Author Topic: Lending Club - Time to panic?  (Read 70724 times)

Capyy

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Re: Lending Club - Time to panic?
« Reply #200 on: August 19, 2017, 08:07:11 PM »
What are you guys using to liquidate? How do I do it? Would rather pull the cash out than wait for the loans to expire.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #201 on: August 21, 2017, 05:51:59 AM »
I'm using their trading platform and listing all my notes at a 1% premium, which is enough to cover the sale fee and break-even.   I list all notes over $10 every week or two and a chunk sell.  There's more sellers than buyers, so its tough to liquidate the entire portfolio.  I figure the lower dollar ones are paying me more principal back and less of an issue.

Not easy to get your money out without a big haircut, just keep plugging away at it.
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chasesfish

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Re: Lending Club - Time to panic?
« Reply #202 on: September 03, 2017, 04:17:56 PM »
August - Net losses of $95.   8 straight months of losses.

Interesting, Lending Club still only wants to report annualized returns since I opened the account.  I emailed them and ask if lending club can provide performance statistics like any other mutual fund/brokerage account does:  YTD, 1, 3, and 5 year returns.  Here was their response:


"Good afternoon <name ommitted>

Thank you for reaching out to us.
 
We currently do not have the option to display returns for specific increments in time. Our Net Annualized Return calculation is only able to determine the rate you have received from the time you started investing until the present day.

However, we appreciate you taking the time to provide us with your suggestions. Your feedback is valuable, and some of the best updates to our site are largely based on the suggestions that we received from our members."

You can't tell me a publicly traded silicon valley fintech companies doesn't have the ability to do this.  They're intentionally keeping that from the investors. 

If I didn't think their origination platform had some value, I'd short this stock to zero.  I think some bank will eventually buy them for the portfolio they can't seem to collect and can't value that.
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Capyy

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Re: Lending Club - Time to panic?
« Reply #203 on: September 03, 2017, 05:01:43 PM »
What I am most confused by is the low defaults for years as the economy was picking back up. Now, the economy is really strong and defaults are through the roof.  It makes me think someone has systemically taken advantage and borrowed money fraudulently. The company sure isn't alleviating any fears. It wouldn't surprise me to see they've been sold shortly.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #204 on: September 03, 2017, 06:39:53 PM »
Do you have any sources on the default information?  Most of what I'm seeing in aggregate bank charge offs and classified loans are below historical averages.
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FireLane

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Re: Lending Club - Time to panic?
« Reply #205 on: September 03, 2017, 07:34:26 PM »
I keep track of my annual return, as reported by Lending Club, and it's been steadily decreasing for months. I'm at 4.68% now and it seems to be dropping by about 0.2% per month.

In an economic downturn, I'd understand, but it makes me uneasy that the default rate is ticking upwards even when nothing obvious is happening to cause it in the wider economy. If this continues much longer, I'll probably turn off automatic reinvestment, let my LC account drain to zero and put the repayments into Vanguard. This is making me think that LC has either loosened its standards or hasn't figured out how to properly calculate how risky its loans are.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #206 on: September 04, 2017, 06:50:27 AM »
Thanks for posting that.  It'll be interesting to see if that's isolated to auto lending or if it seeps into the economy.  I'm in the business side of banking and don't pay much attention to auto lending.  Also haven't had an auto loan in over 10 years

My guess is the delinquencies are driven by lenders not following Auto Lending 101 - Used cars no more than 3 years, new cars no more than 5 years.  If your loan terms are longer, you run the risk of your loan balance being more than the collateral is worth.  The only other thing I'm aware of is GM and a few of the other player having to really reduce the rates on "subprime" loans because of how expensive used cars got over the last few years.  Minimal production from 2009-2011 shortened the supply of used cars coming off lease.  That's probably calming by now.
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Capyy

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Re: Lending Club - Time to panic?
« Reply #207 on: September 04, 2017, 08:41:57 AM »
"LendingClub Doesn't Verify Income Data For 66% Of Transactions"

https://finance.yahoo.com/news/lendingclub-doesnt-verify-income-data-202142929.html

chasesfish

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Re: Lending Club - Time to panic?
« Reply #208 on: November 04, 2017, 04:51:15 AM »
October for Lending Club:

Exactly 500 Notes left at month-end
$7,827 Invested
Interest Income:  $111.89
Losses:  ($292.06)
Net Losses:  ($179.83)

-27.5% annualized return


The lesson in this - The loans that are good paid off and refinanced early.  The borrowers that don't payoff their loans early really struggle.  The "since inception" return has dropped below 2%
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Retire-Canada

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Re: Lending Club - Time to panic?
« Reply #209 on: November 04, 2017, 06:32:23 PM »
I'm glad I didn't let MMM seduce me from the simple path of index funds by his LC pimping posts.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #210 on: November 05, 2017, 05:25:38 AM »
I'm glad I didn't let MMM seduce me from the simple path of index funds by his LC pimping posts.

Surprisingly I don't blame MMM, I blame a culture of dishonesty inside Lending Club.   They had a really good product from 2011 to 2014, but then started loosening lending standards to sell pools of loans to banks (sounds a little like 2005 and mortgages).   The CEO got fired, supposedly there was change, ect.

Now they are intentionally not reporting returns like every other investment firm:  YTD, 1 Year, 3 Year, 5 Year, and Since Inception return.  They only post "since inception" return.  I'm in the finance business, loan defaults are lower when your portfolio is growing and higher when its shrinking because defaults are less common in the first six months of loan origination.
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Retire-Canada

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Re: Lending Club - Time to panic?
« Reply #211 on: November 05, 2017, 06:40:07 AM »
Surprisingly I don't blame MMM, I blame a culture of dishonesty inside Lending Club.   They had a really good product from 2011 to 2014, but then started loosening lending standards to sell pools of loans to banks (sounds a little like 2005 and mortgages).   The CEO got fired, supposedly there was change, ect.

I'm surprised MMM has not updated his positive 2013 LC post with current info. MMM can only work with info he had at the time agreed, but he's got new info now.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #212 on: November 05, 2017, 07:51:27 AM »
I saw him update it to the point he wasn't putting any more money in it.

He has not updated it with this year's returns which would be interesting.  As soon as you stop feeding new loans, the return plummets.  I'm also not really finding a market for my loans anymore.  Was able to sell down some of the performing stuff for break-even...but then my remaining return goes down further.

Oh well, lesson learned.  Index away
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alexpkeaton

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Re: Lending Club - Time to panic?
« Reply #213 on: November 05, 2017, 10:27:52 AM »
I keep track of my LC returns using XIRR in Google Sheets and use mark down my late loans to a more realistic value so returns aren't artificially inflated by new notes. This year I'm at about a 6.5% annualized return, but last year sucked at about 0% even with some $100 bonus offer.

The other day I got an offer for 1 United MileagePlus point for every new $1 invested. I feel like I might be a sucker for considering it, and yet here I am. On the one hand I can get a bonus for an investment that should have a positive ROI. On the other hand it's a tax-inefficient investment, it's also very liquid, and it just causes more hassle on my tax return.

CanuckExpat

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Re: Lending Club - Time to panic?
« Reply #214 on: November 07, 2017, 06:20:49 PM »
People with sub par results (this includes me) curious what your percentage of notes were grade F and G?
I saw the note today that Lending Club is temporarily discontinuing issuing those notes for recent substandard performance, and they stated they made up less than 3% of overall note volume. However, they did make up close to 40% of my portfolio. I was purposely tilted towards riskier notes.

neil

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Re: Lending Club - Time to panic?
« Reply #215 on: November 07, 2017, 06:56:37 PM »
I recently exited.  My portfolio was focused in the C-D range, and it doesn't take as many delinquencies to tank the results.  I went from an average return of 10% to around 3% within a few months.  My hunch is there were a good deal of borderline fraudulent loans and a lot of refinance gaming going on.  I also focused on 36-month terms because I originally planned to hold to term and didn't want to be stuck with filing for five years.

Not Yet Issued (0)
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This was from a statement 2 years in (feb 2017), after starting in 2015, right before I started selling off notes.  I think it's great if those people are really paying off their debt early, but I was simply getting suspicious of a 30% rate in loans being paid off early.  I saw too many individual examples of loans being paid in 1-2 months. 

