Post by: TheStachery on May 09, 2016, 10:34:30 AM
Post by: rahby1us on May 09, 2016, 12:08:26 PM
Post by: AM43 on May 09, 2016, 12:13:00 PM
I think there is a potential here to make a quick buck.
Post by: chesebert on May 09, 2016, 02:45:38 PM
Post by: chasesfish on May 09, 2016, 04:08:54 PM
I hate accounting irregularities, but if its earnings are accurate, they'll make about 0.27/share this year. Financials trade between a 12 and 20x multiple and this one might be able to grow a little more. At a 15 PE, the stock is worth about 4.05.
The drop is from reeling back the growth expectations.
As an investor, I think I can get more upside then a regular 7% right now
Post by: chasesfish on May 10, 2016, 04:25:16 AM
Post by: rahby1us on May 10, 2016, 09:31:23 AM
But as i check the market today i see i'm in the red 6% already today... We'll see.
Post by: adamwoods137 on May 11, 2016, 03:00:59 PM
http://seekingalpha.com/article/3973298-sweet-25-percent-gain-krispy-kreme-podcast
Post by: Acg on May 12, 2016, 07:40:40 AM
I see that cash balances are FDIC insured but there's no insurance on money that I've loaned out. Their website says that they've taken steps to protect investors in the case of bankruptcy but they give no details. They say to look at their prospectus for more information but of course it's enormous and pretty dense. So does anyone know if there are any protections in place for people lending money out through their platform? Thanks.
Post by: FIPurpose on May 12, 2016, 08:09:35 AM
Post by: Fudge102 on May 12, 2016, 09:08:09 AM
http://www.cnbc.com/2016/05/10/why-you-shouldnt-panic-about-the-lending-club-scandal-commentary.html
It says not to worry but can't quite help it. I've stopped my automatic reinvestment. I'd love to restart but I'm just hesitant in the short term for the reasons everyone has been mentioning...
Post by: Jeremy E. on May 12, 2016, 10:12:09 AM
http://jlcollinsnh.com/2011/06/02/why-i-cant-pick-winning-stocks-and-you-cant-either/
You guys invest your money how you want, but I'm happy with total stock market index funds like VTSAX
Post by: R5 on May 12, 2016, 12:05:57 PM
Here's a thoughtful read on the current situation:
http://seekingalpha.com/article/3974435-lending-club-worth-risk
For return on the platform personally I have doubts about the adequacy of their vetting mechanisms. I suspect there is an asymmetry of information and expectation and that if one should be creating a default reserve at the same time you are booking the high yield interest. This may be why MMM's return is trending down.
These points noted I frequently early adopt products where I want to encourage continued existence/help promote the space. I like micro lending conceptually, particularly in developing economies and it doesn't work without capital. I have no problem being willing to provide early stage seed capital in small amounts similar to being willing financially support research at an academic/medical institution.
Post by: TheStachery on May 12, 2016, 01:01:20 PM
Thanks for your email and continuous support of Lending Club. Regarding your concerns, here is a quick review of the facts, and how they relate to your investment with Lending Club:
· None of the announcements this week relate to the quality of your investments with Lending Club. The solid returns and commitment to investors that we offer remain the same.
· The issue has nothing to do with the quality of credit and did not relate to the performance of any loans facilitated through Lending Club. See here for data on how all loans have performed since our inception.
· The issue that was identified and addressed related to whole loan sales to institutional investors. It did not relate to Lending Club Notes and did not affect investors in Lending Club Notes.
· There has been no change in servicing. We are servicing and processing borrower payments just like we always have, and the interest and principal payments they make will continue to be passed on to you just as they were before.
· We’re in the business of trust and we cannot afford the slightest whiff of impropriety. The Board of Directors has acted to address this issue swiftly and decisively in the best interests of investors, employees, partners and borrowers.
· The company has a strong, experienced management team at the helm that has been with the company since its earliest days (6 years apiece), and lends the company continuity in execution and vision.
For more detail, please see our press release. http://ir.lendingclub.com/file.aspx?IID=4213397&FID=34233669
Additionally, please note we remain laser focused on serving you – our investors – and we continue to pursue our mission of making credit more affordable and investing more rewarding, just like we did when you first invested. Trust is the center of our business and we are committed to earning it from you every day.
As always, please feel free to reach out to us directly at (888)596-3159 with any questions.
Best Regards,
Post by: Icecreamarsenal on May 12, 2016, 01:17:17 PM
This has less to do with the news that the CEO was a scumbag and more with the realization (after reading miles dividend) that lending club loans are just junkier junk bonds.
Post by: Fudge102 on May 12, 2016, 11:20:15 PM
Post by: pha999 on May 13, 2016, 09:33:59 AM
Post by: FireLane on May 13, 2016, 10:16:46 PM
I've been keeping an eye on this news too, but I don't see any reason to panic just yet. The ex-CEO may have been engaging in some shady business and not disclosing when he should have, but the loans themselves (at least for me) are performing as advertised. I don't think this story implicates the overall viability of the company or LC's usefulness to FIRE types as an alternative income stream.
That said, I'm keeping most of my assets in Vanguard. I don't plan for Lending Club to ever be more than a small part of my overall retirement portfolio. That was my plan before this news and it still is.
Post by: BlankCheck on May 13, 2016, 10:48:48 PM
I invest money in LC loans, don't own any of their stock.
I've been keeping an eye on this news too, but I don't see any reason to panic just yet. The ex-CEO may have been engaging in some shady business and not disclosing when he should have, but the loans themselves (at least for me) are performing as advertised. I don't think this story implicates the overall viability of the company or LC's usefulness to FIRE types as an alternative income stream.
That said, I'm keeping most of my assets in Vanguard. I don't plan for Lending Club to ever be more than a small part of my overall retirement portfolio. That was my plan before this news and it still is.
Same here. LC is just a small portion of my portfolio, but the loans have been performing just fine. At least for now. I'm not currently reinvesting, but might resume so later after my current notes mature a bit more.
Post by: Icecreamarsenal on May 17, 2016, 10:36:58 AM
Post by: chesebert on May 17, 2016, 10:44:28 AM
http://www.latimes.com/business/la-fi-lendingclub-20160517-snap-story.html
Post by: Fudge102 on May 17, 2016, 10:45:43 AM
Post by: chesebert on May 17, 2016, 11:02:02 AM
http://www.lexology.com/library/detail.aspx?g=ee3a5193-59a2-4adb-b953-bfa2dd70521f
Post by: retiringearly on May 17, 2016, 11:11:04 AM
I'm wondering how much we the investors are actually hurting LendingClub right now? How many of us have stopped investing in the loans and have therefore dug a deeper whole for them to climb out of? I really want to restart my reinvestments but as mentioned here, I don't know what will happen to the company or the loans I'm currently tied up in. The investigations in to one small percentage of the company could have profound consequences just because they exist. Part of me wants to continue, I just wish we could know what the DOJ and then will do to LC and how it will affect the loans...
According to this article, significant investors have suspended making loans. This will only compound LC's problems.
http://www.bloomberg.com/news/articles/2016-05-17/lendingclub-shares-fall-after-investors-suspend-debt-purchases
Post by: chasesfish on May 18, 2016, 05:25:02 AM
I really hate our legal system sometimes
Post by: Fudge102 on May 18, 2016, 10:04:42 AM
Post by: retiringearly on May 18, 2016, 01:34:34 PM
http://www.wsj.com/articles/lendingclubs-loans-come-home-to-roost-1463511780
Post by: chesebert on May 19, 2016, 03:28:00 PM
See below SEC guidance:
Who Is an Investment Adviser?
Subject to certain limited exclusions discussed below, Section 202(a)(11) of the Advisers Act generally defines an "investment adviser" as any person or firm that: (1) for compensation; (2) is engaged in the business of; (3) providing advice, making recommendations, issuing reports, or furnishing analyses on securities, either directly or through publications. A person or firm must satisfy all three elements to be regulated under the Advisers Act.
The Division construes these elements broadly. For example, with respect to "compensation," the receipt of any economic benefit suffices. To be deemed compensation, a fee need not be separate from other fees charged, it need not be designated as an advisory fee, and it need not be received directly from a client. With respect to the "business" element, an investment advisory business need not be the person's or firm's sole or principal business activity. Rather, this element is satisfied under any of the following circumstances: the person or firm holds himself or itself out as an investment adviser or as providing investment advice; the person or firm receives separate or additional compensation for providing advice about securities; or the person or firm typically provides advice about specific securities or specific categories of securities. Finally, a person or firm satisfies the "advice about securities" element if the advice or reports relate to securities. The Division has stated that providing one or more of the following also could satisfy this element: advice about market trends; advice in the form of statistical or historical data (unless the data is no more than an objective report of facts on a non-selective basis); advice about the selection of an investment adviser; advice concerning the advantages of investing in securities instead of other types of investments; and a list of securities from which a client can choose, even if the adviser does not make specific recommendations from the list. An employee of an SEC-registered investment adviser does not need to register separately, so long as all of the employee's investment advisory activities are within the scope of his employment.
For additional guidance on the definition of "investment adviser" and the applicability of the Advisers Act to financial planners, pension consultants, and others, refer to Investment Advisers Act Release No. 1092 (October 8, 1987) (part of the Investment Adviser Registration Package; see below).
Post by: TheStachery on May 20, 2016, 06:43:23 AM
I'm Scott Sanborn, President and acting CEO of Lending Club. I've been on Lending Club's leadership team for the past six years as Chief Marketing Officer and Chief Operating Officer.
I know you have questions about the events of the past week and what it means for your investments.
Here are answers to a few questions we've heard this week:
• What's happening with my assets? Nothing. Your investments are still yours. The performance of loans facilitated through the platform remains robust. We are servicing and processing borrower payments like we always have, and the interest and principal payments that borrowers make will continue to be passed on to you as they were before.
• What's the status of Lending Club's business? We reported strong financial results for Q1 2016. We had solid originations, operating revenue, and adjusted EBITDA, despite a difficult economic environment. We facilitated $2.75 billion in loans and also reported a substantial amount of cash and securities - $868 million.
• Where is Lending Club going from here? We're intensely focused on restoring our investors' confidence. We've talked to hundreds of our investors - spanning individuals to financial advisors to banks to large institutions - including some who are new to Lending Club. While some investors have paused, others have reiterated their interest. We remain committed to both our borrowers and investors, and are working day and night to prove to you that we deserve your trust.
• I'm worried about Lending Club's data - what are you doing to reassure me? On Monday, we took the first of many steps to restore investors' confidence in our data. We shared the observations of an independent forensic data change analysis that looked at over 10 million test conditions on approximately 673,000 whole loans sold over the last eight quarters. Excluding the loans previously identified as having an issue, 99.99% of the loans the independent firm tested display either no changes or changes explained by the normal course of business. You can read the full details here.
• Are you confident in Lending Club's management? Yes. Our Executive Team has been working together for the past six years and has deep expertise in credit, operations, marketing, finance, human resources and technology. We're also supported by one of the strongest Board of Directors in the industry. It includes Hans Morris (the former President of Visa and now our Executive Chairman), Larry Summers (former US Treasury Secretary), John Mack (former CEO of Morgan Stanley), Mary Meeker (a Partner at Kleiner Perkins Caufield & Byers) and other experienced executives.
• What happens if Lending Club goes bankrupt? First and foremost, we are not going out of business. Lending Club has a strong business, a large balance sheet and we are here to stay. We have $868 million in cash and securities, which could cover our costs for a long time. Second, Lending Club has no claim to the payments you receive from borrowers, since each Note is tied to a loan, and loan payments are passed on to Note holders. Third, with a $10.2 billion loan portfolio that generated over $18 million in revenue in the first quarter of 2016 alone, we could profitably service the existing Lending Club platform as a standalone business, even if we didn't facilitate a single new loan. Finally, and I am only mentioning this because some have asked, if all else failed we would transfer our loan servicing obligations to a third party backup servicer. We have a longstanding contract with a third party to service loans in the event Lending Club can't, so that you'd continue to receive borrower payments (regardless of LendingClub Corporation's status). See our prospectus for more detail.
• Why the Department of Justice subpoena? The Department of Justice often issues subpoenas in response to public disclosures such as ours, especially in light of the department's focus on financial services. The company is fully cooperating with the department's investigation.
Our Investor Services team has been working tirelessly to address as many of your questions as possible and I have full confidence in their abilities. Please do not hesitate to reach out by phone at (888) 596-3159 (7am-5pm PT, Monday through Friday) or email us anytime at investing@lendingclub.com.
We're working hard to make things right and I will continue to keep you informed as we move ahead.
Thank you for investing with us. We look forward to having you as an investor for years to come.
Sincerely,
Post by: Vagabond76 on May 20, 2016, 09:15:41 AM
If the institutions don't provide funds for loans, then LC makes no revenue off of fees and the company shuts down. The loans still exist are payable and enforceable according to the laws of the state specified in the loan contract. But who is going to step in and service the loans--collecting payments and disbursing proceeds to the investors? Is that covered in the investment contract? Presumably another company will offer to buy the loan portfolio. Are the investors stuck with whoever a bankruptcy trustee chooses? That companies revenue will only come from one place--money that would have been payable to the investor.
Post by: Greenpez on May 20, 2016, 10:09:33 AM
But who is going to step in and service the loans--collecting payments and disbursing proceeds to the investors? Is that covered in the investment contract? Presumably another company will offer to buy the loan portfolio. Are the investors stuck with whoever a bankruptcy trustee chooses? That companies revenue will only come from one place--money that would have been payable to the investor.
From the wall of text above your post:
"• What happens if Lending Club goes bankrupt? First and foremost, we are not going out of business. Lending Club has a strong business, a large balance sheet and we are here to stay. We have $868 million in cash and securities, which could cover our costs for a long time. Second, Lending Club has no claim to the payments you receive from borrowers, since each Note is tied to a loan, and loan payments are passed on to Note holders. Third, with a $10.2 billion loan portfolio that generated over $18 million in revenue in the first quarter of 2016 alone, we could profitably service the existing Lending Club platform as a standalone business, even if we didn't facilitate a single new loan. Finally, and I am only mentioning this because some have asked, if all else failed we would transfer our loan servicing obligations to a third party backup servicer. We have a longstanding contract with a third party to service loans in the event Lending Club can't, so that you'd continue to receive borrower payments (regardless of LendingClub Corporation's status). See our prospectus for more detail."
Post by: Paul der Krake on May 20, 2016, 10:26:20 AM
I have declined to invest with them, but following this story closely. Interesting times.
Post by: robartsd on May 20, 2016, 11:20:38 AM
This company, indeed the industry's whole business model, is fucked if the big boys don't provide money to make loans. Peer-to-peer lending has NEVER been "peer" to "peer." The "investors" looking to make a return have always been pension funds, hedge funds, investment banks, and endowment funds looking to increase yield. It's never been about the little guy that writes a blog or reads this forum.There are many companies that specialize in servicing various types of loans. They get a small portion of the interest payments on the loans they service. I don't know the details of Lending Club's loan portfolio, but I imagine that the servicing contracts are a valuable asset. I'd honestly be more worried about LC shutting down as a borrower than as a lender. A change in servicer is a hassle and sometimes errors are made during the transfer. Also, loan servicing companies that do not originate loans have little incentive to provide good customer service to borrowers.
