Author Topic: Lending Club - Time to panic?  (Read 37232 times)

Capyy

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Re: Lending Club - Time to panic?
« Reply #100 on: January 02, 2017, 10:45:36 AM »
I've been investing in lending club loans for a couple years now. The last 6 months my returns have taken a serious turn downwards. I have a high risk tolerance, so I was buying mostly C-D loans. And had been around 12% for the first 1.5 years (usually returns are high early, then trickle down as people default, first 6 months I was at 14%+). But I've had so many defaults the last 6 months I'm down to 8.5%, while still pumping in more dollars.

My filter is based on historical data and I played with the filter such that returns over the previous 3 years (prior to my investing) had been 11-13% (can't remember exact number).

It's concerning and I wonder if it might say something about the economy as a whole, or possibly a subset of the population my filter is capturing.

Either way, I've turned off automated investing and will re-asses the filter and possibly p2p lending altogether. Hopefully the trend doesn't continue, I can live with 8.5%.

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Re: Lending Club - Time to panic?
« Reply #101 on: January 02, 2017, 10:49:38 AM »
I'm happy I hear I'm not the only one. My startegy over the past 8 months or so was to buy solely off the secondary market. Returns were hovering at 14% and have dropped to about 10-11%. Thankfully I only buy at a 10-30% discount, so I've stayed positive. Hopefully this clears up soon and continues trending up.
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Capyy

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Re: Lending Club - Time to panic?
« Reply #102 on: January 02, 2017, 10:57:28 AM »
This is the first I've actually looked into it since I'm a huge fan of setting up an automated strategy then ignoring it for a while. But doing some googling now and came across this blog dedicated to peer to peer lending, and a guy who posts his quarterly returns:

http://www.lendacademy.com/my-returns-at-lending-club-and-prosper/

You can see his returns taking the same drop a couple people here have mentioned. He wrote this in his latest update:

"I am beginning to wonder when the decline will stop. I thought it would have stabilized by now but in Q3 my overall returns saw another substantial decline. I think it is safe to say that Q3 was my worst quarter ever when it comes to defaults at Lending Club. I have been focused on the higher risk end of the spectrum and those loans with vintages in 2014 and particularly 2015 continue to perform worse than previous years. Both Lending Club and Prosper have increased interest rates several times this year as well as tightened their underwriting and that will help going forward. But because these are three and five year loans I am investing in I won’t be seeing the benefit in my returns here for quite some time."

"This past quarter saw another decrease in my overall trailing twelve-month (TTM) return from 8.72% to 8.21%. It has now been six quarters in a row where my returns have declined by approximately 0.5%. Just two years ago my TTM return was at 11.28%. I have been hearing from many other investors who have been experiencing similar drops in returns so I know I am not alone. "

I'm not sure what to think of it yet, the note that loans in the last couple years have defaulted at a higher rate than the prior years suggests there could be some selection bias. Perhaps lending club is doing advertising and or getting more exposure to the wrong people (or the opposite for prior years).

Stache-O-Lantern

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Re: Lending Club - Time to panic?
« Reply #103 on: January 02, 2017, 01:13:06 PM »
I wanted to bump this thread and see what others are experiencing in their total return/lifetime return:

My "Adjusted Annualized Net Return" is now running 5.22%.   If I don't adjust for doubtful loans, its 7.06%.   I've been pretty vanilla on this, automated investing with minimal filters.  I probably have a few more 36 month loans in it compared to the average investor.

LC reports my "Adjusted Annualized Net Return" as about 12.8%.  I calculate it in Excel with XIRR as about 12.6%.

I had more defaults this year than earlier too, however that may be because over the past year I have bought the great majority of my notes on the secondary market.  I spend time hand-picking notes, but enjoy it.

Icecreamarsenal

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Re: Lending Club - Time to panic?
« Reply #104 on: January 02, 2017, 02:01:55 PM »
My major problem with Lending club is how illiquid it is.  I didn't panic, per se, when the shady dealings at the company were exposed, but I decided to pull out my money.  Alternative investments are a dime a dozen.
It's going to take me multiple years to take out my rather small 10k investment.  The returns look good, but how useful are they, when you can't access money you need?  To me, it's kind of like using home equity as part of your mustachian net worth.  Technically, it does count as part of your net worth.  But it's not accessible, so not part of the formula for my mustachian net worth.

AM43

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Re: Lending Club - Time to panic?
« Reply #105 on: January 03, 2017, 12:29:09 PM »
I have been investing with LC since 2009 and I have seen my share of defaults.
My returns on average for the past 4 years or so have been around 8.5% or 7.5% adjusted.
Like others I am not happy about defaults, but I am happy with my 8.5% returns.
No mater what economy is doing, defaults are always going to happen, some years more and some less.
If you as investor is not Ok with defaults, this product is not for you and one should stick with other investment products.
At the end of a day I don't know any other products where I can earn 7%-8% besides stock market and we all know well that it also comes with major risks.


