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Author Topic: Shoud LC be allowed to modify loan conditions under extenuating circumstances?

  • Posts: 46
Last Thursday I had 7 of my 684 current loans go into grace. Two of those had made 27 payments, three had made 26 payments and two had made 21 payments. The two that had been in grace before Thursday had made 26 and 27 payments.

I have 8 loans 16-30 late all having made at least 24 payments.

I have 18 loans 31-120 late the majority of which have made at least 20 payments.

I have to believe that someone who has made so many payments and then falls behind has to have extenuating circumstances; loss of a job, unexpected medical payments, etc.

I'm not an expert at LC's rules but I don't believe I saw anything in their collection procedures that would allow them to modify loan conditions.

I would like to know what the consensus out there would be to allowing Lending Club’s collection department to modify the conditions of a loan for those people who have such extenuating circumstances and extend the loan payoff by let’s say another year or two. That would cut the loan payment down and hopefully provide a little relief to those borrowers.

I know that would mean locking up the investor’s funds for another year or two when they (you and I) did not intent to fund a 4-5 year loan but think about it…the majority of loans going 31-120 days late end up being charged off. What is the harm in seeing if some of those loans can be made whole just by the simple change of adding a year to the payback schedule? LC would not need to do that much more work…in fact their collection department might do less work because they might not have to call the borrower every few days for 4 months.

I don’t know where the cutoff should be as far as how many on time payments have been made but there should be some consideration given to those borrowers who have really tried but due to circumstances beyond their control have problems paying their monthly payment. Sure, nothing says the extended payback schedule would ensure all loans are paid back but you would still be ahead because you would get more payments than if the loan went charged off at the start.
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  • Posts: 182
Isn't that what Payment Plans are?

It's not perfect, see for example:
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I don't know if they do that, but I know they used to disclose something that suggested 36 month notes could extend out.  I always assumed this was due to payment plans.  But this was six years ago-ish, so I may be misremembering the disclosure and my impression of it.
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The borrowers are put on payment plan when they are having trouble making payments and allowed to catch up with late payments. AFAIK, there is no permanent reduction in monthly payment and extension of loan term after loan has been issued. Lenders have certain expectations about periodic cash flow and term length of the loans in their portfolio.  Any adjustment to an in-progress loan will be unfair to lenders.  Taking out a new longer term loan with lower monthly payments might be an option for such borrowers.
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  • Posts: 69
I had a Prosper loan have its term extended by three months. This was after several missed payments followed by regular monthly payments again for several months. But alas, right after the term was extended, they have not paid again.
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