If the institutions don't provide funds for loans, then LC makes no revenue off of fees and the company shuts down. The loans still exist are payable and enforceable according to the laws of the state specified in the loan contract. But who is going to step in and service the loans--collecting payments and disbursing proceeds to the investors? Is that covered in the investment contract? Presumably another company will offer to buy the loan portfolio. Are the investors stuck with whoever a bankruptcy trustee chooses? That companies revenue will only come from one place--money that would have been payable to the investor.
Post by: Telecaster on May 20, 2016, 11:28:53 AM
One other note, my biggest fear as a shareholder is when multiple regulatory agencies jump on this news and start fining the company. The people who did this are gone, all the government is doing at that point is stealing money from shareholders. They're still fining other financial institutions from eight years ago.
Insane isn't it? The government is acting as if owners of the company might actually have a tiny bit of responsibility for how the company is run.
Post by: fa on May 20, 2016, 11:41:32 AM
As for the loans: they are likely safer but how much do you trust a company suspected of legal wrongdoing. Maybe the CEO is the only one who has gone rogue and he is gone. All is well now? At the very least you can conclude that LC has inadequate internal controls. Would you keep your money with such a company? Maybe not.
This story remind us to carefully examine all investment advice, even coming from MMM.
Post by: Another Reader on May 20, 2016, 12:00:59 PM
Time to get out the popcorn....
Post by: Paul der Krake on May 20, 2016, 12:44:25 PM
http://finance.yahoo.com/news/exclusive-citigroup-declined-support-lending-club-memo-171322323--sector.htmlWhat exactly is Citi's relationship with Lending Club? The compliance department at large investment banks rules on everything that gets released to the public. They would need an excellent reason to comment on an outside company, regardless of good or bad.
Time to get out the popcorn....
Post by: Tyson on May 20, 2016, 12:46:26 PM
Post by: Another Reader on May 20, 2016, 01:37:44 PM
http://finance.yahoo.com/news/exclusive-citigroup-declined-support-lending-club-memo-171322323--sector.htmlWhat exactly is Citi's relationship with Lending Club? The compliance department at large investment banks rules on everything that gets released to the public. They would need an excellent reason to comment on an outside company, regardless of good or bad.
Time to get out the popcorn....
http://www.ifre.com/p2p-running-out-of-steam-thank-god/21247022.article
There is a lot more to the P2P story than what you see on the surface.
I thought it was strange the banking industry was not up in arms over the loosely regulated competition. Looking into it, it was obvious why. The traditional lenders have co-opted the
P2P lending business. It's now "marketplace lending" and P2P has very little to do with these businesses.
Post by: Stache-O-Lantern on May 20, 2016, 02:58:57 PM
As for the loans: they are likely safer but how much do you trust a company suspected of legal wrongdoing. Maybe the CEO is the only one who has gone rogue and he is gone. All is well now? At the very least you can conclude that LC has inadequate internal controls. Would you keep your money with such a company? Maybe not.
Well, Vanguard had legal trouble with tax issues last year, a lawsuit or two I believe, and accusations of tax fraud. It was discussed on these boards, and i haven't heard that the legal issues were resolved. Granted, Vanguard is a much more established company selling a product with a much longer history than LC.
I have a very small investment in LC loans (and a much larger investment in Vanguard mutual funds!) and I'm not particularly worried yet. According to the news, the ex-CEO misrepresented some data on loans LC sold to an institutional investor. How about that, he was misrepresenting information to the big boys, not the tiny investors on LC. The tiny investors probably don't control enough money to be worth lying to. Sure, maybe there will be an avalanche of lies that will now start to unravel. We will see.
Post by: Stache-O-Lantern on May 20, 2016, 03:18:19 PM
Why in the world did anyone think putting their money into Lending Club was a good way to invest? I'm not particularly risk-averse, but good lord! How can people not see how risky this is? "Regular banks won't lend money to these people, so I will!" WTF?
I chose LC for 3% of my taxable portfolio. At the time i was considering that same % for a junk bond fund. I ended up choosing LC instead. Most of the people who get loans on LC have been lent to by banks through credit cards, and the point of the LC loan is to pay off credit card debt at a lower interest rate. Sure, some may not actually do that once they get the loan. I acknowledge LC loans are risky. I was looking for high risk, and hopefully high return, for a small % of my portfolio.
I've been in LC for almost 3 years. So far my annualized return, calculated in excel, is roughly 12.5%. That's after expenses and loan write-offs, but before taxes. I'm satisfied. I can only wait and see what the recent circumstances develop into.
I've noted the number of LC notes for sale on the secondary market has almost doubled in the last couple weeks. It's usually around 300,000. Last night it was about 571,000. Clearly i think some people are trying to get out. So people were marking notes down more than usual. I bought a couple with good payment histories at a greater discount than i can usually get.
Post by: chesebert on May 20, 2016, 03:20:33 PM
Post by: Seppia on May 20, 2016, 03:43:52 PM
For the folks doing LC loans, can someone tell me why you decided to investment in LC loans and not junk bonds. Presumably junk bonds have good yield, greater transparency and offer the protection of the securities laws and there is a bond trustee to enforce the terms of the bond. What makes LC loans superior to well diversified and diligenced portfolio of junk bonds?
Mostly because it was recommended by MMM.
It was / is play money amounts for me so willing to throw it on a hi risk hi reward.
MMM has made a huge net positive difference in my life.
Probably LC was / is a bad idea but I guess the damage (if any) is going to be pretty minor.
Certainly, trying to get out when everybody else is sounds like a bad idea, unless all loans go to s**t
I'll stay put.
Post by: Stache-O-Lantern on May 20, 2016, 03:44:42 PM
For the folks doing LC loans, can someone tell me why you decided to investment in LC loans and not junk bonds. Presumably junk bonds have good yield, greater transparency and offer the protection of the securities laws and there is a bond trustee to enforce the terms of the bond. What makes LC loans superior to well diversified and diligenced portfolio of junk bonds?
I have no great reason other than I enjoy LC. I pick notes by hand after running a screen i came up with with all the historical data available on the nickel steamroller website. My account is small enough that in a few minutes a week i can do that. I also look for bargains on the secondary market for notes. The great majority of my portfolio is in Vanguard index funds. LC fulfills some inner need i have to trade, without screwing up the advantages of buy-and-hold index investing.
So far my return at LC has beaten Vanguard's hi-yield corporate mutual fund over the last roughly 3 years. Only time will tell if that continues. I don't have more $ in LC than i could afford to lose.
Post by: pha999 on May 22, 2016, 07:23:46 AM
Post by: pl28 on May 22, 2016, 07:59:57 AM
Post by: Fudge102 on May 22, 2016, 05:23:02 PM
Post by: Dollar Slice on May 22, 2016, 05:50:33 PM
Why in the world did anyone think putting their money into Lending Club was a good way to invest? I'm not particularly risk-averse, but good lord! How can people not see how risky this is? "Regular banks won't lend money to these people, so I will!" WTF?
There are plenty of companies making money hand over fist off of imperfect borrowers (credit card companies, payday loans, etc.). You just have to make sure that the interest rate is sufficient to compensate for the expected defaults. The risk is mitigated by diversifying your investment over many many loans - they come in $25 increments. So you buy a few hundred of them instead of putting all your money into one risky loan - just like buying an S&P 500 index instead of buying a bunch of shares of one company. When I invested I was making about 12%. It was too high-maintenance for me at the time so I cashed out, but I can't complain about the returns or the risk.
Also, they weren't necessarily all people who banks wouldn't lend to. I bet a lot of them went to Lending Club because it's all done online and automatically - I think that's very appealing for younger people who don't have experience with getting loans and mortgages in B&M banks. I never loaned to anyone with a FICO under 700.
Post by: joleran on May 23, 2016, 08:58:02 AM
For the folks doing LC loans, can someone tell me why you decided to investment in LC loans and not junk bonds. Presumably junk bonds have good yield, greater transparency and offer the protection of the securities laws and there is a bond trustee to enforce the terms of the bond. What makes LC loans superior to well diversified and diligenced portfolio of junk bonds?
On the surface, these asset classes may seem similar because they're both high risk, high yield fixed income instruments. However, there's one huge difference - LC note interest rates aren't tied to any underlying rate curve. In the middle of the credit crisis when everything was going to shit in the bond markets, LC rates barely quivered.
Also, LC notes are higher risk as you note, but have higher return as well, and the markets are not efficient so there is plenty of opportunity. I've been getting ~12% returns net of defaults every year since 2008 in LC by creating my own credit risk model that appears to be working.
Post by: chesebert on May 23, 2016, 10:22:12 AM
For the folks doing LC loans, can someone tell me why you decided to investment in LC loans and not junk bonds. Presumably junk bonds have good yield, greater transparency and offer the protection of the securities laws and there is a bond trustee to enforce the terms of the bond. What makes LC loans superior to well diversified and diligenced portfolio of junk bonds?
On the surface, these asset classes may seem similar because they're both high risk, high yield fixed income instruments. However, there's one huge difference - LC note interest rates aren't tied to any underlying rate curve. In the middle of the credit crisis when everything was going to shit in the bond markets, LC rates barely quivered.
Also, LC notes are higher risk as you note, but have higher return as well, and the markets are not efficient so there is plenty of opportunity. I've been getting ~12% returns net of defaults every year since 2008 in LC by creating my own credit risk model that appears to be working.
the LC notes are not marked to market, should be subject to liquidity discount and are not pegged to underlying interest rate. Given that we are in a low interest environment, any upward movement on market base interest rate should in theory decrease the market value of your LC notes - but you won't see that because you are only shown the historical book value of the notes.
Your 12% return does not take into account any liquidity discount when you sell the notes and your notes are not marked to market, which if they were could very well reduce your 12% return.
Post by: TheStachery on May 23, 2016, 11:51:20 AM
Why in the world did anyone think putting their money into Lending Club was a good way to invest? I'm not particularly risk-averse, but good lord! How can people not see how risky this is? "Regular banks won't lend money to these people, so I will!" WTF?
Who says regular banks won't lend money to them? There are people on LC with great credit. Are you saying this because the loans are unsecured loans? Most good intentioned people will pay back these loans, because if they do not, it will hit there credit score. There is risk, but there is risk with many investments, the more risk, the great the return.
Post by: TheStachery on May 23, 2016, 03:40:22 PM
Post by: chasesfish on June 04, 2016, 07:01:37 AM
Post by: Vagabond76 on June 04, 2016, 07:29:36 AM
I just got an offer that's $100 for a new $10,000 deposited.
Where is that bonus money coming from, ponzi scheme? This ship is going down like a torpedoed submarine.
Post by: Fudge102 on June 04, 2016, 06:06:40 PM
I just got an offer that's $100 for a new $10,000 deposited.
Where is that bonus money coming from, ponzi scheme? This ship is going down like a torpedoed submarine.
That's a horrible statement. How many banks do the same thing every time you open a card, an account, or refer a friend? They are trying to incentivize people to start reinvesting. Their product is based off of people investing. Many have held or sold. It's about getting money back in.
Post by: Paul der Krake on June 04, 2016, 06:40:17 PM
Banks that offer card bonuses have hugely profitable consumer lending operations. LC is operating at a moderate loss.I just got an offer that's $100 for a new $10,000 deposited.
Where is that bonus money coming from, ponzi scheme? This ship is going down like a torpedoed submarine.
That's a horrible statement. How many banks do the same thing every time you open a card, an account, or refer a friend? They are trying to incentivize people to start reinvesting. Their product is based off of people investing. Many have held or sold. It's about getting money back in.
Post by: Vagabond76 on June 04, 2016, 10:06:40 PM
Post by: Stache-O-Lantern on June 05, 2016, 09:38:25 AM
For the folks doing LC loans, can someone tell me why you decided to investment in LC loans and not junk bonds. Presumably junk bonds have good yield, greater transparency and offer the protection of the securities laws and there is a bond trustee to enforce the terms of the bond. What makes LC loans superior to well diversified and diligenced portfolio of junk bonds?
On the surface, these asset classes may seem similar because they're both high risk, high yield fixed income instruments. However, there's one huge difference - LC note interest rates aren't tied to any underlying rate curve. In the middle of the credit crisis when everything was going to shit in the bond markets, LC rates barely quivered.
Also, LC notes are higher risk as you note, but have higher return as well, and the markets are not efficient so there is plenty of opportunity. I've been getting ~12% returns net of defaults every year since 2008 in LC by creating my own credit risk model that appears to be working.
the LC notes are not marked to market, should be subject to liquidity discount and are not pegged to underlying interest rate. Given that we are in a low interest environment, any upward movement on market base interest rate should in theory decrease the market value of your LC notes - but you won't see that because you are only shown the historical book value of the notes.
Your 12% return does not take into account any liquidity discount when you sell the notes and your notes are not marked to market, which if they were could very well reduce your 12% return.
My LC loan portfolio has an aggregate interest rate of roughly 15%. The fed increasing interest rates by a percent or two over the next couple years, if they even did that, just doesn't affect it much. LC notes are of either 3 or 5 yr durations, so they are not as sensitive to interest rates as longer term loans. True, the secondary loan market for performing loans is particularly thin. Who wants to sell a performing loan earning 15% interest! The mark to market price doesn't matter that much for a performing loan that the holder intends to hold to maturity, as presumably most LC investors do. If the loan performs, they earn the interest rate, regardless of what they could have sold it for on the secondary market.
My 12.5% return so far takes into account all loans that are non-performing because i have sold all of those except 1 on the secondary market. That 1 loan declared bankruptcy, which prevents its sale on the secondary market under the platform rules. That 1 loan is counted as a total loss in the calculation of that return.
Post by: Stache-O-Lantern on June 05, 2016, 09:50:06 AM
With several big boys no longer fronting money, LC is desperate for cash to lend out. If no cash comes in than there are no new loans or revenue, and LC goes under.
Yeah, maybe. But things usually don't work out that poorly. I look at the current bad news for LC as practice for the emotional discipline of staying in the market when there is a big drop. You can't panic at every bump in the road. I added a small amount to my LC account last week. There's still performing loans listed on the secondary market with good payment histories, at better than usual discounts.
The secondary market is still reverting to normal, the week after the bad news there were 571,000 listed. A couple days ago there were 466,000 listed. Normal before all the bad news was about 300,000.
Post by: chesebert on June 05, 2016, 10:21:20 AM
Notes might be okay assuming no bankruptcy risk but the stock is pure rubish for buy and hold. You might make some decent money trading volatility but that's for professionals.With several big boys no longer fronting money, LC is desperate for cash to lend out. If no cash comes in than there are no new loans or revenue, and LC goes under.
Yeah, maybe. But things usually don't work out that poorly. I look at the current bad news for LC as practice for the emotional discipline of staying in the market when there is a big drop. You can't panic at every bump in the road. I added a small amount to my LC account last week. There's still performing loans listed on the secondary market with good payment histories, at better than usual discounts.
