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Has LC loan quality dropped?

Started by Peter, December 22, 2012, 11:00:00 PM

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investforfreedom

I don't know if my observation is correct.  It seems that the quality of LC loans has dropped lately.  I have noticed more loans with "Last Major Derogatory" coming on their pipeline than before.  And I have not been able to find loans that fit my criteria as quickly as I did in the past.  I was able to find at least 1 or 2 loans using the same criteria just a couple of months ago but now I have to go for days without being able to put any money to work.  (And it seems that there are more 60-month C loans coming on the platform as well.)

Can someone shed some light on this? 

TravelingPennies

This seems to confirm my observation: http://www.p2panalytics.com/december-18th-2012-is-lending-club-starting-to-run-out-of-riskier-notes/" class="bbc_link" target="_blank">http://www.p2panalytics.com/december-18th-2012-is-lending-club-starting-to-run-out-of-riskier-notes/

I continue to find A-B grade loans to be plentiful, but that is not the case with the other grades.

william

Yea I have noticed this for D-G loans. I don't invest in A-C loans so can't say anything about them but for D-G it is much harder to find loans that fit my filters.  November was fine it all started in December.

Lovinglifestyle

Could it be that more responsible people have learned that trying to borrow your way out of debt is a bad idea?

DanB

Actually the average interest rate paid on 3 year loans has gone down in the last few weeks (by around 1%) so would it not in fact be accurate to say that average LC loan "quality" has gone up?  Don't worry though, the lower grade loans will be back. After all we are talking about the American consumer.  https://forum.lendacademy.com/Smileys/default/smiley.gif" alt=":)" title="Smiley" class="smiley" />


Lovinglifestyle...........Maybe they're just taking a break from feeding us the BS about how they're taking out these 20-24% loans to "consolidate" or pay down their even "higher" interest loans. Yeah right, I believe that.  https://forum.lendacademy.com/Smileys/default/smiley.gif" alt=":)" title="Smiley" class="smiley" />


rawraw

If you track the average FICO on LC's website has been trending downward, although not by much.



faeriering

I've also been having more trouble finding notes that I like, though there seems to be plenty of notes listed overall.  I usally use my filters and then hand select for the loan amount being close to the indebted amount (this shows a better ROI with my filters, Ron I'm not necessarily saying that they will use the money to pay off the debt, only that there's a good correlation between this ratio being close to 1, and a loan having a good ROI).  I also like to make sure that the loan payment isn't more than 10% of their monthly income, but I have some flexibility on this if their DTI is lower, or if they have an absurdly high income for their geographic region.  And then I factor in what their delinquency history is like.  I used to be able to get more notes a day than I could invest in, now I find myself having to choose which notes I dislike the least which is making me a bit nervous. 

Did LC change how they were setting their interest rates recently? Or did they change who they were recruiting to be borrowers? or the good loans just getting picked up faster when they are released to the marketplace?






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