Out of curiosity, how would you react if LC did decide to start using some of their balance sheet to buy its own loans? Would this be a good or a bad thing? As for myself, I can't decide. Part of me wants LC to buy a portion of their own loans and embrace the whole hybrid approach (you know, the whole idea of "being willing to eat your own dog food"). Peter alluded to this in his latest post on Lend Academy, although he cited different reasons for his embrace of a hybrid model.
If LC bought some portion of their loans, it would signal to me that - at least in theory - they would pay more attention to underwriting, or at the very least they would adapt more when they noticed a deterioration of credit quality. It might also make me more of a willing partner in loans.
On the other hand, if LC did start buying loans en masse, either out of necessity or change in strategy, it could lead to cherry-picking or some other form preferential treatment for LC's notes. For this reason, were LC ever to begin buying notes, I would want them to do so in agnostic sort of way, say X% of all fractional loans.
I can't really decide if this is something that I would like to see as a retail investor, but it was just something I was thinking about and would be curious to hear from others.