The secondary market is still reverting to normal, the week after the bad news there were 571,000 listed. A couple days ago there were 466,000 listed. Normal before all the bad news was about 300,000.
Post by: Stache-O-Lantern on June 05, 2016, 11:26:44 AM
Notes might be okay assuming no bankruptcy risk but the stock is pure rubish for buy and hold. You might make some decent money trading volatility but that's for professionals.With several big boys no longer fronting money, LC is desperate for cash to lend out. If no cash comes in than there are no new loans or revenue, and LC goes under.
Yeah, maybe. But things usually don't work out that poorly. I look at the current bad news for LC as practice for the emotional discipline of staying in the market when there is a big drop. You can't panic at every bump in the road. I added a small amount to my LC account last week. There's still performing loans listed on the secondary market with good payment histories, at better than usual discounts.
The secondary market is still reverting to normal, the week after the bad news there were 571,000 listed. A couple days ago there were 466,000 listed. Normal before all the bad news was about 300,000.
Sure. I guess I've derailed talking about the notes themselves. I don't own any of the stock, and have no intent or desire to buy any.
Post by: FarmerPete on June 06, 2016, 06:58:14 AM
I just got an offer that's $100 for a new $10,000 deposited.
Where is that bonus money coming from, ponzi scheme? This ship is going down like a torpedoed submarine.
Chase regularly gives me $150 to put $1350 into a checking account for 6 months. Is Chase a Ponzi Scheme? Should we stay away from their stock/accounts? Now I'm worried...If Chase is going to collapse in a ball of flame, who is safe? Maybe I should take all my money out of my accounts and stuff it in my fireproof safe, conveniently hidden in my mattress that no one knows about...CRAP!!!!!
Post by: Vagabond76 on June 06, 2016, 04:48:02 PM
LC suffers from the same issues. If there aren't new borrowers AND investors, then the going concern collapses. Only this time, LC is too small for the government to care. If people willingly walked away from their houses to avoid paying the mortgage, what do you expect them to do when LC is no longer around to service their loans? A number of them will tell the backup servicer to go fuck itself.
Post by: tonysemail on June 06, 2016, 06:00:07 PM
my main thought is that my FIRE plan is safe enough with stock market returns.
There's no need for me to go chasing yield and take on extra risk.
Post by: retiringearly on June 28, 2016, 07:16:46 AM
https://techcrunch.com/2016/06/28/troubled-p2p-lender-lendingclub-names-scott-sanborn-ceo-cuts-179-jobs-amid-lower-loan-volume/
Yet more changes afoot for LendingClub — a peer-to-peer loans marketplace whose stock tanked May after its founder, CEO and chairman Renauld Laplanche resigned amid an accounting scandal. Ahead of an annual meeting being held later today, the company announced Scott Sanborn as its permanent CEO and Hans Morris as independent chairman of the board as it seeks to repair its image and business. But it also said that it would cut 179 jobs “in light of lower loan volumes in the second quarter and recognizing that fully restoring investor confidence may take time.”
Sanborn had been in the CEO role on an interim basis before today.
Currently, LendingClub’s stock is up nearly 6% in pre-market trading. But at $4.55, it is still hovering very close to its 52-week low.
The company also gave an update today about its Q2 business, and it’s not pretty. It expects loan originations in Q2 to be one-third lower compared to Q1 amid the fall in business after the scandal first came to light, or “since pausing in early May” in the company’s more euphemistic terms.
Among other charges, LendingClub said it also expects to report “investor incentives of roughly $9 million”; along with $15 million – $20 million of additional expenses “related to employee retention, employee severance, advisory relationships, board review, remediation and due diligence activities.”
Biggest of all will be a goodwill write-down of between $20 million and $40 million related to “slower growth expectations for Springstone,” the credit marketplace it acquired in 2014 for $140 million. All in all, these charges will total between $44 million and $69 million.
LendingClub was once the darling of the very crowded P2P lending space competing against the likes of Prosper, FundingCircle, Kabbage and many more with a model that disrupted the traditional banking world by connecting people looking to borrow money with those willing to lend it. Operating only in the U.S., LendingClub’s sweeteners were rates lower than institutional incumbents, and a process that appeared to work far more seamlessly and quickly. The company raised nearly $400 million when still in startup mode and then nearly $1 billion in its IPO at the end of 2014.
But it appears that what LendingClub was presenting to the world was indeed too good to be true: behind the scenes there were loan applications that were being altered, and the CEO had not disclosed his role in a fund that LendingClub was investing in essentially to provide loans on the platform. These problems led to both the Justice Department and the SEC investigating the company. But putting to one side LendingClub’s own internal mess, there is the fact that the Consumer Financial Protection Bureau is now accepting complaints about sites like Lending Club, which could lead to further fines and lawsuits.
All of this has led to a big decline in LendingClub confidence the amount of loans being made through the platform, and that is what LendingClub is now trying to tackle head-on to stave off the freefall.
Sanborn has been with the company since 2010, most recently as president and COO before stepping up to the CEO role. “We have demonstrated the power of the Lending Club marketplace model to generate attractive, risk adjusted returns to investors,” he said in a statement. “We are working closely with investors to rebuild confidence and are encouraged to see them returning to the platform.”
As part of today’s news, LendingClub also said that it had concluded its own internal review of some of the problems. It has adjusted the valuation of six private funds managed by LC Advisors (the fund that did not disclose Laplanche’s involvement originally), and it has “made several changes to improve governance of the funds, including establishing a majority independent Governing Board.” It also was investigating loans made in December 2009 to Laplance and three members of his family.
The company will be reconvenig a shareholder meeting later today and we’ll update this post as and when we learn more.
Post by: Malaysia41 on July 06, 2016, 02:59:26 AM
This write up is independent of the shenanigans of the back end business. Long story short - while returns were reported as 12% annualized, between fees, write offs, recovery fees, collection fees, etc, I'm looking at an annualized return of 2-3%. I began divesting in earnest when I realized that LC had every incentive to write off loans and then recover them for an 18% fee.
Luckily, I sold most of my notes prior to the revelations about how the business was being managed. Now it's tough to sell more than one or two notes a day, even at steep discounts. But I've recovered more than I put in, and there's only about $1500 worth of notes left to sell.
It's back to Vanguard ETFs for this kid.
Post by: retiringearly on July 06, 2016, 07:23:56 AM
For what it's worth, here's a recap of my 2 year experience with LC as an investor in the lending platform. (http://www.lauramariereese.com/lending-club-mega-post/)Thanks! That was a great write up. One question, those written off loans seem really high, were you investing in the riskiest batch of loans?
This write up is independent of the shenanigans of the back end business. Long story short - while returns were reported as 12% annualized, between fees, write offs, recovery fees, collection fees, etc, I'm looking at an annualized return of 2-3%. I began divesting in earnest when I realized that LC had every incentive to write off loans and then recover them for an 18% fee.
Luckily, I sold most of my notes prior to the revelations about how the business was being managed. Now it's tough to sell more than one or two notes a day, even at steep discounts. But I've recovered more than I put in, and there's only about $1500 worth of notes left to sell.
It's back to Vanguard ETFs for this kid.
Post by: Malaysia41 on July 06, 2016, 07:32:02 AM
15% A, 30%B, 28%C, 14%D, 8%E, 4%F, 1%G.
It seems heavier on C, D and E than I remembered - close to what they put as the 'platform mix'. So, I didn't have the most conservative allocation going. But, it also wasn't terribly risky either - kind of mid to low-risk if I compare to their canned portfolios.
Post by: retiringearly on July 06, 2016, 09:20:53 AM
Post by: FIPurpose on July 06, 2016, 12:20:34 PM
For what it's worth, here's a recap of my 2 year experience with LC as an investor in the lending platform. (http://www.lauramariereese.com/lending-club-mega-post/)
This write up is independent of the shenanigans of the back end business. Long story short - while returns were reported as 12% annualized, between fees, write offs, recovery fees, collection fees, etc, I'm looking at an annualized return of 2-3%. I began divesting in earnest when I realized that LC had every incentive to write off loans and then recover them for an 18% fee.
Luckily, I sold most of my notes prior to the revelations about how the business was being managed. Now it's tough to sell more than one or two notes a day, even at steep discounts. But I've recovered more than I put in, and there's only about $1500 worth of notes left to sell.
It's back to Vanguard ETFs for this kid.
Lending Club has absolutely no motivation to send more loans into charge-off status. They charge an upfront 5% origination fee to the borrowers and a 1% fee to investors. If this does not make up 100% of their profits, it is at least 95%. I doubt the 18% fee they charge for collections even breaks even for them. Collections is a very expensive process and there is no conspiracy. A run of bad notes is not something done because Lending Club wants to screw investors and collect their fee.
Post by: tonysemail on July 06, 2016, 12:46:39 PM
Lending Club has absolutely no motivation to send more loans into charge-off status. They charge an upfront 5% origination fee to the borrowers and a 1% fee to investors. If this does not make up 100% of their profits, it is at least 95%. I doubt the 18% fee they charge for collections even breaks even for them. Collections is a very expensive process and there is no conspiracy. A run of bad notes is not something done because Lending Club wants to screw investors and collect their fee.
agreed. My first thought is the 18% fee comes from the 3rd party they contract with.
I read they outsource collections after a loan is 30 days past due.
Post by: zombiehunter on July 06, 2016, 02:31:38 PM
The only way that it could be worthwhile is in a tax-advantaged account, where it can grow tax-free. As a result, I'm also in the process of liquidating a taxable account, and set up an IRA earlier this spring ear marked as 2015. I think it's also critical to lean towards the riskier notes and avoid the A-B-C grades. Per Nickle Steam Roller, the most profitable class is E. You have to seek out higher returns with riskier loans to offset the risk (which, ok, is supposed to be reflected in the class and interest rate, but it's not yet a 100% efficient system) as well as the fees (which are not adjusted based on risk/interest rate/Note class). You pay a 1% service fee on every note, whether it's a 7% A-grade or a 25% G-grade note.
In regards to the "sneaky" practices of Lending Club regarding their fees, I've noticed something apart from the above discussion on recovery fees: Lending Club is supposed to charge a 1% servicing fee. In fact, they charge more than this. Consider the following example, picked randomly out of my pool of notes:
- F-Grade, 24.5% interest rate note, on a loan of $35,000. The borrower makes payments of $1017 per month, so far, all on time since issuance in May 2015 (so relatively young).
- My $25 Note of this loan is entitled to $0.73 monthly payments on this $25 note, which is divided between P&I.
- "1%" Servicer Fees, however, are taken out at my Note level, and note at the loan level. That is, LC could charge 1% of the $1017 monthly payment and pocket $10.17 per month for administration, which is not a bad deal for them considering they have no skin in the game and have already taken an origination fee. What they do instead is charge 1% of my $0.73 portion, which of course rounds up to just $0.01. This is in fact 1.369%. So they increase their fees in this example almost 40% with this. If you browse through my notes, you will find many examples of monthly payments for less than $1, which means LC almost always gets more than 1% servicing fee. You will very rarely find a note that pays, say, $1.10 per month, which would mean a less than 1% fee.
- Assuming every note for this loan was at $25 (which is not the case, surely some notes are $50 or more), there are 1400 notes, meaning their collected servicing fees are $14 rather than $10.17.
- The problem could be avoided by investing $50 per note rather than $25. However, this means less diversification as I could only hold half as many notes. Not a big deal for accounts over $10k, but not ideal for an account around $5k. And this would only work for notes that are between $.50 and $.75 in monthly payments per $25 note - many are between $.75 and $.99, for example an $.81 per month payment on a $25 note would mean a $50 note would yield $1.62 per month and incur a $.02 fee (rounded up from $.0162).
Post by: MustacheAndaHalf on July 06, 2016, 02:52:58 PM
A1-A5: 5% defaulted
B1-B5: 6% defaulted
C1-C5: 27% defaulted
Roughly speaking, in the average default I lost half my principal (and 100% of interest). Overall it cost me roughly 1/3rd of my total return. I haven't completely wound down my Lending Club notes, but it's almost there.
To calculate the total return, I grouped all my notes which were paid off into one group and viewed the cost and payments. I did the same with another group of notes where each note had defaulted. That let me see the performance of non-defaulting notes, defaulting notes, and how they added up together.
Note I stopped buying new lending club notes several years back when they started allowing large investors to buy every note in sight (I think they allowed one or more hedge funds to invest). Hopefully they've cleared up the supply problem by now... I highly recommend studying historical data on notes to try and lower risk.
Post by: tonysemail on July 06, 2016, 03:00:37 PM
In regards to the "sneaky" practices of Lending Club regarding their fees, I've noticed something apart from the above discussion on recovery fees: Lending Club is supposed to charge a 1% servicing fee. In fact, they charge more than this.
This does not seem to be true.
http://kb.lendingclub.com/investor/articles/Investor/What-fees-does-Lending-Club-charge-investors/
"All fees are calculated to the tenth decimal place and will appear rounded to the nearest whole cent in your account. To see the full amount of the fees calculated to the tenth decimal place, you can hover your cursor over the dotted line below the rounded number."
Post by: Malaysia41 on July 06, 2016, 06:43:02 PM
Lending Club has absolutely no motivation to send more loans into charge-off status. They charge an upfront 5% origination fee to the borrowers and a 1% fee to investors. If this does not make up 100% of their profits, it is at least 95%. I doubt the 18% fee they charge for collections even breaks even for them. Collections is a very expensive process and there is no conspiracy. A run of bad notes is not something done because Lending Club wants to screw investors and collect their fee.
Maybe so. On the statement, there are two different fees called out. There are collection fees, which typically ran around a few dollars a month, and, my impression was that they were the fees for the initial pestering that might be done when a note gets to be more than 30 days late.
Later, the loans would get charged off.
Then, for all charged off notes, if they somehow managed to collect, there was a recovery fee, which, was 18%. Which of course, is still a part of the collections process. I'm sure it is a lot of work. Have you seen Highston on Amazon prime? Good example there. Okay, not really a good example, but that show made me laugh.
That said, it is, as you say, entirely possible that there was a string of bad notes. At first, 1% of my account balance was being charged off per month. But then it went as high as 10% since I first turned off automatic reinvestment and began taking income from notes off the table. The charge offs just seemed extraordinarily large, and it made me suspicious. I'm not saying they were charging notes off early for profit. I'm just saying they were charging off an awful lot of notes and then recovering an awful lot of notes.
Here's some data:
| Month | Interest | Charged Off | Recovered |
| 5/2015 | $709 | $334 | $1 |
| 6/2015 | $683 | $329 | $22 |
| 7/2015 | $694 | $422 | $33 |
| 8/2015 | $613 | $332 | $46 |
| 9/2015 | $593 | $424 | $37 |
| 10/2015 | $580 | $443 | $22 |
| 11/2015 | $520 | $563 | $94 |
| 12/2015 | $531 | $574 | $93 |
Regardless, the returns and risks were not worth the investment. I'll admit, I did not go through and hand select notes as so many investors did. If I had, I may not have seen so many notes get charged off.