Fudge102

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Re: Lending Club - Time to panic?
« Reply #106 on: January 03, 2017, 01:44:20 PM »
7-8% is relative.  I just started back in February with LC.  While mine was starting rather high as foretold, I too have run into the issue of the past few months.  I'm not sure if it's tied into the news of LC or what, by my rates are down to barely 4%.  The past two months have actually seen a decrease in value.  I have a feeling that the number of defaults will only increase from hear.  Perhaps we are seeing the results of the bad press?  The people who would normally use the service didn't, and the higher default individuals just didn't care?  The question right now is, is it worth continuing?   Even MMM has paused his automated investments...

Capyy

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Re: Lending Club - Time to panic?
« Reply #107 on: January 03, 2017, 05:22:24 PM »
7-8% is relative.  I just started back in February with LC.  While mine was starting rather high as foretold, I too have run into the issue of the past few months.  I'm not sure if it's tied into the news of LC or what, by my rates are down to barely 4%.  The past two months have actually seen a decrease in value.  I have a feeling that the number of defaults will only increase from hear.  Perhaps we are seeing the results of the bad press?  The people who would normally use the service didn't, and the higher default individuals just didn't care?  The question right now is, is it worth continuing?   Even MMM has paused his automated investments...

Sorry, I'm hew here - where did you read MMM paused his automated investments?

I cut my automated investing in half, and am going to monitor more frequently. If there are still issues in 6 months I'll probably stop altogether.

Glaeweth

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Re: Lending Club - Time to panic?
« Reply #108 on: January 04, 2017, 01:13:37 AM »
I am also quite concerned by the huge drop in returns over the last year.

I have a highly diversified porftolio (thousands of notes) with Weighted Average Interest Rate of about 20% (mostly high yield with relatively simple investment criteria), and now seeing a ANAR of 4.6%. I should have logged the previously reported values, but it has brutally fallen to this level over 2016 (before the decrease was more gradual as expected). Something is going wrong in terms of default rate and they are not communicating anything about it.

Now, the worse thing is that if I understand correctly, ANAR refers to returns since inception, not just recent returns. Which means recent returns could well be into negative territory... ANAR also doesn't try to estimate a discount factor to "current" notes in the account, though some of them will obviously default as well. This can delay what would be appropriate reactions to a sudden increase in default such as the one we are seeing.
 
LC reports the ANAR as being in the median for this kind of portfolio (duration about 19-20 months), so this is not just bad luck, other investors must be experimenting the same thing. The same automated investment allocation expected return (computed by LC) has fallen from about 10% to 7% and now up to 8%... It looks like they have silently updated them.

I have paused automated investing while I review how the performance evolves. Transparency and trust is paramount, so I hope this was just a temporary drop but that the trend reverses.
« Last Edit: January 04, 2017, 01:19:30 AM by Glaeweth »

chasesfish

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Re: Lending Club - Time to panic?
« Reply #109 on: January 04, 2017, 04:56:55 AM »
I'm glad I could re-open this discussion.  I've been with them since 2011 and have around $20,000 tied up with them.  I made one large deposit and have been drawing out funds, so the portfolio is flat in principal balance in 2016.

That being said, total returns have fallen to 5.06% and in November and December chargeoffs exceeded interest/recoveries.

I really think the institutions that are happy with 6% returns are driving out the underwriting quality.  Additionally, access to consumer credit has gotten a lot easier over the past five years, so people who borrowed from lending club now have access to more credit and use it.
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Fudge102

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Re: Lending Club - Time to panic?
« Reply #110 on: January 04, 2017, 06:25:12 PM »
7-8% is relative.  I just started back in February with LC.  While mine was starting rather high as foretold, I too have run into the issue of the past few months.  I'm not sure if it's tied into the news of LC or what, by my rates are down to barely 4%.  The past two months have actually seen a decrease in value.  I have a feeling that the number of defaults will only increase from hear.  Perhaps we are seeing the results of the bad press?  The people who would normally use the service didn't, and the higher default individuals just didn't care?  The question right now is, is it worth continuing?   Even MMM has paused his automated investments...

Sorry, I'm hew here - where did you read MMM paused his automated investments?

I cut my automated investing in half, and am going to monitor more frequently. If there are still issues in 6 months I'll probably stop altogether.

http://www.mrmoneymustache.com/the-lending-club-experiment/

In the key update right below the tables.  He stated that he's paused his automated investing since the return rate has changed.  He believes it's no longer what it once was...

Capyy

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Re: Lending Club - Time to panic?
« Reply #111 on: January 07, 2017, 01:20:15 PM »
Thanks for the link.

I'm hoping this was just a blip. Only cutting my automated investing in half for now.

HAPPYINAZ

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Re: Lending Club - Time to panic?
« Reply #112 on: January 07, 2017, 02:26:42 PM »
I haven't seen a dip in returns for me yet, mine is at around 8%.  I didn't pick many of the higher interest loans since I thought they were higher risk.  I have a few C and D class loans, but mostly all A rated loans.   I never liked the idea of automated investing, so I hand picked mine.  I started with Lending Club in Nov 2015.  I have 18 loans total, 4 paid in full, and 14 are paying on time and no defaults.  Cross-fingers....

coloradojoe

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Re: Lending Club - Time to panic?
« Reply #113 on: January 12, 2017, 02:51:03 PM »
My major problem with Lending club is how illiquid it is.  I didn't panic, per se, when the shady dealings at the company were exposed, but I decided to pull out my money.  Alternative investments are a dime a dozen.
It's going to take me multiple years to take out my rather small 10k investment.  The returns look good, but how useful are they, when you can't access money you need?  To me, it's kind of like using home equity as part of your mustachian net worth.  Technically, it does count as part of your net worth.  But it's not accessible, so not part of the formula for my mustachian net worth.