In the end, it doesn't really surprise me.  I don't expect a retail investment platform to offer me the same quality of loan selection that a bank or institutional investor would get.  LC started in 2006 and grew during a period where banks were unwilling to make loans.  Under normal banking conditions, will platforms like LC really offer fair market returns on consumer debt? 

aspiringnomad

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Re: Lending Club - Time to panic?
« Reply #216 on: November 07, 2017, 07:27:55 PM »
August - Net losses of $95.   8 straight months of losses.

Interesting, Lending Club still only wants to report annualized returns since I opened the account.  I emailed them and ask if lending club can provide performance statistics like any other mutual fund/brokerage account does:  YTD, 1, 3, and 5 year returns.  Here was their response:


"Good afternoon <name ommitted>

Thank you for reaching out to us.
 
We currently do not have the option to display returns for specific increments in time. Our Net Annualized Return calculation is only able to determine the rate you have received from the time you started investing until the present day.

However, we appreciate you taking the time to provide us with your suggestions. Your feedback is valuable, and some of the best updates to our site are largely based on the suggestions that we received from our members."

You can't tell me a publicly traded silicon valley fintech companies doesn't have the ability to do this.  They're intentionally keeping that from the investors. 

If I didn't think their origination platform had some value, I'd short this stock to zero.  I think some bank will eventually buy them for the portfolio they can't seem to collect and can't value that.

LC stock is down another ~18% after earnings this evening. Down ~30% since this was posted.

Padonak

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Re: Lending Club - Time to panic?
« Reply #217 on: November 07, 2017, 07:36:59 PM »
People with sub par results (this includes me) curious what your percentage of notes were grade F and G?
I saw the note today that Lending Club is temporarily discontinuing issuing those notes for recent substandard performance, and they stated they made up less than 3% of overall note volume. However, they did make up close to 40% of my portfolio. I was purposely tilted towards riskier notes.

Same thing. I chose riskier notes because I used the lending robot automated service based on their "model" and chose the settings to pick the most "profitable" notes which happened to be high risk ones.

Good thing is that I limited my exposure to a little more than 10,000 to avoid paying lending robot for the (dis)service. I think the standard limit is 10K, but i had a little extra because there was a promo.

Anyway, my current estimated return is a little over 1% and has been declining slowly but surely.

I will never invest with Lending Club again, should have just opened a CD instead.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #218 on: November 08, 2017, 04:47:15 AM »
I thought about shorting LC Stock.  Financially, its a no brainer, but there's this problem called "The Greater Fool"

There are 2-3x more banking institutions than management talent to run them (and this problem is getting worse every month).  There's also arcane rules in banking that prevent activist investors from resolving under performing institutions, so we're stuck with a bunch of empty suits that will do anything necessary to keep their level of employment.

One of them will eventually buy lending club.
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alexpkeaton

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Re: Lending Club - Time to panic?
« Reply #219 on: November 08, 2017, 08:29:24 AM »
One of them will eventually buy lending club.

Which is why I'd actually consider buying some small amount of LC stock. Purely a speculative bed, obviously.

ChpBstrd

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Re: Lending Club - Time to panic?
« Reply #220 on: November 08, 2017, 08:25:35 PM »
One of them will eventually buy lending club.

Which is why I'd actually consider buying some small amount of LC stock. Purely a speculative bed, obviously.

Take both positions. If they're either going into the dirt or getting bought out for a fat premium, purchase a straddle:
buy Jan 2020 $5 put: -$1.25
buy Jan 2020 $5 call: -$1.45
--------------------------------
net outlay per share: -$2.70

Current LC price: $4.59, down like 15% today

If they go bankrupt by 2020, you earn 5 - $2.7= $2.3 per share, or a 2.3/2.7 = 85% return.
OR...
If the price rises above 5 + 2.70 = $7.70, you get some positive return depending on how high they go.