Lastly, as zombiehunter noted, the investment really needs to be in a tax-advantaged account. It was silly for me to set this up in an after-tax account when I was still working. Now that we're FIREd, it's not too bad. But paying 33%+ on the profits a couple years ago was a big 'whoopsies'.
Post by: zombiehunter on July 07, 2016, 05:41:21 AM
wow, this is true - thanks for telling me!In regards to the "sneaky" practices of Lending Club regarding their fees, I've noticed something apart from the above discussion on recovery fees: Lending Club is supposed to charge a 1% servicing fee. In fact, they charge more than this.
This does not seem to be true.
http://kb.lendingclub.com/investor/articles/Investor/What-fees-does-Lending-Club-charge-investors/
"All fees are calculated to the tenth decimal place and will appear rounded to the nearest whole cent in your account. To see the full amount of the fees calculated to the tenth decimal place, you can hover your cursor over the dotted line below the rounded number."
Post by: AM43 on July 07, 2016, 07:11:02 AM
Lending Club has absolutely no motivation to send more loans into charge-off status. They charge an upfront 5% origination fee to the borrowers and a 1% fee to investors. If this does not make up 100% of their profits, it is at least 95%. I doubt the 18% fee they charge for collections even breaks even for them. Collections is a very expensive process and there is no conspiracy. A run of bad notes is not something done because Lending Club wants to screw investors and collect their fee.
I'll admit, I did not go through and hand select notes as so many investors did. If I had, I may not have seen so many notes get charged off.
I've been investing with LC since 2009 and all my notes have been hand picked and I only recently(1-2 years) started using automated option to invest in notes and I can tell you that I did not like what automated system picked out for me so I switched it off.
I can honestly tell you that hand picked notes have less charged off rates, but yes it takes time to go thru every note and pick one you like. I don't mind though, as I find it fun activity.
Post by: robartsd on July 07, 2016, 08:32:04 AM
I can honestly tell you that hand picked notes have less charged off rates, but yes it takes time to go thru every note and pick one you like. I don't mind though, as I find it fun activity.Isn't that part of the idea of peer-to-peer lending - individuals deciding who to lend to. Glad to hear that extra work pays off.
Post by: JZinCO on July 07, 2016, 09:09:02 AM
With several big boys no longer fronting money, LC is desperate for cash to lend out. If no cash comes in than there are no new loans or revenue, and LC goes under.
Yeah, maybe. But things usually don't work out that poorly. I look at the current bad news for LC as practice for the emotional discipline of staying in the market when there is a big drop. You can't panic at every bump in the road. I added a small amount to my LC account last week. There's still performing loans listed on the secondary market with good payment histories, at better than usual discounts.
The secondary market is still reverting to normal, the week after the bad news there were 571,000 listed. A couple days ago there were 466,000 listed. Normal before all the bad news was about 300,000.
I thought about how I should react and I'm still not sure. My IPS says 5% in alternative platforms. Do I stay the course? Did I do wrong in selecting the course?
I don't know; I did turn off contributions to m LC account but I'm still reinvesting pay-backs and interest...
I'm fairly concerned about platform risk. I might even redirect my LC money into other crowdfunding platforms. At least I'd be more hedged against platform risk...
Post by: AM43 on July 07, 2016, 09:14:29 AM
I can honestly tell you that hand picked notes have less charged off rates, but yes it takes time to go thru every note and pick one you like. I don't mind though, as I find it fun activity.Isn't that part of the idea of peer-to-peer lending - individuals deciding who to lend to. Glad to hear that extra work pays off.
Majority of LC investors use automated option to purchase notes.
Even with filters in place, I find that automated system picks some questionable notes that I would never pick on my own.
Post by: robartsd on July 07, 2016, 09:31:10 AM
I understand that a majority of LC investors use automated options; however, that's not the idea behind peer-to-peer lending. One should not expect to get great returns as a small time investor using automated tools that someone else developed and owns.I can honestly tell you that hand picked notes have less charged off rates, but yes it takes time to go thru every note and pick one you like. I don't mind though, as I find it fun activity.Isn't that part of the idea of peer-to-peer lending - individuals deciding who to lend to. Glad to hear that extra work pays off.
Majority of LC investors use automated option to purchase notes.
Even with filters in place, I find that automated system picks some questionable notes that I would never pick on my own.
Post by: tonysemail on August 26, 2016, 03:26:58 PM
http://www.bloomberg.com/news/features/2016-08-18/how-lending-club-s-biggest-fanboy-uncovered-shady-loans
In Portland, over coffee, Sims said he’d found thousands of instances from 2009 through 2011 in which Lending Club seemed to allow borrowers to split their loans in two if their first attempt to get a loan didn’t find any takers. For instance, in June 2011, a user from the Phoenix area requested $25,000 for debt consolidation. The user was relatively risky, with a FICO score in the low 700s. Lending Club rated the loan “E2”—one of its riskier categories—offering it at an interest rate of about 18 percent. But investors were skeptical, and only $20,525 worth of the loan’s notes were sold. Later that month the same person, according to Sims, borrowed the difference, $4,475, at an interest rate of just 7.5 percent. (Sims guessed that Lending Club’s algorithms gave the second loan a higher rating because it was smaller and thus less risky.) To the outside, it looks like one reliable loan and one risky loan; in fact they were both risky. “
I hope for their sake they close this loophole quickly.
there's always someone trying to game the system.
Post by: Kwill on August 26, 2016, 03:55:41 PM
I've had pretty good luck with my Lending Club account for the past two years. I kept it small, never much more than $300 at the highest point, but it's showing over 10% for the "adjusted net annualized return." It was over 12% until the other day when one of the loans went into a grace period. Nothing charged off yet. Four or five loans got paid off early, one I sold, and I'll have to wait and see what this one does. I listed it on the trading platform as soon as it went into the grace period, but I might need to offer more of a discount. This was just a trial run with the idea of putting more in once I saw that this was solid, but with all the news about the company, maybe I'll just let the trial wind down and keep transferring out money from repayments.
Post by: FireLane on August 27, 2016, 06:28:24 PM
The other story wasn't as much of a big deal to me, but this one is. If you can't trust that their ratings reflect the true risk, you can't have confidence in your returns. I may let the proceeds from my LC account automatically reinvest, but I think I'm going to stop adding new money and focus on Vanguard instead for the time being.
Post by: uwp on August 31, 2016, 12:34:34 PM
I'm not too well-versed in P2P lending but the YOY comparisons don't look great... $6,000ish increase in late/default/charged off and $7,000ish in interest.
Is everyone else still holding steady?
Post by: Seppia on August 31, 2016, 01:48:56 PM
The worrysome thing about it is that i tried to sell the notes on the secondary market more than once and they are basically untradeable.
It was a valuable lesson because you learn from your mistakes, but with hindsight I would definitely have stayed out
Post by: Fudge102 on September 01, 2016, 08:15:19 AM
Post by: robartsd on September 01, 2016, 08:45:12 AM
And as Seppia said, the secondary market is more like selling at a loss.If everything selling on the secondary market is selling at a loss, then there may be good opportunities to buy there.
Post by: FIPurpose on September 01, 2016, 09:41:12 AM
And as Seppia said, the secondary market is more like selling at a loss.If everything selling on the secondary market is selling at a loss, then there may be good opportunities to buy there.
Yep, I make good money there.
Post by: Kwill on September 02, 2016, 04:00:18 PM
And as Seppia said, the secondary market is more like selling at a loss.If everything selling on the secondary market is selling at a loss, then there may be good opportunities to buy there.
Yep, I make good money there.
I've only ever bought notes from the secondary market. It's nice to be get a discount and be able to see a steady payment history for a few months. My one in-grace note came back, so now I'm feeling more positive about the site again. I don't know if I could handle having a large investment in Lending Club when I worry about one or two people being a few days late now and then.
Post by: chasesfish on September 08, 2016, 09:24:31 AM
Almost 11% of the notes I've issued have gone bad (265 defaulted notes out of 2412) in a 5 year period.
Post by: tonysemail on September 08, 2016, 10:17:24 AM
it's slow and steady and the bad news hasn't caused me to cash out any faster.
Post by: Fudge102 on September 08, 2016, 10:23:04 AM
Post by: chasesfish on September 08, 2016, 11:00:27 AM
I think most people used LC to consolidate credit card debt, but those habits are tough to break and the cards get run up again causing defaults/BKs. Early on, I think there were more people with better credit using it for RE investing and home renovation. Prime financing has gotten easier for that stuff now.
Post by: Fudge102 on September 08, 2016, 08:02:47 PM
Post by: coloradojoe on November 02, 2016, 02:50:56 PM
I am, but i have about 1% of my NW in LendingClub.
The worrysome thing about it is that i tried to sell the notes on the secondary market more than once and they are basically untradeable.
It was a valuable lesson because you learn from your mistakes, but with hindsight I would definitely have stayed out
For those it may help (and at the risk of creating a run on the bank), I'll share that I'm using LENDINGROBOT to help liquidate my LC assets. It's an automated way to liquidate your LC assets. They charge a fee if you use their site to PURCHASE notes (but only after you have over $5000 managed by them in this way). However, they don't charge for selling (beyond the 1% already charged by LC for selling). I've been able to fairly quickly (couple months) sell a fair portion of my current notes for 1-3% above remaining principal and interest -- enough to ensure I don't take a loss after the 1% fee. I haven't had a lot of success selling even Grace Period notes using the discount rates indicated by LC's loss rates -- suggesting that buyers believe the real loss rate to be higher too. This only confirms my concerns about LC's falling returns.
I plan to liquidate all my LC notes as quickly as I can (while minimizing losses). My returns had been fairly steady, but I have made just about no money in 2016 there. My concern is that this may be an early indicator of rising defaults -- or even that we're headed for a recession soon. Either way, my comfort with this unsecured debt is shaken.
Post by: chasesfish on December 31, 2016, 06:28:38 AM
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.
Post by: zazpowered on January 01, 2017, 07:41:10 PM
Post by: Kwill on January 02, 2017, 06:14:36 AM
I don't know if this would scale up, though. I have a tiny little account with 14 current loans, and I transfer money out to my bank account regularly.
Post by: Capyy on January 02, 2017, 10:45:36 AM
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%.
Post by: FIPurpose on January 02, 2017, 10:49:38 AM
Post by: Capyy on January 02, 2017, 10:57:28 AM
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).
Post by: Stache-O-Lantern 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.
Post by: Icecreamarsenal on January 02, 2017, 02:01:55 PM
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.
Post by: AM43 on January 03, 2017, 12:29:09 PM
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.
Post by: Fudge102 on January 03, 2017, 01:44:20 PM
Post by: Capyy 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.
Post by: Glaeweth on January 04, 2017, 01:13:37 AM
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.
Post by: chasesfish on January 04, 2017, 04:56:55 AM
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.
Post by: Fudge102 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...
Post by: Capyy on January 07, 2017, 01:20:15 PM
I'm hoping this was just a blip. Only cutting my automated investing in half for now.
Post by: HAPPYINAZ on January 07, 2017, 02:26:42 PM
Post by: coloradojoe 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.
Post by: FIPurpose on January 12, 2017, 03:43:36 PM
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.
Post by: Icecreamarsenal on January 13, 2017, 07:37:58 AM
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.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.
Sent from my iPhone using Tapatalk
Post by: bassman2003 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
Post by: ChpBstrd on January 17, 2017, 12:35:34 PM
Post by: coloradojoe 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.
Post by: coloradojoe 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%
Post by: Capyy on January 17, 2017, 07:14:29 PM
Plan is below 8% stop all investing. Below 7%, start liquidating.
Post by: Indexer 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.
Post by: coloradojoe on February 01, 2017, 02:14:41 AM
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.
Post by: chasesfish on February 01, 2017, 05:58:20 AM
Only positive I'd say about Lending Club is they just integrated with TurboTax! That's a huge help
Post by: Stache-O-Lantern on February 05, 2017, 10:20:10 AM
Post by: ChpBstrd on February 05, 2017, 11:56:42 AM
Post by: Heroes821 on February 06, 2017, 08:16:13 AM
Post by: Cc15gec 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!
:-)
Post by: zombiehunter on February 27, 2017, 01:19:47 PM
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.
Post by: FIPurpose 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.
Post by: SeattleCPA on February 27, 2017, 02:39:26 PM
http://whitecoatinvestor.com/why-i-decided-to-liquidate-my-lending-club-account/
Post by: zombiehunter 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.
Post by: AM43 on March 02, 2017, 12:00:21 PM
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.
Post by: FIPurpose 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.
Post by: Capyy on April 06, 2017, 03:51:07 PM
12% returns were too good to be true
Post by: Fudge102 on April 06, 2017, 08:46:16 PM
Post by: FIPurpose on April 06, 2017, 09:34:03 PM
Post by: Heroes821 on April 07, 2017, 05:59:10 AM
Post by: Capyy 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.
Post by: Tyson 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.
Post by: ChpBstrd on April 07, 2017, 11:09:32 AM
Post by: Capyy 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.
Post by: chasesfish on April 08, 2017, 05:08:11 PM
Post by: Capyy on May 01, 2017, 03:32:46 PM
Post by: FIPurpose 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.
Post by: chasesfish on May 02, 2017, 05:10:00 AM
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.
Post by: TheStachery on May 02, 2017, 06:49:45 AM
Post by: Icecreamarsenal on May 02, 2017, 11:06:43 AM
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Post by: Heroes821 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.
Sent from my iPhone using Tapatalk
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.
Post by: sisto on May 03, 2017, 12:23:08 PM
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.I'm in exactly the same boat as you on this. I've been thinking about pulling out and may do what other are doing by turning off auto investing and then start pulling it out. I only put in $5K as an experiment and was really happy at first, but time to move on now.
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%.
Post by: chasesfish on May 03, 2017, 07:00:24 PM
Post by: Open Space on May 04, 2017, 05:24:15 PM
2016
Jan 7.9%
Feb 11.1%
Mar 13%
Apr 11.3%
May 12%
Jun 9.1%
Jul 5.4%
Aug 11.5%
Sept 12.5%
Oct 8.5%
Nov 8.3%
Dec 7.8%
2017
Jan 6%
Feb 2.8%
Mar 5.3%
Apr 4.7%
These returns are on an account with $10k in deposits. Most of the notes were purchased in late 2015 through May 2016. Notes are grade A-D with a heavy concentration in B&C, and I purchase them manually with a filter. Overall I was happy with performance, and I would have expected some decrease in returns due to the portfolio aging. I've actually added a little money to buy new notes so we will see if it pulls up the averages. Hopefully they will find a way to sort this out - I really like the concept behind peer to peer lending.
Post by: Capyy on May 05, 2017, 07:23:01 AM
Post by: chasesfish on May 05, 2017, 10:25:13 AM
here's another data point...annualized monthly returns from my LC statements since the beginning of 2016:
2016
Jan 7.9%
Feb 11.1%
Mar 13%
Apr 11.3%
May 12%
Jun 9.1%
Jul 5.4%
Aug 11.5%
Sept 12.5%
Oct 8.5%
Nov 8.3%
Dec 7.8%
2017
Jan 6%
Feb 2.8%
Mar 5.3%
Apr 4.7%
These returns are on an account with $10k in deposits. Most of the notes were purchased in late 2015 through May 2016. Notes are grade A-D with a heavy concentration in B&C, and I purchase them manually with a filter. Overall I was happy with performance, and I would have expected some decrease in returns due to the portfolio aging. I've actually added a little money to buy new notes so we will see if it pulls up the averages. Hopefully they will find a way to sort this out - I really like the concept behind peer to peer lending.