As far as liquidity goes, I wanted to quickly mention again the ease and simplicity (and lack of fees) of using LendingRobot to automatically sell notes.  Instead of waiting 3-5 years for all my notes to be paid off, I've been able to liquidate over half of my $12K account in 6 months while losing little or no money. Most of this has been selling current notes at a 1-3% premium (to ensure that it covers at least the 1% fee that LC charges). To sell Grace Period and Late notes, however, I HAVE had to discount them MORE than the loss estimates from LC -- which suggests to me that loss rates are increasing (and makes me even more confident in my decision to get out of LC).

Note: I'm NOT a shill for LendingRobot -- they only charge/make money if you BUY more than $5K in notes through them (I haven't).  I just want to share with the group here a good way I've found to liquidate LC holdings and get out if they want (as I am doing).  LendingRobot doesn't make money from people selling notes through them (or at least they don't charge any fees -- maybe LC gives them some form of kickback for any transactions).

On a broader note, I think something that hasn't been discussed much here is the possibility that the drop in returns that everyone is seeing may actually be an early indicator of a impending recession (given that we're long overdue for one given historical patterns) instead of just a problem with LC or P2P lending. FWIW, beyond working to quickly liquidate my LC account, I'm shifting my other investments to increasingly defensive positions.

Slow2FIRE

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Re: Lending Club - Time to panic?
« Reply #114 on: January 12, 2017, 03:02:58 PM »
I have been investing with LC since 2009 and I have seen my share of defaults.
My returns on average for the past 4 years or so have been around 8.5% or 7.5% adjusted.
Like others I am not happy about defaults, but I am happy with my 8.5% returns.
No mater what economy is doing, defaults are always going to happen, some years more and some less.
If you as investor is not Ok with defaults, this product is not for you and one should stick with other investment products.
At the end of a day I don't know any other products where I can earn 7%-8% besides stock market and we all know well that it also comes with major risks.

Mainly just short term volatility risk in the stock market.  No real risk of total default and more proper diversification vs bundling a bunch of personal loans from a single online market.

Returns in the total stock market since 2009 have been higher than 7-8% (about 14.5% with dividends from january 1, 2009- january 12, 2017 based on the wilshire 5000 index).

FIPurpose

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Re: Lending Club - Time to panic?
« Reply #115 on: January 12, 2017, 03:43:36 PM »
I don't think the discount on selling Lending Club notes that are currently in Grace Period or Late, means that LC is reporting incorrectly on their notes, it's more of a combination of the fact that notes that are late are extremely risky and that the number of buyers of late note are relatively few. To sell your notes you'll be looking at:

Always Current: 0-5% surplus
Current Now, but not always: -15 - 0%
Grace Period: -25-(-20)%
Late Early: -50-(-25)%
Really Late: -75% (Likely won't sell)

The lower grade notes will be closer to the bottom of the spectrum, and higher grades closer to the top.
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Icecreamarsenal

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Re: Lending Club - Time to panic?
« Reply #116 on: January 13, 2017, 07:37:58 AM »
My major problem with Lending club is how illiquid it is.  I didn't panic, per se, when the shady dealings at the company were exposed, but I decided to pull out my money.  Alternative investments are a dime a dozen.
It's going to take me multiple years to take out my rather small 10k investment.  The returns look good, but how useful are they, when you can't access money you need?  To me, it's kind of like using home equity as part of your mustachian net worth.  Technically, it does count as part of your net worth.  But it's not accessible, so not part of the formula for my mustachian net worth.

As far as liquidity goes, I wanted to quickly mention again the ease and simplicity (and lack of fees) of using LendingRobot to automatically sell notes.  Instead of waiting 3-5 years for all my notes to be paid off, I've been able to liquidate over half of my $12K account in 6 months while losing little or no money. Most of this has been selling current notes at a 1-3% premium (to ensure that it covers at least the 1% fee that LC charges). To sell Grace Period and Late notes, however, I HAVE had to discount them MORE than the loss estimates from LC -- which suggests to me that loss rates are increasing (and makes me even more confident in my decision to get out of LC).

Note: I'm NOT a shill for LendingRobot -- they only charge/make money if you BUY more than $5K in notes through them (I haven't).  I just want to share with the group here a good way I've found to liquidate LC holdings and get out if they want (as I am doing).  LendingRobot doesn't make money from people selling notes through them (or at least they don't charge any fees -- maybe LC gives them some form of kickback for any transactions).

