[jpildis]

The inventory of available loans is about 1/2 of normal.  Could this be due to LendingRobot being down? It's a bit scary if their customers are 1/2 of the market.

[dr.everett]

I'm back on Interest Radar now. My notes are being listed again- while not a lot, it represents about 10K notes listed. But yes, I notice the difference each time I'm manually purchasing. Only my general purchasing criteria is producing any notes to buy- my specifics for 36/60 are all striking out.

[fliphusker]

I have not paid much attention to the overall amount of loans on the FOLIO market, but was it at nearly 800K? When I was paying attention probably a couple of mounts ago, it was generally around 600-650K.
Sure we all know that what, 90% of the notes on FOLIO is probably incorrectly priced. (Is it higher?) So did it just take the people out who was setting every one of their loans at a markup at let's go with 5%?
I have not seen a drop in quality notes to buy via handpicking.
from: jpildis on July 22, 2017, 11:42:53 AM

[TravelingPennies]

I'll share my observations as a current (and possibly soon to be former) LR User:

I did list all of my notes in the 10% to 5% range- usually sold quite a few in the 7-8% average range. I was always surprised at how many sold like this. I think a lot of us on LR did this. They also had a fully automated strategy where you let them do all your buying and selling. I never heard enough about how well it worked to try it- I always thought the rules I tuned were better. And the amount of notes I sold on my own helped to somewhat offset the spate of bad quality loans recently- and my standards for purchase are very tight. The problem as I saw it was that the standards at issue/purchase were good, just that many of my notes deteriorated soon after that. That's ultimately why I migrated to the secondary market- I could buy notes past the 6-10 month default hot zone, get the YTM I wanted, and get notes that were good that others were dumping at a discount.

As for the secondary market- LR would purchase about $1200-1500 in notes a day using the criteria I described above. It did this like clockwork- any time money piled up there was an issue with LR, or in a very few cases, a drought in Folio.

Since I'm liquidating my taxable account, I'm using Interest Radar to sell my remaining notes at around 1.2% to sell them quickly without a loss. I've put my IRA notes up via IR at the same 7-8% range as before to sell what I can at a profit and reinvest it in additional notes. Eventually when I have time I'm going to focus on closing out the IRA and transferring it elsewhere. I'm anticipating doing this closer to the end of the year. Until then I don't mind the 15-30 minutes it takes to manually purchase. LCAC is wonderful for this and makes it easy to do. Would I like the 15-30 minutes a day back by using LR? Sure. Will it happen? Unsure- leaning towards no.

It would have been nice if Lending Robot was able to fix things for the secondary market, but I get the strong feeling that they aren't, don't yet know how, don't see it as a priority, etc. Take your pick. The utter silence on their part is speaking volumes.

In my field as a consultant, you have to do three things- communicate frequently, set expectations clearly, and update status. If they did these things I'd be willing to cut them slack and wait.

The 5th is coming- that's my LR go dark day. That allows me to close my account prior to next months billing. If I hear a satisfactory update I may change my mind. Their monthly fee for next month was just spent renewing my IR subscription, which ironically expired the day I turned it back on. 

If there are others with questions I'm happy to answer them.

[AnilG]

There has been encouraging changes in last couple of weeks on Folio. I quickly compared two Folio listings from today (7/22) and 14 days ago (7/08) both were captured about noon.

• The number of notes listings decline by 30.5% between 07/08 and 07/22 but decline in unique loans listed is only 4.9%. It indicates that while the amount of notes available has declined the variety of loans available hasn't declined much.
• The average markup declined from +3.90% on 07/08 to -0.34% on 07/22 indicating the newer listings are more reasonably priced to sell than previously.
  
• The markup at 75% of listings declined from +7.62% on 07/08 to +2.68% indicating majority of listings have lower markup than previously.
  
• The average Ask Price has declined from $31.29 on 07/08 to $29.27 on 07/22 while outstanding principal has almost stayed the same $29.90 on 07/08 to $29.00 on 07/22.
  
• Majority of decline has been in notes with Current (30.0%) and Issued (77.2%) status.