A bolder bet would be to just buy the $3 put for $0.60 and let it ride. The ROI on a bankruptcy scenario would be 500%. This would also be a good way to hedge your portfolio against a recession, which would wipe out most of these loans and the vulnerable LC along with them. We already know these are the new "liar loans" (remember 2008? good times.)

https://finance.yahoo.com/quote/LC/options?p=LC&straddle=true&date=1579219200

chasesfish

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Re: Lending Club - Time to panic?
« Reply #221 on: December 06, 2017, 05:21:31 AM »
Lost $66 on a portfolio around $6,000 for the month.  That'll come out to a sweet negative 13% annualized return.

I've almost cracked $1,300 in net losses for the year.  At least I'll finally see a tax benefit.  Lending Club still isn't reporting YTD, 1, or 3 year returns, only returns since inception.
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ChpBstrd

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Re: Lending Club - Time to panic?
« Reply #222 on: December 06, 2017, 12:37:22 PM »
We have information the stock analysts don't have: Absent the sort of changes that would make it just another small bank, LC is going to fail as a lending platform.

If you'd like to place a bet, you can set up a synthetic short all the way out to January 17, 2020.

Buy the $4.50 strike put for $1.40.
Sell the $4.50 strike call for $1.48.

Thus you take an $0.08 credit to enter a trade that moves the opposite of LC stock (over time, not immediately/daily). LC is already down 21% YTD.
Wait two years for this house of cards company to tumble, or cash out at the next earnings release. Your breakeven is $4.58, which is 8% higher than today's price.
Best of all, this is portfolio insurance. If the broader stock market declines, speculative companies like LC will get hit hard and your synthetic short will make up for some of your other losses. With this synthetic short, your leverage is about 3:1 on a company that is 60% more volatile/risky than the market.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #223 on: December 07, 2017, 05:31:07 AM »
I still worry that there's a greater fool out there sitting in a Bank CEO role.  Capital One comes to mind, they want to be a tech company so badly.
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ChpBstrd

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Re: Lending Club - Time to panic?
« Reply #224 on: December 07, 2017, 09:05:09 PM »
I still worry that there's a greater fool out there sitting in a Bank CEO role.  Capital One comes to mind, they want to be a tech company so badly.

Good point.

Outside the Box

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Re: Lending Club - Time to panic?
« Reply #225 on: December 11, 2017, 03:29:20 PM »
I chronicled my exit from LendingClub here.

It's (mostly) finished. Only the remaining money transfers/account closures remain. It is completely liquidated.

What began as $17,043.60 in "account value" at Lending Club has finally concluded as $16,429.08 of actual cash. I will then have to pay $250 to close/transfer the IRA, resulting in a final $16,179.08.

5% hit to the asset. 0.2% hit to the portfolio. I will be moving that into Vanguard which will line up with my strategies going forward in a more coherent manner.

It's all in Vanguard now. Started liquidating in July and finished in September. Took another month or so for all the medallion guarantees, paperwork, closures, transfers, etc. It feels good to be done.

meatgrinder

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Re: Lending Club - Time to panic?
« Reply #226 on: December 13, 2017, 05:15:45 PM »
I have about 3% of assets in LC and went from 12% net return down to 7.5% according to lending clubs calculation, however, my statements have been showing losses for over 12 months so its probably close to -5%.  I'm actively getting out through the secondary market now but its slow going. In addition, the tax treatment on a non-tax advantaged accounts is horrible - paying full tax on the interest and not not able to write off the full amount of charge-offs. 

My Notes at-a-Glance 4843
Not Yet Issued $0
Issued & Current $68,395
In Grace Period $1,988
Fully Paid $178,568
Late 16 - 30 Days $965
Late 31 - 120 Days $4,488
Default $430
Charged Off $55,473

Payments $366,840.12
Payments to Date $366,840.12
Principal $261,505.21
Interest $105,303.91
Late Fees $30.99


chasesfish

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Re: Lending Club - Time to panic?
« Reply #227 on: December 14, 2017, 05:18:52 AM »
@ Meatgrinder - Why wouldn't you be able to writeoff the full amount of the chargeoffs?

Thats the only thing I'm looking forward to about lending club, I'm in the same spot you're in except about six months ahead of these terrible returns.