Are you manually calculating this or is there somewhere from LC that publishes returns by month for your portfolio?
Post by: uwp on May 09, 2017, 04:59:16 PM
Don't lend to the person who promises to pay you back.
"The more assertive the promise, the more likely he will break it."
Post by: chasesfish on May 09, 2017, 07:30:05 PM
Interesting article on the language used by the borrowers and it's correlation with repayment: http://nymag.com/scienceofus/2017/05/what-the-words-you-use-in-a-loan-application-reveal.html
Don't lend to the person who promises to pay you back.
"The more assertive the promise, the more likely he will break it."
I'm in my 14th year as a banker, very accurate statement.
Post by: chasesfish on May 10, 2017, 08:23:47 AM
January -6.99%
February -10.86%
March 0.27%
April -11.70%
Post by: Icecreamarsenal on May 10, 2017, 08:54:56 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.
Sent from my iPhone using Tapatalk
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.
True. I'm referring not to results, but entity. These are illiquid junk bonds. Thinking or referring to them that way negates any upside appeal for me.
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Post by: ChpBstrd on May 10, 2017, 08:55:40 AM
If that's the case, and if we act on it, the foresight provided by P2P lending experiences could save many times more money than it cost to receive an early economic signal. Based on what I'm hearing, I'll be paying more attention to the Dow Transports Index - known as another canary. I will also think twice before writing any more puts.
Post by: Car Jack on May 10, 2017, 09:17:55 AM
Here are my stellar returns (annualized) over the last four months. I was on auto-invest, Portfolio option 2 for most of this portfolio.
January -6.99%
February -10.86%
March 0.27%
April -11.70%
What level of notes do you hold? Are these E or F rated? I've still got a few (been selling off every month) but have always had A, B, C notes only. Never had a charge off....one late payment in a couple years. But I'm getting out even though I'm still at 10.65%.
Post by: chasesfish on May 10, 2017, 10:17:19 AM
I can't help but wonder if LC and the other P2P lending sites are the canaries in the coal mine. Maybe we're about to see another wave of auto repossessions, foreclosures, and individual bankruptcies. Maybe internet loans are the easiest things to default on, and the next wave will hit other lenders. Maybe the credit cycle is further along than the official household indebtedness numbers would seem to indicate, because the averages obscure increasing inequality in debt servicing ability.
If that's the case, and if we act on it, the foresight provided by P2P lending experiences could save many times more money than it cost to receive an early economic signal. Based on what I'm hearing, I'll be paying more attention to the Dow Transports Index - known as another canary. I will also think twice before writing any more puts.
I work in the banking industry - They've loosened up over the last three years on credit card and unsecured lending. Additionally, appreciating home values have opened up access to home equity lines/borrowings again.
I think the Lending Club issue now vs. 2011 is the best borrowers are going back to their banks and credit unions for 5-7% rates, leaving LC adversely selecting the worse borrower.
Post by: chasesfish on May 10, 2017, 10:21:00 AM
Here are my stellar returns (annualized) over the last four months. I was on auto-invest, Portfolio option 2 for most of this portfolio.
January -6.99%
February -10.86%
March 0.27%
April -11.70%
A: 1.4%
B: 6.1%
C: 17.6%
D: 22.6%
E: 39.6%
F: 9.5%
G: 3.2%
The lesson is past returns don't indicate future results. I've gone between Portfolio 2 and Portfolio 3 on auto-investing while the good notes from 2011-2013 paid off. My 6 year return is now 4.6%. Its a nice sample size, $66,000+ in principal invested over the time period.
What level of notes do you hold? Are these E or F rated? I've still got a few (been selling off every month) but have always had A, B, C notes only. Never had a charge off....one late payment in a couple years. But I'm getting out even though I'm still at 10.65%.
Post by: FIPurpose on May 10, 2017, 12:31:11 PM
This is for multiple reasons:
1. You'll have to sell at an even further discount
2. Most defaults happen during the earlier half of the loan. (ie people who pay for more than 50% of the loan are more likely to continue to pay)
3. Selling early means you're giving up on most of the positive return, acting as a shield for buyers on the second-hand market.
Imagine a series of notes that are E grade. You should expect E grade notes, if they will default, to default earlier rather than later.
Year one: 20% default rate = -4% return
Year two: 10% default rate = 8% return
Year three: 5% default rate = 14% return
CAGR: ~5.5%
Which is about what people see. But of course reinvestment takes the same path. You're money that's reinvested in each year is going to be hit by a big drop in the beginning. For people buying on 2nd market like myself, are aiming that people are dumping good notes left and right because they get fearful after a bad round of defaults. Meaning that other investors are acting as shields to early defaulters.
Post by: zazpowered on May 10, 2017, 06:47:20 PM
Post by: chasesfish on June 05, 2017, 11:57:47 AM
Here are my stellar returns (annualized) over the last four months. I was on auto-invest, Portfolio option 2 for most of this portfolio.
January -6.99%
February -10.86%
March 0.27%
April -11.70%
Another month....and the return is...
- 8.16% annualized.
I don't know if its worth anything to liquidate the notes, or just enjoy letting this payout and getting a hundred dollars a year in residual bad debt recovery occasionally.
Post by: retiringearly on June 07, 2017, 11:37:28 PM
Here are my stellar returns (annualized) over the last four months. I was on auto-invest, Portfolio option 2 for most of this portfolio.The single best piece of investing advice I have ever received is, "Do less of what isn't working, and do more of what is working."
January -6.99%
February -10.86%
March 0.27%
April -11.70%
Get out while you still can and put the money to work in an investment that is working.
Another month....and the return is...
- 8.16% annualized.
I don't know if its worth anything to liquidate the notes, or just enjoy letting this payout and getting a hundred dollars a year in residual bad debt recovery occasionally.
Post by: Tyson on June 08, 2017, 10:59:56 AM
CAGR: ~5.5%
Which is about what people see.
Really? That's it? All this extra risk, stress and worry, and the return is only 5.5%? And not only that, but 5.5% during a time that the economy is doing pretty well? Wow.
Post by: chasesfish on June 08, 2017, 04:11:01 PM
I figure I'll keep collecting mine out, but it was good while it lasted.
Post by: coloradojoe on June 13, 2017, 04:03:51 PM
The BAD NEWS is that for the last few weeks, I've really cranked up the discounts on my few remaining grace period, late, and very late notes (which are C, D, E class notes for ~$50 each). NONE have sold -- and that's with discounts WAY above the loss rates the LendingClub lists. Suggests to me that things are going sour in a way that LendingClub is doing its best not to acknowledge -- and that people would be wise to crank the custom loss rates for past due notes to pretty near 100%...
Discount rates I'm trying (and not succeeding in selling) currently set at:
Grace period: -32% to -42%
Late (16-30 days): -70% to -80%
Very Late (31-120 days): -85% to -90%
Post by: coloradojoe on June 13, 2017, 04:11:45 PM
and since they are a totally different asset class they are a good hedge when stocks don't do well.
This depends on the assumption that LC performance will be uncorrelated with the stock market -- and there's lots of reason to doubt that assumption. If the stock market takes a dive, lots of people are likely to lose their jobs -- and loss rates on unsecured debt like LC and P2P lending may well jump. I'd urge people to think twice about the role of LC and other P2P in their portfolio. Especially given that we're past due for a recession based on historical patterns (to say nothing of the instability and incompetence of current US leadership).
Post by: chasesfish on June 14, 2017, 09:14:08 AM
I stopped reinvesting around June 2016 (~1 year ago), then started actively selling my notes using LendingRobot in Oct. 2016 (~8 months ago). In that time, I've managed to liquidate all but $1K of my $12K portfolio and been able to sell enough notes at a slight premium to offset the 1% that LendingClub charges (conveniently, LendingRobot charges nothing to help you automate sales of notes, only for automated buying of notes).
The BAD NEWS is that for the last few weeks, I've really cranked up the discounts on my few remaining grace period, late, and very late notes (which are C, D, E class notes for ~$50 each). NONE have sold -- and that's with discounts WAY above the loss rates the LendingClub lists. Suggests to me that things are going sour in a way that LendingClub is doing its best not to acknowledge -- and that people would be wise to crank the custom loss rates for past due notes to pretty near 100%...
Discount rates I'm trying (and not succeeding in selling) currently set at:
Grace period: -32% to -42%
Late (16-30 days): -70% to -80%
Very Late (31-120 days): -85% to -90%
I agree with everything you said above. Once a loan goes 30 days past due, it should just be an immediate charge-off and recovery. I'm convinced LC was playing some games early on with the loss rates and write-offs. Banking institutions are required to called a loan a chargeoff when there's no collateral and no payments are received in 90 days. LC was already playing in the grey area adding another 30 to those numbers.
I don't need the money, selling notes seems to be more of a pain than its worth, I'll just keep collecting what money I can out of the paydowns and move on.
Post by: FIPurpose on June 14, 2017, 09:43:45 AM
I stopped reinvesting around June 2016 (~1 year ago), then started actively selling my notes using LendingRobot in Oct. 2016 (~8 months ago). In that time, I've managed to liquidate all but $1K of my $12K portfolio and been able to sell enough notes at a slight premium to offset the 1% that LendingClub charges (conveniently, LendingRobot charges nothing to help you automate sales of notes, only for automated buying of notes).
The BAD NEWS is that for the last few weeks, I've really cranked up the discounts on my few remaining grace period, late, and very late notes (which are C, D, E class notes for ~$50 each). NONE have sold -- and that's with discounts WAY above the loss rates the LendingClub lists. Suggests to me that things are going sour in a way that LendingClub is doing its best not to acknowledge -- and that people would be wise to crank the custom loss rates for past due notes to pretty near 100%...
Discount rates I'm trying (and not succeeding in selling) currently set at:
Grace period: -32% to -42%
Late (16-30 days): -70% to -80%
Very Late (31-120 days): -85% to -90%
My guess is that your remaining notes have very low credit scores, meaning that the recovery rate will be lower than the LC average. If the secondary market expects you to lose out, I would assume those late notes will not be making it.
Post by: AM43 on June 14, 2017, 10:31:28 AM
I stopped reinvesting around June 2016 (~1 year ago), then started actively selling my notes using LendingRobot in Oct. 2016 (~8 months ago). In that time, I've managed to liquidate all but $1K of my $12K portfolio and been able to sell enough notes at a slight premium to offset the 1% that LendingClub charges (conveniently, LendingRobot charges nothing to help you automate sales of notes, only for automated buying of notes).
The BAD NEWS is that for the last few weeks, I've really cranked up the discounts on my few remaining grace period, late, and very late notes (which are C, D, E class notes for ~$50 each). NONE have sold -- and that's with discounts WAY above the loss rates the LendingClub lists. Suggests to me that things are going sour in a way that LendingClub is doing its best not to acknowledge -- and that people would be wise to crank the custom loss rates for past due notes to pretty near 100%...
Discount rates I'm trying (and not succeeding in selling) currently set at:
Grace period: -32% to -42%
Late (16-30 days): -70% to -80%
Very Late (31-120 days): -85% to -90%
I agree with everything you said above. Once a loan goes 30 days past due, it should just be an immediate charge-off and recovery. I'm convinced LC was playing some games early on with the loss rates and write-offs. Banking institutions are required to called a loan a chargeoff when there's no collateral and no payments are received in 90 days. LC was already playing in the grey area adding another 30 to those numbers.
I don't need the money, selling notes seems to be more of a pain than its worth, I'll just keep collecting what money I can out of the paydowns and move on.
^^This
This is exactly what I am doing.
Not selling on secondary market to loose even more returns.
I prob have 2 years to go before my very last note will be paid off.
Post by: chasesfish on June 20, 2017, 04:07:27 PM
I haven't called yet, just wondered.
Post by: Kwill on June 20, 2017, 04:27:37 PM
Question: Has anyone else tried to process a withdraw this week? I've submitted two, get a confirmation, then they don't go through.
I haven't called yet, just wondered.
I did a withdrawal on 12 June, which went through fine, and I did another earlier today, which should be another couple days.
This thread got me a little worried about Lending Club. I'm selling off and now down to 2 notes. I've been consistently above 12% for returns and have never had a default over the 3 years I've been there. I never had more than about 20 notes at most, so it was a fair amount of bother for the small dollar amount involved. I figured I should either put enough in to make it worthwhile or else sell and close the account.
Any super-positive stories here to counter the negative ones? Is there any reason to invest more rather than leaving?
Post by: WonderfulLife43 on June 22, 2017, 12:45:54 PM
A couple of years ago, I decided to liquidate the taxable LC account. This was mainly because of the headaches it caused at tax time - writing off bad loans, accounting for partially recovered bad loans, etc. I've been passively liquidating this account for about 2 years now, withdrawing any available funds each month, and have a grand total of 6 loans left for a total of less than $50. If things continue normally, the last loan will be paid off next year.
I was willing to let the LC IRA ride a little longer, since it didn't have the tax reporting headaches, investing was pretty much on auto-pilot, and the returns were good, even with a conservative mostly A and B loan portfolio. Returns were something like this:
First year: 12%
Second year: Total average of 10%, or about 8% for that year alone
Third year: Total average of 9%, or about 7% for that year alone
This year: Total average of 7%, or about 3% for the first 6 months of the year.
Since all of this happened in 'good' economic times, I can only imagine what will happen with the next recession!
Given the poor results so far this year, the liquidity issues, the desire to simplify my life, and the desire to simplify my wife's life in case something happens to me .... I decided to liquidate the LC IRA, and transfer it to Vanguard, to join my other Vanguard accounts.
So, for the past 6 weeks, I've been actively selling my 900+ LC loans on the secondary market (Foliofn), starting with a 2-3% premium, and ending with some steep discounts, especially for late loans. Selling hundreds of loans this way isn't that hard, since you can Select them all at once and assign a consistent markup/discount. I started with a 3% markup, and repriced them once or twice a day: 3% -> 2.8% -> 2.6%, ..... until they were all sold.
As of this week, I have 0 LC loans left, and in the process of transferring the IRA to Vanguard. Yes, I will wince a little at the extra costs for closing the account with SDIRA. :-/
Post by: chasesfish on June 22, 2017, 06:00:33 PM
Post by: Padonak on June 22, 2017, 09:51:19 PM
My Prosper is showing 20% annualized returns using a portfolio that is managed by LendingRobot on a risky portfolio. I assume their calculations could be off but that's pretty good
I also use lending robot, but only for lending club.
Lending Robot ANR calculations are suspicious. Mine shows around 12% for LC, but LC itself shows 5.25% ANR (taking into account past due notes). My guess is that LR does not take past due notes into account (the fact that a certain percentage of them is likely to default). Another curious thing is that I invested a bit of money in LC before I started using LR, and LR shows a higher ANR for that manual portfolio of basically random notes with a few rules applied vs the loans picked by LR which are supposed to be "better" (otherwise what's the point of using LR even for free?).
