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Author Topic: Offering Hardship Plans for Borrowers and Protecting Returns for Investors

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Cynic in me says, this may benefit Lending Club more than lender or borrower. LC gets another tool to manage delinquency rate by spreading out candidate borrowers across longer time frame. Fred93 will get to claim "See delinquencies are not rising."  ;)

"Ah shucks! more than expected borrowers are not making payment this month, lets put them on hardship plan so that we can spread them across 3 months to prevent falling them through loan status funnel in this quarter."

Quote"> from: Osito on April 10, 2017, 09:44:10 PM
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They do not have to be current to get into the hardship program. They just can not be more than 30 days late.
As they will only be paying interest only, they will not be making double payments. Only be paying interest twice. Their loan basically gets extended by three months. 36 and 60-month loans now become 39 and 63-month loans.
I think what you are thinking in your scenario is how payment plans work. Where they have to pay the full amount at some point during those three months.
from: Osito on April 11, 2017, 11:38:31 AM
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Goldman's Marcus has always had a hardship feature of sorts. From their web site:

"The Payment Deferral Feature is a benefit for customers who consistently pay on time. After making 12 or more consecutive monthly payments, you can defer one payment as long as you have made all of your prior payments in full and on time. We will waive any interest incurred during the deferral, and extend your loan by one month (you will pay interest during this extra month). Your payments resume as usual the month after the deferral. If you miss a payment or pay late once, you lose access to the feature for the life of your loan."

Depending on interest rate, term, and number of payments made to date, deferring a single payment may result in more money in pocket for a hardship borrower than interest only payments for three months.
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After reading the discussions so far I look at it this way. On average I have about 150 notes a month totaling $4-5K a month go bad (31-60). Very few of them go back to current. (5-10 a month if I'm lucky..)

If their hardship program makes a difference, great. If it turns out to be lipstick or window dressing, not good.
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So one of my IGP notes is on a "Hardship Plan" now.

Based on the dates in the collection log, it looks like the note was already IGP before going on the Hardship Plan. Also, some of the data in the "Upcoming Payments" section seems inconsistent, now: the "Expected Final Payment" date didn't get adjusted out, and the "Remaining Payments" count (and probably amount, but I didn't do the math) has not been updated. Also interesting is that the 4/30 payment was missed, and the Hardship Plan payments don't start until 5/30 (followed by 6/29 and 7/28). The Hardship Plan payments look like they are supposed to be equivalent to one month's interest, but because of the missed payment, they don't cover the accrued interest.
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There should be new fields to account for the plan.
The number of payments will not change, as it is the principle that is getting moved down the road.
The dates you are seeing are correct the way I understand it. The missed payment is not a big deal it just also gets moved down the road. So for the next three months, they will only be paying interest, and not principle. Then their payments will return back to normal and the 3-4 payments will be tacked onto the end.
I was under the belief that there would be a bunch more new fields involved. If you click on the payment plan, does it show more fields?
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If that is in the perspective, I am going to then assume that 60-month notes are not eligible.
I was under the impression that there was going to be 15 new fields (or something like that) added with hardship plans. I do not buy primary market notes and have not seen any hardship notes listed on FOLIO, yet.
Earlier in the thread, there should be the LC page in regards to the fields and probably better explanation than what I am currently doing.
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We need DEFINITIONS for those fields.  If you talk with LC about any of this, please make that point.
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