On a broader note, I think something that hasn't been discussed much here is the possibility that the drop in returns that everyone is seeing may actually be an early indicator of a impending recession (given that we're long overdue for one given historical patterns) instead of just a problem with LC or P2P lending. FWIW, beyond working to quickly liquidate my LC account, I'm shifting my other investments to increasingly defensive positions.
I'll be sure to check it out. You say that it's losing little to no money. But it's a percentage, as you state. I don't want to pay a percentage to access my money. I will still consider it illiquid.


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bassman2003

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Re: Lending Club - Time to panic?
« Reply #117 on: January 13, 2017, 08:50:00 AM »
My major problem with Lending club is how illiquid it is.  I didn't panic, per se, when the shady dealings at the company were exposed, but I decided to pull out my money.  Alternative investments are a dime a dozen.
It's going to take me multiple years to take out my rather small 10k investment.  The returns look good, but how useful are they, when you can't access money you need?  To me, it's kind of like using home equity as part of your mustachian net worth.  Technically, it does count as part of your net worth.  But it's not accessible, so not part of the formula for my mustachian net worth.

As far as liquidity goes, I wanted to quickly mention again the ease and simplicity (and lack of fees) of using LendingRobot to automatically sell notes.  Instead of waiting 3-5 years for all my notes to be paid off, I've been able to liquidate over half of my $12K account in 6 months while losing little or no money. Most of this has been selling current notes at a 1-3% premium (to ensure that it covers at least the 1% fee that LC charges). To sell Grace Period and Late notes, however, I HAVE had to discount them MORE than the loss estimates from LC -- which suggests to me that loss rates are increasing (and makes me even more confident in my decision to get out of LC).

Note: I'm NOT a shill for LendingRobot -- they only charge/make money if you BUY more than $5K in notes through them (I haven't).  I just want to share with the group here a good way I've found to liquidate LC holdings and get out if they want (as I am doing).  LendingRobot doesn't make money from people selling notes through them (or at least they don't charge any fees -- maybe LC gives them some form of kickback for any transactions).

On a broader note, I think something that hasn't been discussed much here is the possibility that the drop in returns that everyone is seeing may actually be an early indicator of a impending recession (given that we're long overdue for one given historical patterns) instead of just a problem with LC or P2P lending. FWIW, beyond working to quickly liquidate my LC account, I'm shifting my other investments to increasingly defensive positions.

I too liquidated my LC holdings from Aug thru Dec .  I had the EXACT same thought about this being a possible early sign of recession vs a LC problem (but that wasn't why I liquidated my LC ). 

Since I can't tell the future though, I'm not changing any of my core investments and sticking to the plan

ChpBstrd

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Re: Lending Club - Time to panic?
« Reply #118 on: January 17, 2017, 12:35:34 PM »
The risk of owning LC shares or loans is the sum of the debtors' default risk plus LC's default risk. ROI may not compensate for this double-risk. There are junk bonds with better risk/reward characteristics.

coloradojoe

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Re: Lending Club - Time to panic?
« Reply #119 on: January 17, 2017, 03:40:45 PM »

I'll be sure to check it out. You say that it's losing little to no money. But it's a percentage, as you state. I don't want to pay a percentage to access my money. I will still consider it illiquid.


It's definitely less liquid than stocks, mutual funds, etc.  I'm just pointing out a way to make it MORE liquid than just waiting for all the notes to be paid off (3-5 years) and without the agonizing effort of individually listing every single note for sale...

I also agree 100% that it's a bummer to take a hit to sell your notes. The good news is that I've had pretty good success selling current notes at a 1-3% premium (sufficient to offset the 1% fee that LC charges for selling).  Even selling for +1% that means you're effectively breaking even.

coloradojoe

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Re: Lending Club - Time to panic?
« Reply #120 on: January 17, 2017, 04:35:51 PM »
I don't think the discount on selling Lending Club notes that are currently in Grace Period or Late, means that LC is reporting incorrectly on their notes, it's more of a combination of the fact that notes that are late are extremely risky and that the number of buyers of late note are relatively few. To sell your notes you'll be looking at:

Always Current: 0-5% surplus
Current Now, but not always: -15 - 0%
Grace Period: -25-(-20)%
Late Early: -50-(-25)%
Really Late: -75% (Likely won't sell)

The lower grade notes will be closer to the bottom of the spectrum, and higher grades closer to the top.

On further examination, I think you're right. I think was just getting impatient to unload those non-current notes, but was only seeing 1 or maybe 2 sell each month. In thinking about it more, since I have far fewer non-current notes (less than 10), it shouldn't be surprising that I've sold only 1 or 2 per month -- since I've only ever sold ~10% of my current notes in any month. I'm probably being too impatient about dumping those notes -- which I realize may be a bit unwise. That said, it's a pretty small fraction of my total portfolio and so not that big a deal.

FYI, the discount rates I've been offering for my non-current notes (mostly C, D, and E) are pretty similar to those you suggested:
Grace Period: -22 to -27%
Late (16-30 days): -54 to -59%
Very late (31-120 days): -71 to -76%

Capyy

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Re: Lending Club - Time to panic?
« Reply #121 on: January 17, 2017, 07:14:29 PM »
Return last Thursday was at something like 8.9%. This morning 8.7%, now 8.5%. I've got over 400 loans.