Also, I stopped my lending club auto investments using LR. I don't think I'll buy any lending club notes anymore. The rate of return does not justify the risk in my opinion. ANR is declining even now when unemployment is <5%, what's going to happen when the next recession hits? Surely all those great people who borrow money at 20%+ interest rates will pay back their loans (my portfolio is also mostly high risk hence over 20%). Surely, none of them lied about their income, property ownership and other unverified information I used in my filters to limit risk.
If you go to the Lending Club web site and click on your ANR estimate, it'll show you the range of ANRs for all accounts by average age of portfolio highlighting those with similar range of interest rates to yours. My avg age is less than a year right now and it's already 5.25% ANR. The average declines for more mature portfolios, then it goes up slightly for those with average age closer to 3 years, but that increase is likely because those loans were purchased earlier, before LC lost its luster so to speak. Based on this chart, I expect my ANR to decline even more over time, but hope that it will still be above 0. If recession starts withing the next year or two, I'll most likely lose money (<0 ANR). Even if there is no recession in the next 3 years, I might still lose money because average returns deteriorate for those who, based on average age, started buying loans a few months before I did and will likely deteriorate even more over time given that the quality of borrowers seems to have deteriorated as well.
The good news for me is that i only invested a little over 2% of my investment portfolio in LC. This is my play money and tuition for learning how lending works.
Post by: chasesfish on June 23, 2017, 08:09:53 AM
Post by: chasesfish on June 26, 2017, 06:17:42 AM
It'll be a nice trial run.
Post by: Car Jack on June 27, 2017, 07:04:27 AM
Any super-positive stories here to counter the negative ones? Is there any reason to invest more rather than leaving?
Super positive......hmm. I'm still well over 10% with only A-C notes. I'm selling everything as I no longer trust the platform. I have never had a charge off and only 1 late payment ever.
Post by: chasesfish on June 28, 2017, 04:33:46 PM
Listed 573 performing loans, all ones over $10 in principal. 61 have sold so far. I only listed issued/current notes and asked for at least a 1% premium since I've eaten all the deadbeats and first payment defaults.
Anyone else sold notes and have comments on the premiums? I don't really need the money so I'm not interested in taking much of a loss.
Post by: chasesfish on July 03, 2017, 01:20:23 PM
Interest Earned: $258.65
Charged Off Notes: $308.76
Total Return: ($49.55)
Average Balance for the Period: $16,649
Annualized Return for the Month (-3.57%)
Hey hey, didn't loose quite as much. Will have note sales to update next month.
Post by: HAPPYINAZ on July 03, 2017, 02:03:53 PM
Any super-positive stories here to counter the negative ones? Is there any reason to invest more rather than leaving?
Super positive......hmm. I'm still well over 10% with only A-C notes. I'm selling everything as I no longer trust the platform. I have never had a charge off and only 1 late payment ever.
I am getting 6% return on 18 notes (mostly A grade notes, but a few B-D).....5 fully paid off, 1 late and likely will default (has $200 left to pay on it), and 12 are paying on time. I don't intend to sell, but likely won't add more money into it. I like Peer Streets shorter loan time frames.
Post by: Heroes821 on July 10, 2017, 06:24:38 AM
$3000 funded.
Since March 2017 I've traded 112 notes.
13 Fully paid
14 Charged Off
Of the 23 remaining:
6 are 31-120 days behind payment
5 are 16-30 days late
2 are in grace period
Current combined return of -2.5%
Hopefully this will all be done before year's end, I don't want to mess with Lending club in 2018. Time to follow the simple path I think.
Post by: CanuckExpat on July 12, 2017, 02:30:51 PM
Her account returns (LC calculations) are 3.8% on notes with an average weighted interest rate of 19.3%
My account returns (LC calculations) are 5.5% on notes with an average weighted interest rate of 22.5%
Both are autoinvesting, roughly 400 notes at $25 each. I think my account had some filters applied, her's didn't. Both are obviuosly biased towards higher interest rates & riskier notes. Interesting that her returns are lower, even with less risky notes on average, she also has much newer notes. So seems consistent with recent degradation in performance.
I don't personally care how many default, nor am I that interested in hand selecting notes. I want as wide exposure as possible and only care about overall return. As part of my fixed income allocation (I carve this out of my smaller high yield allocation) I can live with 5%, but the constant declining returns are weird. The real worry for me is platform or systematic risk, if they are taking on riskier borrowers without pricing it in. (It's a small enough part of our portolio that I am fine with it is as is)
My initial and current thoughts line up with someone else said before:
I don't think that Lending Club is in any way a solid investment when done through a regular, taxable account. The risk is high, the returns are capped at fixed rates without the chance to out-perform as in equities, and the taxes are terrible at regular income tax rates.
I had experimented with liquidating notes on the trading platform a few years ago in my account and had good success (I would say it was moderate to bad liquidity at that time, but not horrible). Recently liquidating notes on the trading platform has been difficult, I would characterize as very bad liquidity.
This makes me curious about picking up notes at a steep discount on the secondary market. Is there a good automated tool to do that? Given that I don't want to hand select notes, but rather want funds distributed across as many notes as possible in an automated fashion.
Post by: Glaeweth on July 14, 2017, 06:22:21 AM
Post by: CanuckExpat on July 14, 2017, 02:39:32 PM
Post by: sisto on July 14, 2017, 07:45:20 PM
Available Cash$132.39
Committed Cash ? $0.00
Outstanding Principal$4,875.04
Account Value$5,007.43
Adjustment for Past-Due Notes ? ( $257.72 )
Adjusted Account Value$4,749.71
Post by: chasesfish on August 04, 2017, 05:41:02 AM
$13,580 Average Balance for the Period (been selling some notes finally)
Net Loss: ($110.22)
Return: (9.47%) Annualized for the period
Seven consecutive months of losses for the year.
Lending Club doesn't report return by year, only annualized return since inception. Now down to 2.81% since inception.
S&P 500 Index Fund invested for the same period is running 10%+ annualized returns
Post by: Tyson on August 04, 2017, 11:28:19 AM
Post by: ChpBstrd on August 04, 2017, 03:26:04 PM
Post by: chasesfish on August 04, 2017, 07:09:45 PM
Why not just buy the stock of a subprime lender like Capital One? Their lending standards and recovery protocols are better too.
They get to fund their subprime loans through FDIC insured bank deposits! Very odd competitor of mine professionally
Post by: Capyy on August 04, 2017, 08:20:54 PM
Post by: neonlight on August 07, 2017, 10:00:28 PM
FundingSocieties is a Singapore based P2P lending startup. There are lots of others in the region, but since I've started using them, I'll just take a stab at comparing LC with FC.
(https://image.ibb.co/mVNY1a/Screen_Shot_2017_08_08_at_10_55_46_AM.png)
What's your take.
Note: this is not an endorsement of FundingSocieties
Post by: Dicey on August 08, 2017, 06:33:39 PM
Hi guys, side-tracking a little.Dicey's take is I'm kind of surprised that after seeing what's happened with LC, you think another company's going to be different. It sounds like the lending climate has changed more than anything LC did or didn't do.
FundingSocieties is a Singapore based P2P lending startup. There are lots of others in the region, but since I've started using them, I'll just take a stab at comparing LC with FC.
(https://image.ibb.co/mVNY1a/Screen_Shot_2017_08_08_at_10_55_46_AM.png)
What's your take.
Note: this is not an endorsement of FundingSocieties
As to your last sentence, "If it looks like a duck, etc."
Post by: neonlight on August 08, 2017, 08:44:03 PM
Hi guys, side-tracking a little.Dicey's take is I'm kind of surprised that after seeing what's happened with LC, you think another company's going to be different. It sounds like the lending climate has changed more than anything LC did or didn't do.
FundingSocieties is a Singapore based P2P lending startup. There are lots of others in the region, but since I've started using them, I'll just take a stab at comparing LC with FC.
(https://image.ibb.co/mVNY1a/Screen_Shot_2017_08_08_at_10_55_46_AM.png)
What's your take.
Note: this is not an endorsement of FundingSocieties
As to your last sentence, "If it looks like a duck, etc."
You have a point, actually P2P lending has been cropping up like mushrooms since LC. There's a company call Lufax from China, they are now valued >1 billion USD. Maybe the only P2P unicorn.
Anyway back to facts, how do you guys think about the return, and on the mean time will try to dig out the default rate.
Post by: CanuckExpat on August 09, 2017, 11:00:14 PM
Wow, higher risk and lower return than index funds. Sounds like a dog.
That may turn out to be true, and we'll only know in hindsight. But does it have to be?
You are funding unsecured loans to individuals, with interest rates in the ~7% - 30% range. You can diversify across a lot individuals easily. So accounting for defaults, and early repayments, what might you expect your return to be? Historically it's been in the 5% - 10% range it seems, which to me sounds reasonable for that level of risk, and also passes the smell test for what I would expect after accounting for defaults.
Now something seems to have tanked for many people's returns. Were the expectations too high, did something change?
*shrugs*
Are there other tools to calculate return easily? I've got some of my notes divided across different portfolios. The notes that had been selected based on some heavy filtering seems to have done better, but I would like to confirm that. Lending club does not break down the return by portfolio.
Post by: neonlight on August 10, 2017, 09:13:32 PM
Wow, higher risk and lower return than index funds. Sounds like a dog.
That may turn out to be true, and we'll only know in hindsight. But does it have to be?
You are funding unsecured loans to individuals, with interest rates in the ~7% - 30% range. You can diversify across a lot individuals easily. So accounting for defaults, and early repayments, what might you expect your return to be? Historically it's been in the 5% - 10% range it seems, which to me sounds reasonable for that level of risk, and also passes the smell test for what I would expect after accounting for defaults.
Now something seems to have tanked for many people's returns. Were the expectations too high, did something change?
*shrugs*
Are there other tools to calculate return easily? I've got some of my notes divided across different portfolios. The notes that had been selected based on some heavy filtering seems to have done better, but I would like to confirm that. Lending club does not break down the return by portfolio.
Yes, one mistake I've made was due to wanting to safe time, I invested all the money to one individual (it's not alot of money to start with) but a better strategy was to spread it to many more people.
Post by: FLBiker on August 11, 2017, 11:28:34 AM
Post by: chasesfish on August 13, 2017, 05:35:49 AM
"Lending money is easy, anyone can do it. What they haven't figured out is how to collect money. That's the expensive infrastructure to build and they're decades behind the banks"
I thought that was interesting, he complimented their origination platforms, but the problem in banking/lending is nothing is proprietary/patentable and its heavily regulated. If one institution figures out a new way to acquire customers, everyone else quickly follows and returns get back to the median. I think we've seen that with Lending Club and the consumer banks like Capital One and Citi now offering unsecured loans.
Post by: Capyy on August 19, 2017, 08:07:11 PM
Post by: chasesfish on August 21, 2017, 05:51:59 AM
Not easy to get your money out without a big haircut, just keep plugging away at it.
Post by: chasesfish on September 03, 2017, 04:17:56 PM
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.
Post by: Capyy on September 03, 2017, 05:01:43 PM
Post by: chasesfish on September 03, 2017, 06:39:53 PM
Post by: FireLane on September 03, 2017, 07:34:26 PM
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.
Post by: chasesfish on September 04, 2017, 06:50:27 AM
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.
Post by: Capyy on September 04, 2017, 08:41:57 AM
https://finance.yahoo.com/news/lendingclub-doesnt-verify-income-data-202142929.html
Post by: chasesfish on November 04, 2017, 04:51:15 AM
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%
Post by: Retire-Canada on November 04, 2017, 06:32:23 PM
Post by: chasesfish 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.
Post by: Retire-Canada 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.
Post by: chasesfish on November 05, 2017, 07:51:27 AM
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
Post by: alexpkeaton on November 05, 2017, 10:27:52 AM
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.
Post by: CanuckExpat on November 07, 2017, 06:20:49 PM
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.
Post by: neil on November 07, 2017, 06:56:37 PM
Not Yet Issued (0)
Issued (0)
Current (165)
Fully Paid* (75)
Charged Off (24)
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?
Post by: aspiringnomad 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.
Post by: Padonak 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.
Post by: chasesfish on November 08, 2017, 04:47:15 AM
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.
Post by: alexpkeaton 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.
Post by: ChpBstrd 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 (https://finance.yahoo.com/quote/LC/options?p=LC&straddle=true&date=1579219200)
Post by: chasesfish on December 06, 2017, 05:21:31 AM
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.
Post by: ChpBstrd on December 06, 2017, 12:37:22 PM
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.
Post by: chasesfish on December 07, 2017, 05:31:07 AM
Post by: ChpBstrd 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.
Post by: Outside the Box on December 11, 2017, 03:29:20 PM
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 (https://forum.mrmoneymustache.com/investor-alley/please-help-me-overhaul-my-portfolio/msg1621956/#msg1621956) 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.
Post by: meatgrinder on December 13, 2017, 05:15:45 PM
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
Post by: chasesfish on December 14, 2017, 05:18:52 AM
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"
Post by: Car Jack on December 14, 2017, 07:17:29 AM
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.
Post by: meatgrinder 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.
Post by: FIPurpose on December 18, 2017, 04:15:19 AM
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.
Post by: meatgrinder on December 18, 2017, 09:16:41 AM
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.
Post by: retirementnestegg 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
Post by: chasesfish on December 20, 2017, 02:55:10 PM
Post by: Retire-Canada 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....
Post by: topshot on December 21, 2017, 06:45:42 AM
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.
Post by: meatgrinder 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....
Post by: chasesfish 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
Post by: frozen on December 27, 2017, 03:34:50 PM
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
Post by: Heroes821 on January 03, 2018, 08:01:15 AM
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.
Post by: ChpBstrd on January 03, 2018, 04:00:40 PM
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. :)
Post by: chasesfish on January 04, 2018, 06:25:24 AM
Ugh. At least I'm down to $5500 or so
Post by: appleshampooid on February 17, 2018, 01:45:24 PM
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.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.
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.
Post by: ePalmtrees on February 17, 2018, 05:23:47 PM
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.
Post by: chasesfish on February 17, 2018, 06:30:59 PM
$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
Post by: ChpBstrd 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.
Post by: Fireball 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.
Post by: Villanelle on February 19, 2018, 10:16:41 PM
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.
Post by: appleshampooid on February 20, 2018, 06:54:50 AM
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.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 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.
Post by: AM43 on February 20, 2018, 07:53:53 AM
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.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 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.
Post by: hgjjgkj on February 20, 2018, 09:20:05 AM
Post by: uwp on February 20, 2018, 01:10:55 PM
Post by: appleshampooid on February 20, 2018, 02:07:40 PM
It's been a while since MMM updated the "experiment" page.I think it would be great if MMM updated his initial LC article with the current status of the company. That being returns are way down and it pretty much doesn't make any sense to use this over the stock market.