For a while, the Folio notes listings were getting too bloated with majority of listings had no reasonable chance of selling. Bloated listings create challenge for buyers who have to shift through lot more notes to find they want to buy. I am sure large amount of such listings were gumming up the systems at Folio and buying services.

from: fliphusker on July 22, 2017, 04:53:16 PM

[TravelingPennies]

Thanks Anil!
Has it been two weeks since LR quit their FOLIO?
Going to assume that 4.9% is well within statistical norms?
3.5% drop in markup is huge and shows that the amount of loans that were bloating the FOLIO market where not accurately priced to sell for most people looking to buy. I am also going to assume that the YTM average also moved up significantly overall. Not sure if you would have that number. I would assume that most of those notes trimmed out of the market had a YTM from 0-5.
Not sure how close you follow FOLIO and trends but has such a drop happened before? If so, what was the cause then if there was one?
from: AnilG on July 23, 2017, 12:48:27 AM

[TravelingPennies]

According to LR forum post, LR Folio quit date might have been 7/11, almost two weeks. The quick analysis I did was based on 7/08 and 7/22 Folio listings at noon (I corrected the dates in earlier post that previously mentioned 8/08 and 8/22).

Average YTM moved up from 15.88% on 7/08 to 18.21% on 7/22. I don't monitor Folio trend closely except time to time looking at PeerCube Folio Pricing Overview page at https://www.peercube.com/folionotes/index that lists a few stats for guidance to our users who manually price notes. I am getting back into analyzing Lending Club data again so you might see new posts sharing my findings.

from: fliphusker on July 23, 2017, 10:42:11 AM

[TravelingPennies]

I don't doubt the statistics but I buy about $2500 from folio each day and I have seen a significant lack of well priced loans. On a positive note, the lack of available loans has dramatically increased my sales. In fact, yesterday was record day of $15k of sales with healthy mark-ups.

from: AnilG on July 23, 2017, 06:53:14 PM

[TravelingPennies]

I will always find it baffling that people will pay a 5% markup on notes. I actually tossed all my notes on there at 5% markup and have sold a few. I never do that but do think I will start from now on doing it.
from: jpildis on July 25, 2017, 08:11:54 PM

[TravelingPennies]

Not to change the subject here, but how do you guys stay away from buying these loans on the secondary market? I know Dr. Everett had issues with it, did not know if others did too.

This loan actually does show up as never late.
https://www.lendingclub.com/foliofn/browseNotesLoanPerf.action?showfoliofn=true&loan_id=79033857&order_id=151904258&note_id=129371299

Not sure if you guys actually mind notes that have a changed payment date, but I dislike them. Able to weed them out?
https://www.lendingclub.com/foliofn/browseNotesLoanPerf.action?showfoliofn=true&loan_id=81406945&order_id=115132190&note_id=129975864

This last one is not as dramatic as the one I saw yesterday. Has the initial bounce from the loan and then the slow retreat back to where his FICO started. I am sure I am not the only one who dislikes those big FICO swings. Not still shows an up FICO.
https://www.lendingclub.com/foliofn/browseNotesLoanPerf.action?showfoliofn=true&loan_id=74654169&order_id=105731054&note_id=120141043

If an automated system could throw such loans out I would absolutely switch to it.

[TravelingPennies]

Able to weed out loans automatically with changed payment dates- no
Able to weed out loans automatically that go into grace, but never hit late status- no

When I was purchasing notes through LR- you could tell it to purchase only up or flat fico. That's what I used to do, and for the most part it worked OK. It still comes down to how much time do you want to spend doing things manually- the questions you asked above are why there are still so many people doing things manually. No system can check for these things.

No one has built the best "mousetrap" yet. Like you, if I saw/found it, I'd pay willingly for it. Now that I'm on the way out, not so much.

Side note- anyone get really messed up sale alerts from Folio tonight where the note amounts/totals were way off? Just about had a heart attack when it told me I'd sold a note worth 1100.00 for 25.00. Checked and it was not right. So far there have been about 30 of them.

[TravelingPennies]

So the Folio pool does still seem to be very low- 365K notes listed as of right now. And out of that very little that I'm interested in buying (mostly in the low teens). Right now I'm sitting on at least $5K of cash and can only buy about $500 in notes I want at any one time. Everything else is uninteresting. 

I'm listing my notes right now at about 5% markup and selling quite a few, adding to the cash that I can spend. I think when the time comes and I'm ready to liquidate my IRA, I'll probably have no problem selling the notes quickly if the number of available notes remains so low.