Plan is below 8% stop all investing. Below 7%, start liquidating.

Indexer

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Re: Lending Club - Time to panic?
« Reply #122 on: January 17, 2017, 09:36:10 PM »
If LC goes belly up, I query whether the SEC will look into bloggers that pushed the LC stock and/or the LC loan investments. SEC interprets "investment adviser" broadly.

See below SEC guidance:

Who Is an Investment Adviser?

Subject to certain limited exclusions discussed below...

Exclusions include "Publishers of bona fide newspapers, magazines or financial publications of a general and regular circulation."

MMM should be fine. ;)



I've always avoided Peer to Peer lending because I could care less what the default rates are during an expansion. What are those default rates in a recession? Even bigger question, what does liquity look like in a recession?

Loans to people who have a hard time getting conventional loans = we have seen this story before. It's fine when unemployment is low. These people are already having a hard time getting loans at the bank. I use to be a loan officer at a bank. If I declined to loan you the bank's money when you were in my office(and I had your credit report) I'm not going to go loan you my own money over the internet.

EDIT: I know lending club was around in '08. I also know they have limited data from then, the data they do have isn't good, and based on what I've read the average FICO score is lower now than it was back then.
« Last Edit: January 17, 2017, 09:40:19 PM by Indexer »

coloradojoe

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Re: Lending Club - Time to panic?
« Reply #123 on: February 01, 2017, 02:14:41 AM »
Another issue I've noticed: LC has becoming less and less transparent about their statistics. They used to show a lot of data about return/loss rates for different loan classes, increases in loans issued through LC. For a while they even had a feature where you could compare your returns versus those of other account holders based on risk and number of loans, etc.

Slowly, less and less of that content has been available. Now they don't even have the "Statistics" tab/link. This seems like yet another sign that they are not doing well -- and are trying to cover up that fact.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #124 on: February 01, 2017, 05:58:20 AM »
My 2500 note portfolio I've had since 2011 just dropped below a 5% adjusted return.  30%+ in E notes as well.

Only positive I'd say about Lending Club is they just integrated with TurboTax!  That's a huge help
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Stache-O-Lantern

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Re: Lending Club - Time to panic?
« Reply #125 on: February 05, 2017, 10:20:10 AM »
I have noticed the last 2 years in my account a bump in late notes in January.  My thought is it's classic consumer spendypants behavior where people spend too much during the holidays, and then have trouble with the bills.

ChpBstrd

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Re: Lending Club - Time to panic?
« Reply #126 on: February 05, 2017, 11:56:42 AM »
If you must invest in subprime debt, Rent-A-Center junk bonds maturing in 2020 have APYs over 11%.

Heroes821

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Re: Lending Club - Time to panic?
« Reply #127 on: February 06, 2017, 08:16:13 AM »
As a means of diversifying I put $3000 to test the waters on LC last March and in a year I've made around $300 and have 3 charged off notes out of 163 notes.  13 of which are in various late sections.  Now I'm not saying LC is a complete loss or unrecoverable, but I'm discovering that this level of illiquidity and risk is more than I'm willing to mess with.  Now I might just move it all to vanguard, or I was planning on testing the waters at fundrise.

Cc15gec

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Re: Lending Club - Time to panic?
« Reply #128 on: February 07, 2017, 03:56:02 AM »
Another issue I've noticed: LC has becoming less and less transparent about their statistics. They used to show a lot of data about return/loss rates for different loan classes, increases in loans issued through LC. For a while they even had a feature where you could compare your returns versus those of other account holders based on risk and number of loans, etc.

Slowly, less and less of that content has been available. Now they don't even have the "Statistics" tab/link. This seems like yet another sign that they are not doing well -- and are trying to cover up that fact.

CJ~ The stats are still there...  Login to LC account -> Account Summary -> Understand Your Returns (it is under your ANAR percentage) -> Info should be there!

:-)

zombiehunter

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Re: Lending Club - Time to panic?
« Reply #129 on: February 27, 2017, 01:19:47 PM »
Well this sucks.  I have a Lending Club IRA and decided to start the process to slowly roll out of Lending Club and move the funds over to my Vanguard IRA in traditional investments.  Just haven't been happy with the return in my LC IRA, as it didn't match my prior experience with a taxable Lending Club account (late-note adjusted return is just about 5% with average age of notes less than 1 year... barf).

For my taxable LC account, I've set up some automated sales with lending robot, and have sold most everything with no discounts, other than late notes.  Over the past year, I've wound down the account to just 25% or so of the value it was this time last year.  I usually pull out the cash weekly, without fee, via ACH -- super easy. 

Winding down the LC IRA won't be so easy.  The fee for any "partial transfer" is $50, courtesy of SDIRA.  And then the account termination fee is $150.  Note sure if one transfer and termination would therefore cost $200.  Shit. 

https://quikforms.com/viewform/zpWO-MeLbKwAm --> Fee Schedule actually indicates partial transfer fee of $100 and account termination fee of $250, but apparently it's lower for Lending Club IRAs. 