Post by: Paul der Krake on February 20, 2018, 07:25:09 PM
From the customer perspective I tried to get a 10k loan to essentially refinance my student loans. I have 6 figure income, no debt aside from student loans, credit score in the mid to low 700s and very low housing cost. Somehow was quoted 9% interest rate. There is no way anyone credit worthy would use these guysThis has been my experience too. High 700s, debt-to-income < 1%, and they wanted twice the rate of a competitive unsecured loan.
Pretty sure that their customer base is made entirely of people who either:
1) don't have the chops to shop around
2) don't give a shit because they intend on missing a payment
Post by: chasesfish on February 21, 2018, 05:17:33 AM
It's been a while since MMM updated the "experiment" page.I think it would be great if MMM updated his initial LC article with the current status of the company. That being returns are way down and it pretty much doesn't make any sense to use this over the stock market.
He updated the post to say he's letting it wind down. The problem is its really manual to calculate your annual returns.
I'm hoping I get a bump in paydowns since its tax refund season. That happened in past years, but not this year
Post by: chasesfish on March 11, 2018, 06:56:29 AM
I still think its time to short them...or just buy a bunch of $3.50 put options
Post by: frozen on March 11, 2018, 07:16:51 AM
Agreed. I noticed on of my borrowers declared bankruptcy immediately after receiving the loan. The person never even made a payment!From the customer perspective I tried to get a 10k loan to essentially refinance my student loans. I have 6 figure income, no debt aside from student loans, credit score in the mid to low 700s and very low housing cost. Somehow was quoted 9% interest rate. There is no way anyone credit worthy would use these guysThis has been my experience too. High 700s, debt-to-income < 1%, and they wanted twice the rate of a competitive unsecured loan.
Pretty sure that their customer base is made entirely of people who either:
1) don't have the chops to shop around
2) don't give a shit because they intend on missing a payment
I added some more money to my Lending Club account late last year for the United Mileage Plus promotion and still have not received the miles! Plus their stock is down to single digits. I just don’t trust them.
Post by: chasesfish on March 11, 2018, 08:47:59 AM
We will see, there may not be someone dumb enough to write the put option on the other side
Post by: frozen on March 11, 2018, 12:27:09 PM
I'm about to buy some put options for this coming October in case the company goes bankrupt. I just don't see how this model is sustainable and at the pace they're loosing money and the failure of their origination platform, I no longer think the IT is valuable to competitors.
We will see, there may not be someone dumb enough to write the put option on the other side
Great idea!
I will look into this as well.
I still have about $4K with Lending Club that I am slowly divesting. If they go bankrupt, what do you think happens to the lenders and borrowers?
Post by: ePalmtrees on March 11, 2018, 01:50:41 PM
I'm about to buy some put options for this coming October in case the company goes bankrupt. I just don't see how this model is sustainable and at the pace they're loosing money and the failure of their origination platform, I no longer think the IT is valuable to competitors.
We will see, there may not be someone dumb enough to write the put option on the other side
Not too familiar with put options, why for this coming October specifically?
Post by: chasesfish on March 11, 2018, 07:30:44 PM
I'm about to buy some put options for this coming October in case the company goes bankrupt. I just don't see how this model is sustainable and at the pace they're loosing money and the failure of their origination platform, I no longer think the IT is valuable to competitors.
We will see, there may not be someone dumb enough to write the put option on the other side
Not too familiar with put options, why for this coming October specifically?
A put option allows me the option to places 100 shares of Lending Club with the other party. There are only so many contract dates you can pick, I'm guessing this crap blows up in another quarter or two.
How much you pay for the option depends on the price you want to put the stock on the counterparts.
If I buy out options for .30/share at 3.50, I make my investment back st $3.20 and start profiting higher. A put option has a maximum loss vs a short sale so theoretically has unlimited loss potential.
It's rare to do, but it's an interesting gamble if you think a company will fail. I'm kicking myself for not doing this earlier. Someone still has to agree to sell me the put.
Post by: appleshampooid on March 12, 2018, 09:26:33 AM
Post by: hgjjgkj on March 12, 2018, 10:03:23 AM
Post by: ChpBstrd on March 12, 2018, 12:22:12 PM
I'm about to buy some put options for this coming October in case the company goes bankrupt. I just don't see how this model is sustainable and at the pace they're loosing money and the failure of their origination platform, I no longer think the IT is valuable to competitors.
We will see, there may not be someone dumb enough to write the put option on the other side
Good luck and keep your position size reasonable! Go for the longest duration you can get, even though it's more expensive to do so. Zombie companies like this can linger around for years, and then there's the threat of them being acquired. Bear in mind how LC jumped 18% on March 1 for no apparent reason!
You will find a seller for your puts. The question is, at what price? I would use an aggressively priced limit order.
Post by: robtown on March 12, 2018, 07:37:03 PM
I started attempting to liquidate all the notes in my LC Roth IRA via the trading platform. Wish me godspeed.
Good luck. I sold on the secondary market and took my loses a year ago.
Post by: chasesfish on March 12, 2018, 07:57:37 PM
Post by: frozen on March 13, 2018, 01:50:47 PM
Post by: chasesfish on March 13, 2018, 07:15:36 PM
I remember our bank's CEO was asked about LendingClub/Prosper two years ago, he politely said non-bank lenders have been making loans for years, but they fail at collecting loans
Post by: yachi on March 14, 2018, 06:17:57 AM
@ChpBstrd No real takers yet, it's just hobby money with a capped upside. I wish I had the guts to buy $30,000 in puts
What do you think are the chances of bankruptcy in the next year and a half vs a takover? Capital One just sold off their former sharebuilder ownership to Etrade, I'm not sure what else they have been buying. I think maybe Prosper would buy them, or Renaud Laplanche's new company Upgrade Inc. Then again, I'm not sure either of these companies would trust the loan portfolio they would be buying.
At the rate they're losing money, it looks like they have less than 5 quarters of cash left.
Post by: yachi on March 14, 2018, 09:04:51 AM
@ChpBstrd No real takers yet, it's just hobby money with a capped upside. I wish I had the guts to buy $30,000 in puts
I just did this with a January 2019 expiration. At worst, it's better than buying my dream sportscar and wrecking it w/o insurance. At best (stock drops to $1) I get a x5 return.
Post by: chasesfish on March 14, 2018, 12:33:04 PM
Post by: ChpBstrd on March 14, 2018, 09:06:16 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.I'm checking in on the performance of my synthetic short idea from December 6th.
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.
Last put price 1.55
Last call price 0.91
----------------------
Current profit: 0.64
Assuming you had to deposit 100% margin ($4.50/share) for the short call, that's an ROI of 14.2% since December 6th. Multiply by roughly three to annualize that! Interestingly, most of the profit came from deterioration of the call.
Post by: frozen on March 25, 2018, 08:55:03 PM
I’ve noticed a few of my loans lately that default before 1 payment has even been made!
Post by: Padonak on March 25, 2018, 09:08:31 PM
I wonder if Lending Club is falling victim to Bust Out Fraud like the credit card companies are. I have been reading about how people are creating synthetic identities and it made me wonder how LC verifies they are loaning money to an actual person.
I’ve noticed a few of my loans lately that default before 1 payment has even been made!
Even if they use their real identities, they may get a loan with Lending Club, spend a bunch of money on their credit cards, get personal loans with banks and default on all of their obligations.
Post by: chasesfish on March 26, 2018, 04:56:54 AM
The entire banking industry has been forced to retain more capital from 2010 through 2016, they have to put it to work somewhere and are making the same higher rate/higher loss loans as lending club was exclusively making in 2011.
Making loans is easy, collecting loans is harder.
Post by: appleshampooid on March 29, 2018, 11:47:30 AM
https://www.mrmoneymustache.com/2012/09/24/the-lending-club-experiment/
Post by: chasesfish on March 30, 2018, 06:52:18 AM
I noticed today that on MMM's initial LC article, there is now a disclaimer near the top. I don't know when this went up, but it makes me feel a little better that he isn't actively steering people that way anymore:
https://www.mrmoneymustache.com/2012/09/24/the-lending-club-experiment/
I started my account in 2011. It had a good run from 2011 to 2014, then fell off a cliff
Post by: appleshampooid on March 30, 2018, 09:10:14 AM
I started later than you, but had a similar good run that ended. I'm too lazy to look up the dates exactly, but like most everyone now I am losing money month over month (and actively trying to get out). I followed the MMM strategy of high risk/high return; I wonder if the lower-risk notes have also had increased default rates. Of course the return rates were never high enough in the A-C notes to justify allocating money there away from stocks/bonds.I noticed today that on MMM's initial LC article, there is now a disclaimer near the top. I don't know when this went up, but it makes me feel a little better that he isn't actively steering people that way anymore:
https://www.mrmoneymustache.com/2012/09/24/the-lending-club-experiment/
I started my account in 2011. It had a good run from 2011 to 2014, then fell off a cliff
On the liquidation front, so far I haven't sold a single loan that is in either late period (16-30 days or 31-120 days). I have sold a couple Grace Period loans, and a bunch of current.
Anyone know what kind of discount is needed before someone will take a chance on these toxic assets? I've been ratcheting up the discount over time, currently at 10%.
Post by: Outside the Box on March 30, 2018, 10:32:51 AM
On the liquidation front, so far I haven't sold a single loan that is in either late period (16-30 days or 31-120 days). I have sold a couple Grace Period loans, and a bunch of current.
Anyone know what kind of discount is needed before someone will take a chance on these toxic assets? I've been ratcheting up the discount over time, currently at 10%.
For lates, I couldn't sell any for more than 50%. The 31-120 I had to discount even more deeply. I'm so glad to have completed my liquidation months ago.
I was more conservative, so thankfully I had many current. If you look through my post history, I detailed the process.
Post by: LWYRUP on March 30, 2018, 10:38:02 AM
On the liquidation front, so far I haven't sold a single loan that is in either late period (16-30 days or 31-120 days). I have sold a couple Grace Period loans, and a bunch of current.
Anyone know what kind of discount is needed before someone will take a chance on these toxic assets? I've been ratcheting up the discount over time, currently at 10%.
For lates, I couldn't sell any for more than 50%. The 31-120 I had to discount even more deeply. I'm so glad to have completed my liquidation months ago.
I was more conservative, so thankfully I had many current. If you look through my post history, I detailed the process.
I have no experience in lending club but I do work in commercial real estate so am very familiar with lending generally. A 10% haircut for a loan that is late beyond grace period on a troubled platform seems wildly optimistic. Would you advise someone to buy what you are trying to sell? 50% sounds more likely.
Post by: appleshampooid on March 30, 2018, 10:41:40 AM
Thanks to both of you for the context. I don't have any experience in this arena, so I didn't know how optimistic I was being! I will go in and re-price my notes to try to shed them.On the liquidation front, so far I haven't sold a single loan that is in either late period (16-30 days or 31-120 days). I have sold a couple Grace Period loans, and a bunch of current.
Anyone know what kind of discount is needed before someone will take a chance on these toxic assets? I've been ratcheting up the discount over time, currently at 10%.
For lates, I couldn't sell any for more than 50%. The 31-120 I had to discount even more deeply. I'm so glad to have completed my liquidation months ago.
I was more conservative, so thankfully I had many current. If you look through my post history, I detailed the process.
I have no experience in lending club but I do work in commercial real estate so am very familiar with lending generally. A 10% haircut for a loan that is late beyond grace period on a troubled platform seems wildly optimistic. 50% sounds more likely.
Honestly, just looking at what Lending Club thinks those notes are worth in their "adjusted NAR" view should have been a clue.
Post by: Outside the Box on March 30, 2018, 10:46:14 AM
Thanks to both of you for the context. I don't have any experience in this arena, so I didn't know how optimistic I was being! I will go in and re-price my notes to try to shed them.
Honestly, just looking at what Lending Club thinks those notes are worth in their "adjusted NAR" view should have been a clue.
What I did was price everything, and then 2 times a day I did the "minus button" to decrease them by 25bp until they sold. I would individually sometimes lower the late ones by 50bp or 100bp depending on how I was feeling.
That way you have a process which will eventually sell them at the highest price the market will pay.
Post by: appleshampooid on March 30, 2018, 11:07:56 AM
That's pretty much how I started. I just made a huge jump in the discount of my late notes. I'll keep going from here.Thanks to both of you for the context. I don't have any experience in this arena, so I didn't know how optimistic I was being! I will go in and re-price my notes to try to shed them.
Honestly, just looking at what Lending Club thinks those notes are worth in their "adjusted NAR" view should have been a clue.
What I did was price everything, and then 2 times a day I did the "minus button" to decrease them by 25bp until they sold. I would individually sometimes lower the late ones by 50bp or 100bp depending on how I was feeling.
That way you have a process which will eventually sell them at the highest price the market will pay.
I may not get the highest possible price, but there's an opportunity cost as well. Since you can't sell notes in Default, if you wait trying to sell a late note and it goes to default, you have lost the chance to sell (unless it comes back, which is possible but unlikely). Plus the opportunity cost of the cash I have sitting around in the account until the whole debacle is finished. Since it's an IRA I am going to end up paying Strata (the IRA custodian) for the pleasure of rolling my account over, and if I am reading the terms correctly, this fee is per withdrawal/rollover, and not small (I think $100 or something ridiculous). So I'm trying to fast track this process, at the cost of maybe not totally maximizing the prices I sell at.
Post by: Tyson on March 30, 2018, 12:00:11 PM
I mean, I maybe have a little bit of stress when the market goes down, but nothing like the aggravation and stress I see around Lending Club investments. Sheesh.
Post by: chasesfish on March 30, 2018, 12:44:34 PM
The problem with the recovery idea is who knows what happens to recoveries once Lending Club goes bankrupt.
Oh well, I kept this to a percent or two of my net worth at the peak, lessons learned
Post by: Million2000 on March 30, 2018, 01:44:47 PM
Good lord, what a clusterf*ck this whole thing turned out to be. I'm glad I stuck with plain old boring indexing.
I mean, I maybe have a little bit of stress when the market goes down, but nothing like the aggravation and stress I see around Lending Club investments. Sheesh.
Back in 2012 I dipped my toes into Lending Club, buying secondary market notes at discounts (the state I was living in at the time forbade buying directly from LC) and recall being really excited about the concept even though it should have been obvious to me how dodgy this was-50% of notes on the secondary market were selling for more than the total cash you could possibly get out of them, i.e. a scam. After about 6 months I liquidated everything. There wasn't just one thing that was a trigger, but I think the biggest was actually reading the prospectus. The structure of the platform is incredibly complex and the risk is inordinately put on the investor. If LC goes bankrupt, you're screwed, if the borrower defaults, you're screwed, if WebBank (I believe this was the bank holding cash for the transaction) went out of business, you're screwed. The lesson here is read the prospectuses folks.
I also recall an early review of Lending Club calling into question the model of securitization and how it compared to the dodgy securities during the financial crisis. I registered the article in my mind then, and it's becoming apparent to me now how accurate they were. I'm glad I got out while I did.
Post by: ChpBstrd on March 30, 2018, 03:20:42 PM
LOL, not gonna do it. Too risk averse. Not a millionaire either...hmmm.
