding down on Lending Club
OP: February 26, 2020, 12:00:00 AM
I've decided to most likely completely wind down my Lending Club accounts.  I've been doing so on my taxable account for a couple of years now.  But today I think I've decided to finally wind down my ROTH IRA as well.  I had been using NSR's managed investing to keep that account going, but now it seems to be having trouble keeping my money invested.  Lately it's been investing $50-100 per note and still cash has been piling up.  Now I see the news of LC acquiring Radius Bank and it seems that the whole retail aspect of LC is fading away.

My IRA is with STRATA.  I see that LC now has a new preferred custodian in IRA Services Trust Company.  That custodian seems to have lower fees.  Does anyone know if LC can simply facilitate a change in custodians?  I've written them to ask.  Not sure if it would be worth doing....I'll need to compare transfer out fees, etc. more closely.  But STRATA will have a $100/year fee once I drop below $10,000 in notes and it appears ISTC's fee is only $40 per year and only assessed if the balance drops below $5500. 

I'm going to be evaluating a few different ways to wind down, since there are fees for withdrawls.  Would be interested in any feedback on pros/cons of the following?

A) Just let account wind down on it's own.  Let cash build up and do periodic (yearly?) transfers of cash to my other ROTH account?

B) Try to sell notes on secondary market to get a lot of cash out now.  I'm thinking to sell whatever I can above or at par value.  I have zero experience selling notes on the secondary market and would appreciate any pointers on best way to do.  Manual?  Automated?  Who has a good automated selling tool recommendation?  Then transfer a bunch of cash out now and let the rest wind down slowly.

C) Keep aggressively lowering prices below par and try to completely liquidate and just get out ASAP.  Would take losses, but avoid aggravation of waiting around and fees for multiple cash transfers and yearly custodial fees.

Or anyone have any other strategy recommendations?

Thanks for any and all advice.  It was a good run with LC, but just doesn't seem to be worth it any more.
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Winding down on Lending Club
#1: February 26, 2020, 12:00:00 AM
I chose "C" when I did it in 2018.  Manually was not hard.  For 2019 taxes, the $8 in recoveries took me an hour to do right on TaxAct.  For a do-over, I'd rather have let LC keep it!
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Winding down on Lending Club
#2: February 26, 2020, 12:00:00 AM
I went with B first and when that completed went with C for the remaining notes. I feel like I got rid of notes in as quick and efficient fashion as I could without taking unnecessary losses.
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Winding down on Lending Club
#3: February 27, 2020, 12:00:00 AM
When you get down to $10,000 value remaining and approaching your renewal date, contact LC and request that they continue to cover the annual $100 fee.  Explain that you are winding the account down.  They're VERY familiar with people doing this (evacuation of the retail side).  They'll gladly cover it.  Took me two waivers on my one SEP IRA to accomplish it.

B.  I just finished winding down my $16,000 SEP IRA a month ago.  Did a direct trustee-to-trustee transfer of $15,000 cash awhile back at a fee of $25.  Ran into issues liquidating my last 30 some odd notes due to platform issues.  Finally sold those off and did a rollover of the remaining $1,000 of cash at a fee of $50.  (Total costs of $75 vs the $250 indicated on their site.)

Leaving only paid off and charged off notes.  Working now on getting those transferred over to one of my taxable accounts.  Big issue with that now is they no longer support linked accounts under one login/email.  So now they're working on separating my four taxable accounts by breaking the link.

Just finished winding my wife's Traditional IRA with one annual fee waiver as well.
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Winding down on Lending Club
#6: March 04, 2020, 12:00:00 AM
You don't have to wait 3-5yr to get majority of your money back.  Because LC loans are amortizing, each payment contains a portion of principal.  Depending on average age of your loans, you could get cash quicker.  I did an experiment on one of my accounts; in one year, I wind down 2/3 of my portfolio value.  You can use LC API to withdraw money daily.
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Winding down on Lending Club
#7: March 15, 2020, 11:00:00 PM
Didn't know LC had a new preferred custodian. I wonder if they would cover the fees to transfer to IRA Services Trust Company from STRATA. It seems like they'd still pay less fees in the long run.
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