Does anyone have experience getting out of an LC IRA?  I suppose to minimize fees it would be best to sell everything and transfer it once, but that means either (i) sitting on cash sitting for a long time while winding down slowly using automated sales, or (ii) trying to liquidate more quickly, but that likely requires significant discounts. 

Of course when Googling IRA transfers and Lending Club, I find a million articles about how to roll IRAs to Lending Club, but have not easily found info about getting out.  IMO, these fees are absurd (esp. for the partial transfer), given that Lending Club itself doesn't charge anything to withdraw from their taxable accounts.  Perhaps I should've considered this more carefully when opening the account, but I was more focused on how to get the annual fee waived and how much better the returns would in the tax-advantaged account.  Please feel free to punch me in the face for this one, and then let me know if there are any strategies for dealing with this headache. 
« Last Edit: February 27, 2017, 01:31:12 PM by zombiehunter »

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Re: Lending Club - Time to panic?
« Reply #130 on: February 27, 2017, 01:45:40 PM »
Well this sucks.  I have a Lending Club IRA and decided to start the process to slowly roll out of Lending Club and move the funds over to my Vanguard IRA in traditional investments.  Just haven't been happy with the return in my LC IRA, as it didn't match my prior experience with a taxable Lending Club account (late-note adjusted return is just about 5% with average age of notes less than 1 year... barf).

For my taxable LC account, I've set up some automated sales with lending robot, and have sold most everything with no discounts, other than late notes.  Over the past year, I've wound down the account to just 25% or so of the value it was this time last year.  I usually pull out the cash weekly, without fee, via ACH -- super easy. 

Winding down the LC IRA won't be so easy.  The fee for any "partial transfer" is $50, courtesy of SDIRA.  And then the account termination fee is $150.  Note sure if one transfer and termination would therefore cost $200.  Shit. 

https://quikforms.com/viewform/zpWO-MeLbKwAm --> Fee Schedule actually indicates partial transfer fee of $100 and account termination fee of $250, but apparently it's lower for Lending Club IRAs. 

Does anyone have experience getting out of an LC IRA?  I suppose to minimize fees it would be best to sell everything and transfer it once, but that means either (i) sitting on cash sitting for a long time while winding down slowly using automated sales, or (ii) trying to liquidate more quickly, but that likely requires significant discounts. 

Of course when Googling IRA transfers and Lending Club, I find a million articles about how to roll IRAs to Lending Club, but have not easily found info about getting out.  IMO, these fees are absurd (esp. for the partial transfer), given that Lending Club itself doesn't charge anything to withdraw from their taxable accounts.  Perhaps I should've considered this more carefully when opening the account, but I was more focused on how to get the annual fee waived and how much better the returns would in the tax-advantaged account.  Please feel free to punch me in the face for this one, and then let me know if there are any strategies for dealing with this headache.

Err yeah, sorry that you bought an IRA. I was close to buying one until I saw that fee schedule. I didn't like the fees to get out. I don't know how much money you put in, but trying to sell everything on the Secondary Market and just close it out all at once sounds like the way to go.

I've recently decreased my minimum discount requirement in my Sec. market buy account. Whereas before I bought notes at 10-15% (making about a 8-9% return) discount, I require a 15-25% discount now with he same note conditions as before. The recent lending club wave of defaults is going to make liquidating more expensive. My best investment buys on the secondary market are A-C loans. Lending Club in my estimation has been way off in D-G loans, and you'll likely have to sell those at discount.
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Re: Lending Club - Time to panic?
« Reply #131 on: February 27, 2017, 02:39:26 PM »
Not to pile on, but this post by White Coat Investor (from today) discusses his decision to move out of LC:

http://whitecoatinvestor.com/why-i-decided-to-liquidate-my-lending-club-account/

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zombiehunter

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Re: Lending Club - Time to panic?
« Reply #132 on: March 02, 2017, 08:55:17 AM »
Well this sucks.  I have a Lending Club IRA and decided to start the process to slowly roll out of Lending Club and move the funds over to my Vanguard IRA in traditional investments.  Just haven't been happy with the return in my LC IRA, as it didn't match my prior experience with a taxable Lending Club account (late-note adjusted return is just about 5% with average age of notes less than 1 year... barf).

For my taxable LC account, I've set up some automated sales with lending robot, and have sold most everything with no discounts, other than late notes.  Over the past year, I've wound down the account to just 25% or so of the value it was this time last year.  I usually pull out the cash weekly, without fee, via ACH -- super easy. 

Winding down the LC IRA won't be so easy.  The fee for any "partial transfer" is $50, courtesy of SDIRA.  And then the account termination fee is $150.  Note sure if one transfer and termination would therefore cost $200.  Shit. 

https://quikforms.com/viewform/zpWO-MeLbKwAm --> Fee Schedule actually indicates partial transfer fee of $100 and account termination fee of $250, but apparently it's lower for Lending Club IRAs. 

Does anyone have experience getting out of an LC IRA?  I suppose to minimize fees it would be best to sell everything and transfer it once, but that means either (i) sitting on cash sitting for a long time while winding down slowly using automated sales, or (ii) trying to liquidate more quickly, but that likely requires significant discounts. 