I heard a large Bank CEO say in a private event "The thing about online lending is its really easy for anyone to originate loans, different non-bank companies have popped up originating loans for decades.  They usually struggle at collecting, where Banks have generations more of experience on staff"
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Car Jack

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Re: Lending Club - Time to panic?
« Reply #228 on: December 14, 2017, 07:17:29 AM »
Here are Pete's latest comments on the MMM blog at the end of October:

Quote
Here in October 2017, the balance is still drifting downwards. It has now been over a year of flat or negative performance, a time period which should have brought in about $6000 of net interest according to original estimates. If this were a stock market investment, it would all be part of normal fluctuations. But interest bearing loans aren’t supposed to do this.
Therefore I have turned off automatic investments and will begin winding down this experiment – cashing out my money as the surviving loans are repaid. I have withdrawn $19000 in cash so far (although leaving it virtually in the table above to keep the month-to-month comparisons meaningful). This will tend to suppress the reported return rate, but the balance should still be rising if the loans were performing properly, which obviously they are not.

So he is exiting.  I'm 100% out now and am happy I got out even before Pete did.  I sold all my notes and avoided any charge offs, but was much smaller in what I invested.  I was in for about 2 years or so.

meatgrinder

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Re: Lending Club - Time to panic?
« Reply #229 on: December 16, 2017, 09:48:14 AM »
@ Meatgrinder - Why wouldn't you be able to writeoff the full amount of the chargeoffs?

Thats the only thing I'm looking forward to about lending club, I'm in the same spot you're in except about six months ahead of these terrible returns.

I heard a large Bank CEO say in a private event "The thing about online lending is its really easy for anyone to originate loans, different non-bank companies have popped up originating loans for decades.  They usually struggle at collecting, where Banks have generations more of experience on staff"

Good question. Short-term capital loses (lending club bad debt) can be deducted against ordinary income up to $3k per year.

The problem is, I have a lot more than $3K short term loses per year in LC bad debt (and due to tax loss harvesting). So I have a large carry over from year-to-year where I can only deduct $3K off of ordinary income (which interest is considered ordinary income).

For example:

So far in 2017 I have $20K in interest and $20K in charged off loans making it a break even year from an investment perspective, however, for tax purposes I'll only be able to deduct $3k of the $20K bad debt from income.  This results in $17K of interest earned ($20K interest income - $3K charged off bad debt) being taxed as ordinary income. 

Given my marginal tax rate this results in an additional $3K to $4K in income taxes!  Someone please tell me I'm doing this wrong and don't have to pay this.






« Last Edit: December 16, 2017, 09:58:14 AM by meatgrinder »

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Re: Lending Club - Time to panic?
« Reply #230 on: December 18, 2017, 04:15:19 AM »
I believe you have that right. You can instead try to tax loss harvest from your other investments' short term gains if you want. Unless you have a lot of investments, it might be difficult to find 20k of short term gains. Otherwise yep, you just carry those losses forward.

Like many others here, I too am removing myself from LC. I won't be selling, just waiting for all the loans to eventually end. That might take a few years, but like many others have said here, the LC investment returns have been misleading and just plain wrong.

Im hoping to come out without too many losses, but I currently only have about 6k in so I'm not too worried about my returns. I more or less would prefer to be one account fewer to keep track of.
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meatgrinder

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Re: Lending Club - Time to panic?
« Reply #231 on: December 18, 2017, 09:16:41 AM »
Thanks for the info.  Agree that the returns they state are highly misleading and its surprising they continue to do so. The general perception around p2p lending was/is a big caveat emptor so not surprising.

The first 5 years were great and overall I think I will come out ahead, but I am selling notes due solely to the taxation.

retirementnestegg

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Re: Lending Club - Time to panic?
« Reply #232 on: December 20, 2017, 01:04:23 PM »
I recently exited.  My portfolio was focused in the C-D range, and it doesn't take as many delinquencies to tank the results.  I went from an average return of 10% to around 3% within a few months.  My hunch is there were a good deal of borderline fraudulent loans and a lot of refinance gaming going on.  I also focused on 36-month terms because I originally planned to hold to term and didn't want to be stuck with filing for five years.