Of course when Googling IRA transfers and Lending Club, I find a million articles about how to roll IRAs to Lending Club, but have not easily found info about getting out.  IMO, these fees are absurd (esp. for the partial transfer), given that Lending Club itself doesn't charge anything to withdraw from their taxable accounts.  Perhaps I should've considered this more carefully when opening the account, but I was more focused on how to get the annual fee waived and how much better the returns would in the tax-advantaged account.  Please feel free to punch me in the face for this one, and then let me know if there are any strategies for dealing with this headache.

Err yeah, sorry that you bought an IRA. I was close to buying one until I saw that fee schedule. I didn't like the fees to get out. I don't know how much money you put in, but trying to sell everything on the Secondary Market and just close it out all at once sounds like the way to go.

I've recently decreased my minimum discount requirement in my Sec. market buy account. Whereas before I bought notes at 10-15% (making about a 8-9% return) discount, I require a 15-25% discount now with he same note conditions as before. The recent lending club wave of defaults is going to make liquidating more expensive. My best investment buys on the secondary market are A-C loans. Lending Club in my estimation has been way off in D-G loans, and you'll likely have to sell those at discount.

I came up with a strategy to get out of a LC IRA as efficiently as possible, but it's fairly complicated:

--SDIRA, the custodian that manages Lending Club IRAs, allows you to invest in other assets (e.g. ETFs) if you open a separate IRA brokerage account with TD Ameritrade. 

--Funds from the LC IRA can be transferred to TD Ameritrade for a $25 wire fee or for free with check (from SDIRA to TD Ameritrade). 

--Normally this would increase the SDIRA annual fee from $100 to $175.  However, Lending Club covers the annual fee (that is normally $100) that occurs on the 1st anniversary if you have more than $5000 invested in LC notes, and covers the fee on the 2nd anniversary and thereafter if you have more than $10k.

--In my case, the 1st anniversary annual fee is set to be charged in March 2017.  With more than $5k in LC Notes, LC will cover this fee to SDIRA.

--After that fee is covered, I can open a separate brokerage account with SDIRA via TD Ameritrade, and the fee will have already been paid that year (and the $175 fee for the next year will not occur until March 2018).  So basically you get 1 year free with TD Ameritrade.

--Sell notes with Lending Robot over the year, periodically transfer cash from SDIRA LC IRA to SDIRA TD Ameritrade IRA until all funds are held in TD Ameritrade.

--TD Ameritrade has certain commission free ETFs (including VTI).

--Once all cash is converted from LC to TD Ameritrade and held in a single ETF (VTI), this can be transferred to Vanguard IRA.


One negative -- once the whole balance is rolled over to TD Ameritrade, and is then closed out and rolled to Vanguard, there is a $250 account termination fee (and a $100 'partial termination' fee for any partial transfers) rather than the semi-reduced LC IRA fees which are $150 for termination and $50 for partial termination. 

The benefits for this over-complicated solution is that you don't have to choose between (i) cash sitting around while liquidating the Notes, or (ii) liquidating notes at a steep discount to minimize idle cash.  Instead funds can periodically transfer to TD and be invested in an ETF while the LC notes are liquidated more gradually without fire-sale discounts.  Then the ETF holding can be transferred over from TD Ameritrade to Vanguard once so as to minimize fees.  So long as this is completed by March 2018, there should be no additional fee other than the $250 account termination fee. 

Hopefully that strategy will be useful if anyone else attempts to get out of the LC IRA. 
« Last Edit: March 02, 2017, 10:01:14 AM by zombiehunter »

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Re: Lending Club - Time to panic?
« Reply #133 on: March 02, 2017, 12:00:21 PM »
This is little bit off topic, but did anybody else buy LC stock at IPO only to watch it loose 70% of it's value.
I did not invest much only about $1200 but I don't know what to do, cut my losses and sell or hang on to my shares and wait till they  recover. Thank you for your input.

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Re: Lending Club - Time to panic?
« Reply #134 on: March 02, 2017, 12:48:48 PM »
This is little bit off topic, but did anybody else buy LC stock at IPO only to watch it loose 70% of it's value.
I did not invest much only about $1200 but I don't know what to do, cut my losses and sell or hang on to my shares and wait till they  recover. Thank you for your input.

I would cut your loses. Lending Club was way overvalued at IPO and is still at a market cap of about 2 bil (probably closer to its actual value). You're basically playing with a penny stock, and if you wouldn't buy it now, I'd drop it.
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Re: Lending Club - Time to panic?
« Reply #135 on: April 06, 2017, 03:51:07 PM »
Done with lending club. My returns continue to sink. A lot of people said it was a 2015 underwriting issue, but a lot of my loans defaulting now are 16. Somethings broken.

12% returns were too good to be true

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Re: Lending Club - Time to panic?
« Reply #136 on: April 06, 2017, 08:46:16 PM »
Probably when they lowered their standards to allow a wider market access so we could "make more money."  Now it's flooded with bad loans and corporations who flood the investor side as well.  The peer to peer aspect is gone.  If you count all of the charged off loans to date, I've made $700 off of a $20,000 investment over a year.  And that doesn't include the loans that are waiting to close.  I stopped reinvesting at the beginning of the year.  $3000 is out and going off to Vanguard next week.  That only took 3 months to do.  We'll see how long the rest takes.