Not Yet Issued (0)
Issued (0)
Current (165)
Fully Paid* (75)
Charged Off (24)

I had a very similar experience. I had a lot of C and D notes, and near the end of my run I bought more B and A.

I had a maximum of about 50k in Lending club and loved the program and concept.
I went from about a 13-14% return, and each month the return would drop due to chargeoffs. The return went all the way down to 4.xx return and I decided I had enough and liquidated. I have about $8000 left and will continue to let it ride out and sell notes.

My return is now showing 2.57% return. What a joke. Ive got much better investments to put my money into.
I was happy with about a 9-10% return but the

chasesfish

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Re: Lending Club - Time to panic?
« Reply #233 on: December 20, 2017, 02:55:10 PM »
Ugh, still have $5,500 in here with no easy way to liquidate without taking a bit haircut.   I wish I could just ignore this account
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Re: Lending Club - Time to panic?
« Reply #234 on: December 20, 2017, 02:59:19 PM »
Ugh, still have $5,500 in here with no easy way to liquidate without taking a bit haircut.   

I'd rather get a haircut than a brazilian. Just saying....

topshot

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Re: Lending Club - Time to panic?
« Reply #235 on: December 21, 2017, 06:45:42 AM »
For those that followed MMM's LC HQ post, he noted the first sign of decline in Oct 2016 which continued for a year and thus summarized his current position with this:
Quote
Therefore I have turned off automatic investments and will begin winding down this experiment – cashing out my money as the surviving loans are repaid.

meatgrinder

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Re: Lending Club - Time to panic?
« Reply #236 on: December 21, 2017, 08:06:30 AM »
Ugh, still have $5,500 in here with no easy way to liquidate without taking a bit haircut.   

I'd rather get a haircut than a brazilian. Just saying....

I'd rather get a Brazilian than a crab.  Just saying....

chasesfish

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Re: Lending Club - Time to panic?
« Reply #237 on: December 21, 2017, 06:22:46 PM »
Ugh, still have $5,500 in here with no easy way to liquidate without taking a bit haircut.   

I'd rather get a haircut than a brazilian. Just saying....

I'd rather get a Brazilian than a crab.  Just saying....

This current pace feels like having hairs plucked one by one down there
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frozen

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Re: Lending Club - Time to panic?
« Reply #238 on: December 27, 2017, 03:34:50 PM »
I've had my Lending Club account for nearly 2 years. I don't have much in there -- only an adjusted account value of $1,925 and it's showing a net annualized return of 8.61%. I am planning to x-fer in the $2,500 for the United Mileage Plus bonus, use it to purchase all 3-year notes, and then slowly divest. Most of my notes are 3-year, with a few 5-year, and all expire by the end of 2021. I invest each note manually using a filter.

Here are my stats:
Available Cash $6.75
Committed Cash $50.00
Outstanding Principal $1,922.04
Account Value $1,978.79
Adjustment for Past-Due Notes  ( $52.97 )
Adjusted Account Value $1,925.82

My Notes at-a-Glance 133
Not Yet Issued 2
Issued & Current 96
In Grace Period 1
Fully Paid 29
Late 16 - 30 Days 1
Late 31 - 120 Days 2
Default 0
Charged Off 2


Heroes821

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Re: Lending Club - Time to panic?
« Reply #239 on: January 03, 2018, 08:01:15 AM »
My last update.  Before Jan 1st I got my Lending Club to close out.

May 2016-Dec 2017

$3000 initial investment.

All notes purchased with the default $25 funding.

14 Fully paid. ($350)
22 Charged off ($478)
126 Traded Notes 11.13%
Primary Return -47.35%
Combined Return -4.75%

Cash pulled out while closing down account: $2700. 

After $478 charged off I made $178, but functionally lost over $300 and had that money tied up for 20 months.

$3000 put into VTSAX with my other investments for 20 months would be: ~$4000 before dividends.

ChpBstrd

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Re: Lending Club - Time to panic?
« Reply #240 on: January 03, 2018, 04:00:40 PM »
Roughly 1 month update on the synthetic short idea posted earlier:

As of today, that synthetic short would be up $0.13/share in addition to the $0.08 credit taken to open the position.

But of course I only point out my good ideas. :)

chasesfish

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Re: Lending Club - Time to panic?
« Reply #241 on: January 04, 2018, 06:25:24 AM »
First positive month of the year, got $63 in recoveries to offset a net $60 loss between interest income and chargeoffs.

Ugh.  At least I'm down to $5500 or so
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appleshampooid

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Re: Lending Club - Time to panic?
« Reply #242 on: February 17, 2018, 01:45:24 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.

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.
Thanks for posting this, zombiehunter. I am in the same un-enviable position as you. I opened a Roth IRA and funded it with the majority of my contribution limit in 2014 and 2015. $9700 invested at the absolute worst time (in terms of loan origination) for this fucking company. My current balance is just barely above my original investment, but adjusting for notes that will almost certainly be charged off, my ANAR is negative and I'll almost certainly lose money on the whole thing. Thankfully a small amount in the big picture, but still very frustrating. My taxable account which has been in draw-down mode for several years is even down to about 7% NAR. So much for beating index funds with a steady stream of income.

Worse yet, it's in an IRA so I can't even deduct the losses :cry: :cry:

I will take a look at your strategy with TD and run some rough opportunity cost numbers on just letting the cash accumulate before making one rollover to Vanguard. Your strategy looks sound for minimizing idle cash, but I don't have a lot of mental energy to throw at this problem.

I had also completely forgotten about the SDIRA fees that LC pays for you at certain balances. I put in just enough that I would "obviously" be above $10k at the 2 years mark. BZZZZZZZT. nope. I should have been changed the yearly fee for at least the last year, but I don't see it on my statements. Probably just need to look harder.

ePalmtrees

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Re: Lending Club - Time to panic?
« Reply #243 on: February 17, 2018, 05:23:47 PM »
I've invested 20k, reinvesting some of it in the beginning and then stopping. I have about $5500 of loans left that are still in payment. My net annualized return when adjusted for projected right offs over the entire 3 year period is 2.63%.

I emailed them wondering if I was understanding what numbers I was looking at. I ended up on the phone with someone who was very nice. Basically I had a larger than expected number of grade A and B loans written off.

Another thing he said to explain it was that I had stopped reinvesting the money back into new loans. The rate of return is higher in the beginning before the charge off's start. I said well isn't that artificially inflating the returns though, and he said yes.

I didn't ask what the average return is for people who don't reinvest the loans. I was widely diversified as far as I know so I still don't know why my I had so many write offs.

After taxes, I would have done better in a risk free CD. Not too impressed.

chasesfish

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Re: Lending Club - Time to panic?
« Reply #244 on: February 17, 2018, 06:30:59 PM »
I had another crummy month in January.  I struggle with their company not providing me 1,3,5 year returns.

$5000 or so left, hopefully I see most of it.  The only nice thing about all these chargeoffs is I may see recoveries for years
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ChpBstrd

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Re: Lending Club - Time to panic?
« Reply #245 on: February 19, 2018, 07:52:56 PM »
We have information the stock analysts don't have: Absent the sort of changes that would make it just another small bank, LC is going to fail as a lending platform.

If you'd like to place a bet, you can set up a synthetic short all the way out to January 17, 2020.

Buy the $4.50 strike put for $1.40.
Sell the $4.50 strike call for $1.48.

Thus you take an $0.08 credit to enter a trade that moves the opposite of LC stock (over time, not immediately/daily). LC is already down 21% YTD.
Wait two years for this house of cards company to tumble, or cash out at the next earnings release. Your breakeven is $4.58, which is 8% higher than today's price.
Best of all, this is portfolio insurance. If the broader stock market declines, speculative companies like LC will get hit hard and your synthetic short will make up for some of your other losses. With this synthetic short, your leverage is about 3:1 on a company that is 60% more volatile/risky than the market.

The above synthetic short on Lending Club is now up $0.38 plus the original $0.08 credit = $0.46.

Fireball

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Re: Lending Club - Time to panic?
« Reply #246 on: February 19, 2018, 08:52:16 PM »
Another thing he said to explain it was that I had stopped reinvesting the money back into new loans. The rate of return is higher in the beginning before the charge off's start. I said well isn't that artificially inflating the returns though, and he said yes.