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Re: Lending Club - Time to panic?
« Reply #137 on: April 06, 2017, 09:34:03 PM »
Lending club has recently been making changes to improve investor returns. The first is that they now charge interest during the Grace Period. I believe this will push the A-C loans to go late less often. The second is that they will allow interest only payments for certain borrowers. I've been making a lot of changes to my secondary market portfolio. Basically, if you expect to sell your notes, you'll be selling C-G loans at -25%- -70%. I've moved to buying more A and B loans willing to only take a -5% discount. Good money to be made in the secondary market!
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Re: Lending Club - Time to panic?
« Reply #138 on: April 07, 2017, 05:59:10 AM »
Instead of seeing more interest income, I'm simply seeing more defaulting.  In 1 year I have 8 defaults and 16 from 30-180 days late section.  That's only on $3000 invested.  Too much to mess with, I'm probably putting it all back to vanguard.

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Re: Lending Club - Time to panic?
« Reply #139 on: April 07, 2017, 08:53:46 AM »
Lending club has recently been making changes to improve investor returns. The first is that they now charge interest during the Grace Period. I believe this will push the A-C loans to go late less often. The second is that they will allow interest only payments for certain borrowers. I've been making a lot of changes to my secondary market portfolio. Basically, if you expect to sell your notes, you'll be selling C-G loans at -25%- -70%. I've moved to buying more A and B loans willing to only take a -5% discount. Good money to be made in the secondary market!

Yea, I think if you're going to make money here now, it's in the secondary market. Although, I don't see anything with that kind of discount.

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Re: Lending Club - Time to panic?
« Reply #140 on: April 07, 2017, 10:58:17 AM »
Instead of seeing more interest income, I'm simply seeing more defaulting.  In 1 year I have 8 defaults and 16 from 30-180 days late section.  That's only on $3000 invested.  Too much to mess with, I'm probably putting it all back to vanguard.

Plus, the people that borrow from Lending Club are by definition more desperate than people that can get regular loans.  Making money off that hardship is just not something I'd be comfortable with.
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Re: Lending Club - Time to panic?
« Reply #141 on: April 07, 2017, 11:09:32 AM »
I wonder how many of the defualts are due to outright fraud. How hard is it to buy some identities online and pull in a bunch of loans under those aliases? If it's easy, expect a snowball to form.

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Re: Lending Club - Time to panic?
« Reply #142 on: April 07, 2017, 12:04:28 PM »
I wonder how many of the defualts are due to outright fraud. How hard is it to buy some identities online and pull in a bunch of loans under those aliases? If it's easy, expect a snowball to form.

Good question. I hadn't thought about that aspect.

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Re: Lending Club - Time to panic?
« Reply #143 on: April 08, 2017, 05:08:11 PM »
Outright fraud has been rampant.  I don't think they'll claim its fraud, but I''ve had a number notes with first payment defaults.  If someone doesn't pay their first payment, there was no intention to ever pay.
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Re: Lending Club - Time to panic?
« Reply #144 on: May 01, 2017, 03:32:46 PM »
I wonder if they changed their calculation of return. Mine bumped up half a % in a week, and I have a lot of notes. Still not buying new notes. Went and looked back and I have several months with more default write offs that interest received.

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Re: Lending Club - Time to panic?
« Reply #145 on: May 01, 2017, 03:40:08 PM »
I wonder if they changed their calculation of return. Mine bumped up half a % in a week, and I have a lot of notes. Still not buying new notes. Went and looked back and I have several months with more default write offs that interest received.

They mentioned something a while back about changing the way certain returns are calculated. Defaults have still been happening a lot. But I'm seeing my portfolio health improve which is usually a good sign for the near future.
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chasesfish

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Re: Lending Club - Time to panic?
« Reply #146 on: May 02, 2017, 05:10:00 AM »
I'm still waiting for my April statement, maybe my return will turn positive this year.

Through March I have received $897 in interest income but lost $1,203 in charge offs.  I don't see how this is a sustainable business model for them.
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Re: Lending Club - Time to panic?
« Reply #147 on: May 02, 2017, 06:49:45 AM »
I don't use the auto investment anymore, and I have been slowly draining my LC account $500 at a time.  5 out of the last 12 months on LC was losing months.  Still waiting on April.

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Re: Lending Club - Time to panic?
« Reply #148 on: May 02, 2017, 11:06:43 AM »
I've been doing weekly withdrawals. Anywhere from $30-90. What was I thinking? I followed MMM blindly into it without doing my own thinking. No one to blame but myself.


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Heroes821

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Re: Lending Club - Time to panic?
« Reply #149 on: May 02, 2017, 11:47:54 AM »
I've been doing weekly withdrawals. Anywhere from $30-90. What was I thinking? I followed MMM blindly into it without doing my own thinking. No one to blame but myself.


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Considering that most people, MMM included didn't notice a decrease until Fall 2016, I wouldn't really say anyone saw this coming.  The MMM experiment started in what 2011 and had a good track record.