This is true. I work at a mortgage company that carries all of its own paper(we don't sell to the GSEs). We only look at a 6 month static delinquency, meaning any loans newer than 6 months aren't included in our delinquency calculation. Gives a more true number.

Villanelle

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Re: Lending Club - Time to panic?
« Reply #247 on: February 19, 2018, 10:16:41 PM »
Stopped investing some time ago and am exiting slowly via attrition/loan pay off.  I should be done with my 11 remaining loans by the end of this year. 

Issued & Current ?11
In Grace Period ?0
Fully Paid ?113
Late 16 - 30 Days ?1
Late 31 - 120 Days ?0
Default ?0
Charged Off ?44

LC says I'm at a 9.08% adjusted NAR.  So overall, it's not terrible, but not worth continuing, especially as it got so much more difficult to find loans I wanted to fund.  (I never did auto-investing.)

Nearly all my loans were D, E, and F. 

appleshampooid

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Re: Lending Club - Time to panic?
« Reply #248 on: February 20, 2018, 06:54:50 AM »
We have information the stock analysts don't have: Absent the sort of changes that would make it just another small bank, LC is going to fail as a lending platform.

If you'd like to place a bet, you can set up a synthetic short all the way out to January 17, 2020.

Buy the $4.50 strike put for $1.40.
Sell the $4.50 strike call for $1.48.

Thus you take an $0.08 credit to enter a trade that moves the opposite of LC stock (over time, not immediately/daily). LC is already down 21% YTD.
Wait two years for this house of cards company to tumble, or cash out at the next earnings release. Your breakeven is $4.58, which is 8% higher than today's price.
Best of all, this is portfolio insurance. If the broader stock market declines, speculative companies like LC will get hit hard and your synthetic short will make up for some of your other losses. With this synthetic short, your leverage is about 3:1 on a company that is 60% more volatile/risky than the market.

The above synthetic short on Lending Club is now up $0.38 plus the original $0.08 credit = $0.46.
I got in on the LC IPO since they let early customers of the platform get some shares at the IPO price. A small amount of cash, I think around $400. I wasn't interested in holding it long term, but most IPOs seem to pop in the first couple days and it was probably the only time in life I'll have the opportunity to participate before the stock hits the open market.

I sold at $25 after debating whether to hold out for $30. I hadn't kept tabs on the stock and only checked it after reading this thread. Yikes, guess I played that one right.

AM43

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Re: Lending Club - Time to panic?
« Reply #249 on: February 20, 2018, 07:53:53 AM »
We have information the stock analysts don't have: Absent the sort of changes that would make it just another small bank, LC is going to fail as a lending platform.

If you'd like to place a bet, you can set up a synthetic short all the way out to January 17, 2020.

Buy the $4.50 strike put for $1.40.
Sell the $4.50 strike call for $1.48.

Thus you take an $0.08 credit to enter a trade that moves the opposite of LC stock (over time, not immediately/daily). LC is already down 21% YTD.
Wait two years for this house of cards company to tumble, or cash out at the next earnings release. Your breakeven is $4.58, which is 8% higher than today's price.
Best of all, this is portfolio insurance. If the broader stock market declines, speculative companies like LC will get hit hard and your synthetic short will make up for some of your other losses. With this synthetic short, your leverage is about 3:1 on a company that is 60% more volatile/risky than the market.

The above synthetic short on Lending Club is now up $0.38 plus the original $0.08 credit = $0.46.
I got in on the LC IPO since they let early customers of the platform get some shares at the IPO price. A small amount of cash, I think around $400. I wasn't interested in holding it long term, but most IPOs seem to pop in the first couple days and it was probably the only time in life I'll have the opportunity to participate before the stock hits the open market.

I sold at $25 after debating whether to hold out for $30. I hadn't kept tabs on the stock and only checked it after reading this thread. Yikes, guess I played that one right.

I got in on LC IPO as well. About 1k invested.
Sitting on their shares at below $4 and debating whether I should sell it at a loss and move on with my life or hold on and see if it recovers enough where I can recoup some  money.