Post by: chasesfish on March 30, 2018, 06:16:47 PM
Hmmm. Feeling frustrated at work and tempted to go all in with the Jan 2020 put options at the $1.50 strike. At the asking price of $0.20/share the ROI would be 650% in the event of a bankruptcy in the next 21 months.
LOL, not gonna do it. Too risk averse. Not a millionaire either...hmmm.
I own a few $2.50 for this June...I may throw a grand or two at that strategy above
Post by: HAPPYINAZ on April 01, 2018, 03:41:00 PM
Post by: appleshampooid on April 19, 2018, 08:42:24 AM
I'm now up to selling current notes at a 10% discount and 31-120 days late notes at 92% discount.That's pretty much how I started. I just made a huge jump in the discount of my late notes. I'll keep going from here.Thanks to both of you for the context. I don't have any experience in this arena, so I didn't know how optimistic I was being! I will go in and re-price my notes to try to shed them.
Honestly, just looking at what Lending Club thinks those notes are worth in their "adjusted NAR" view should have been a clue.
What I did was price everything, and then 2 times a day I did the "minus button" to decrease them by 25bp until they sold. I would individually sometimes lower the late ones by 50bp or 100bp depending on how I was feeling.
That way you have a process which will eventually sell them at the highest price the market will pay.
I may not get the highest possible price, but there's an opportunity cost as well. Since you can't sell notes in Default, if you wait trying to sell a late note and it goes to default, you have lost the chance to sell (unless it comes back, which is possible but unlikely). Plus the opportunity cost of the cash I have sitting around in the account until the whole debacle is finished. Since it's an IRA I am going to end up paying Strata (the IRA custodian) for the pleasure of rolling my account over, and if I am reading the terms correctly, this fee is per withdrawal/rollover, and not small (I think $100 or something ridiculous). So I'm trying to fast track this process, at the cost of maybe not totally maximizing the prices I sell at.
90 notes left...
Post by: ChpBstrd on April 19, 2018, 11:33:51 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.
Update: the synthetic short described above is now up $0.90 plus the original $0.08 credit = $0.98 per share (Using today's "last" prices).
This might be the smolder before the dumpster fire. I'm kicking myself for only being a spectator on this one.
Post by: jrbrokerr on April 19, 2018, 01:19:35 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.
Update: the synthetic short described above is now up $0.90 plus the original $0.08 credit = $0.98 per share (Using today's "last" prices).
This might be the smolder before the dumpster fire. I'm kicking myself for only being a spectator on this one.
What if LC gets bought by a bigger company at a higher price ?? this could lose big...
Post by: ChpBstrd on April 19, 2018, 02:26:25 PM
There's that risk of being acquired and then there's the risk they do some kind of operational improvement to make their business model work. I've seen dumber acquisitions and I've seen stranger turnarounds succeed. Guess I shouldn't kick myself too hard. After all, a synthetic short can lose a theoretically infinite amount.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.
Update: the synthetic short described above is now up $0.90 plus the original $0.08 credit = $0.98 per share (Using today's "last" prices).
This might be the smolder before the dumpster fire. I'm kicking myself for only being a spectator on this one.
What if LC gets bought by a bigger company at a higher price ?? this could lose big...
Risk #1 became less likely as interest rates rose and volatility returned. That probably explains the past few months.
Risk #2 is an issue of "if they haven't been able to fix the problems in all these years..." However a leadership shakeup could really pop the stock in the short term.
Post by: chasesfish on April 19, 2018, 03:10:16 PM
Post by: ChpBstrd on April 20, 2018, 12:24:09 PM
I bought some $2.50 put options for June, it hasn't dumpster fired enough yet for me to make any moneyWell, if the overall market tanks, LC is likely to double-tank, so at least this short exposure offsets some systemic risk from the rest of your portfolio. It's definitely a multi-year play. I might wait for a bout of good news and then get in. It's rare for an individual investor to obtain essentially a customer satisfaction survey like this thread.
Post by: Outside the Box on April 20, 2018, 01:33:53 PM
Well, if the overall market tanks, LC is likely to double-tank, so at least this short exposure offsets some systemic risk from the rest of your portfolio. It's definitely a multi-year play. I might wait for a bout of good news and then get in. It's rare for an individual investor to obtain essentially a customer satisfaction survey like this thread.I feel bad dancing on their grave. I liked the business model. Lend to people at rates lower than banks and get paid higher than bank interest. I viewed it as high-interest bond investing.
I filtered by purpose, long employment history, low utilization ratio, low DTI, etc. I only invested in A-C. I was very non-risk tolerant when it came to this platform.
It was fine for a long time. I remember what a punch in the gut my first default felt like. I felt like "how could they do this (the borrower)?" But, I persisted for years. I dumped more and more money into it through the Roth IRA because it still seemed like a good investment overall in my portfolio. It was never over 10% of my portfolio.
Then, I started noticing lots more defaults and the rates were much higher. Why would a good borrower borrow from LendingClub if they could get the same or better rate from a real bank? They wouldn't, right? Ergo, sub-prime, in my opinion.
The whole thing looks like a house of cards to me now. I'm glad I took the hit and liquidated last year and got my money out to Vanguard, even though Trump has tanked the market since then with his trade war. I have long-term hope in the US/Intl stock markets that I no longer have in LC.
Again, I hate to dance on their grave, but the company as it is now seems beyond saving to me. I'm worried the people currently invested don't know what they really own. I hope I'm wrong.
Post by: bdbrooks on April 24, 2018, 03:06:21 PM
Even with my program I only catch about 10% of the loans I want. My program checks to make sure there are no notes in the collections log (sometimes customers will call in BEFORE a missed payment). Even when I disabled this check, I didn't get more than 12-15% of the loans I requested. So that tells me that there are some quick people probably with co-located servers. They probably have as much capital to buy loans that return >12% after defaults. So that probably caps my gains at 10%.
Those two reasons have led me to wind down the portfolio. I have started withdrawing $5000 every 2 weeks. My portfolio is mostly notes with less than 2 years left, so payments are mostly principle at this point. I have been listing by loans to sell for a 5-10% premium and I have sold about 3-4% of my portfolio that way, but I'm mostly letting it unwind.
I thought I would share since I took a different approach than most people here. I had better results over the last year than most people on lending club, but it still didn't seem worth it since it is a matter of time before those bots buying up the secondary loans eat up more and more of the loans I would have bought.
Post by: uwp on April 25, 2018, 11:01:31 AM
"FTC charges LendingClub with collecting hidden fees on loans"
https://www.marketwatch.com/story/ftc-charges-lendingclub-with-collecting-hidden-fees-on-loans-2018-04-25
Post by: FIPurpose on April 25, 2018, 11:39:54 AM
Post by: chasesfish on April 25, 2018, 12:31:44 PM
Post by: Outside the Box on April 25, 2018, 02:07:04 PM
Ohh yep LC stock is hitting a new low. Looks like it will be dropping to the 2.80 range.$2.77 right now.
Post by: chasesfish on April 26, 2018, 06:34:27 AM
Post by: ChpBstrd on April 26, 2018, 02:29:24 PM
Sometimes I wish I would go big on my ideas. I only put $125 in to $2.50 puts for June....I didn't expect a federal regulator to sue, just terrible earnings in May. Worth $250 now, before the costs of liquidating.At least you're sitting on gains. I had the synthetic short idea but was too risk averse to carry through.
(Homer Simpson) D'oh! (/Homer Simpson)
I do find when I am certain of a speculation, that is the speculation that will fail!
Post by: ChpBstrd on April 26, 2018, 04:02:08 PM
If so, shorting crowdfunding companies might be a never before encountered opportunity to actually short ponzi schemes! Check out this disaster story and tell me it doesn't fit the description.
https://firechecklist.net/2018/04/21/downside-to-r-e-crowdfunding (https://firechecklist.net/2018/04/21/downside-to-r-e-crowdfunding)/
Post by: chasesfish on May 10, 2018, 05:28:10 AM
Still not reporting investment returns in a consistent manner with the industry. I was happy to see some collection activity spike and I had my first positive net month thanks to $36 in recoveries.
Anyways, I lost the gain I had in the short position and decided I missed the train once, now it was time to bet hard against the company and I threw a few thousand into the put options and bought some going out into 2019 and 2020. We will see...
Post by: ChpBstrd on May 10, 2018, 09:47:41 AM
LC is riding the roller coaster with the rest of the market. I think if you set a limit order to sell your puts 20% higher than what you paid, you'd have the sale executed sometime within the next several months.
I have held a couple Sears puts over the past 3 mos and they've gone nowhere so far. But I remain confident that SHLD will eventually declare bankruptcy.
Post by: uwp on May 10, 2018, 11:14:07 AM
Post by: FIPurpose on May 10, 2018, 11:59:44 AM
Post by: chasesfish on May 10, 2018, 08:35:27 PM
Post by: FIPurpose on May 15, 2018, 06:51:34 PM
They're looking for people with losses above 100k. They claim that LC had "hidden fees" despite claiming no hidden fees, and the Gramm-Leach-Bliley Act for failing to provide customers with a clear and conspicuous privacy notice so that each customer could reasonably be expected to receive actual notice.
I wonder how much that settlement could even possibly be worth or if it will go anywhere.
Post by: Dollar Slice on May 15, 2018, 09:28:44 PM
Post by: Syonyk on May 15, 2018, 10:03:30 PM
Post by: chasesfish on May 16, 2018, 05:21:20 AM
Found out that there is a class action lawsuit building up: https://www.prnewswire.com/news-releases/rm-law-announces-class-action-lawsuit-against-lendingclub-corporation-300642988.html (https://www.prnewswire.com/news-releases/rm-law-announces-class-action-lawsuit-against-lendingclub-corporation-300642988.html)
They're looking for people with losses above 100k. They claim that LC had "hidden fees" despite claiming no hidden fees, and the Gramm-Leach-Bliley Act for failing to provide customers with a clear and conspicuous privacy notice so that each customer could reasonably be expected to receive actual notice.
I wonder how much that settlement could even possibly be worth or if it will go anywhere.
Its interesting all the legal action is for either the stock investors or the borrowers. Nothing for all of us who put money into the service and has been getting pounded by poor/negative returns
Post by: appleshampooid on May 17, 2018, 09:09:22 AM
. I have no idea what is different about these notes vs. the hundreds of current notes that sold at more modest discounts earlier on (started around 2-3% off and a bunch sold there), and frankly am to busy/lazy to dig in to the data at all. Just want to be done with it.I sold the last of the 31-120 day late notes at 95% off, and the 16-30 day late at 75%. At that discount I honestly hope the buyer gets the price in recoveries after the inevitable charge off. I just don't want to deal with the trickle of money coming in (which I will still have to, with the notes that were charged off on my account).
Post by: chasesfish on May 17, 2018, 11:57:44 AM
I still have 31 notes left, 2 in Grace Period and the rest current. I'm now up to listing the current notes at 20% off
I sold the last of the 31-120 day late notes at 95% off, and the 16-30 day late at 75%. At that discount I honestly hope the buyer gets the price in recoveries after the inevitable charge off. I just don't want to deal with the trickle of money coming in (which I will still have to, with the notes that were charged off on my account).
The upside of leaving it in there, you'll get a trickle of money and they finally got the tax reporting/importing easy.
The downside is who knows what happens once lending club bankrupts.
Post by: appleshampooid on May 18, 2018, 12:37:16 PM
Sadly this is an IRA account, so no taxable events, AND once I transfer the money out (with the hefty fee courtesy of STRATA), the trickle will never amount to the transfer fee which I think is $150 IIRC.I still have 31 notes left, 2 in Grace Period and the rest current. I'm now up to listing the current notes at 20% off
I sold the last of the 31-120 day late notes at 95% off, and the 16-30 day late at 75%. At that discount I honestly hope the buyer gets the price in recoveries after the inevitable charge off. I just don't want to deal with the trickle of money coming in (which I will still have to, with the notes that were charged off on my account).
The upside of leaving it in there, you'll get a trickle of money and they finally got the tax reporting/importing easy.
The downside is who knows what happens once lending club bankrupts.
I know there are some workarounds here that someone posted about getting a fidelity brokerage account through STRATA, I just don't care enough over a few bucks.
Post by: sisto on May 22, 2018, 12:46:36 PM
I still have 31 notes left, 2 in Grace Period and the rest current. I'm now up to listing the current notes at 20% offI'm riding it out and still just hoping to still break even
I sold the last of the 31-120 day late notes at 95% off, and the 16-30 day late at 75%. At that discount I honestly hope the buyer gets the price in recoveries after the inevitable charge off. I just don't want to deal with the trickle of money coming in (which I will still have to, with the notes that were charged off on my account).
140 notes issued and current
10 notes in grace period
187 notes fully paid
3 notes 16-30 days late
3 notes 31-120 days late
1 note in default
96 notes charged off
I just keep pulling the cash out as notes get paid off.
Post by: FLBiker on May 24, 2018, 10:32:20 AM
I just keep pulling the cash out as notes get paid off.
Me too. I've got 35 current, 1 in grace, 4 late and 1 default. I've been phasing out for a while, though (also have 140 fully paid and 86 charged off).
I did pretty well with it all told, but it was WAY more hassle than index funds.
Post by: AM43 on May 25, 2018, 06:52:55 AM
900 notes
140 in default
Only around 70 notes are left to get paid from so should be done with it this year.
All and all I am making around 6.5% in interest.
On the other hand I jumped on LC IPO and absolutely got hammered.
Only invested little over $1k, but still...
Post by: Million2000 on July 17, 2018, 12:25:40 PM
https://www.bloomberg.com/news/articles/2018-07-16/panic-roils-china-s-p2p-lenders-as-savers-rush-to-withdraw-cash (https://www.bloomberg.com/news/articles/2018-07-16/panic-roils-china-s-p2p-lenders-as-savers-rush-to-withdraw-cash)
I also noticed MMM updated his Lending Club stats this past June, for interest received he states "No Longer Shown". I wonder what's going on.
I got out of Lending Club years ago but have a tiny amount invested in crowdfunded real estate. As we head into the late part of the credit cycle I'm still keeping tabs on this business model and how it comes out the other end. I am a chicken I know, but right now I'd rather be a chicken than a pig that gets slaughtered.
Post by: appleshampooid on July 17, 2018, 01:25:55 PM
Finally sold my last note a few weeks ago. Total invested: $9700; total balance now: $8808.Sadly this is an IRA account, so no taxable events, AND once I transfer the money out (with the hefty fee courtesy of STRATA), the trickle will never amount to the transfer fee which I think is $150 IIRC.I still have 31 notes left, 2 in Grace Period and the rest current. I'm now up to listing the current notes at 20% off
I sold the last of the 31-120 day late notes at 95% off, and the 16-30 day late at 75%. At that discount I honestly hope the buyer gets the price in recoveries after the inevitable charge off. I just don't want to deal with the trickle of money coming in (which I will still have to, with the notes that were charged off on my account).
The upside of leaving it in there, you'll get a trickle of money and they finally got the tax reporting/importing easy.
The downside is who knows what happens once lending club bankrupts.
I know there are some workarounds here that someone posted about getting a fidelity brokerage account through STRATA, I just don't care enough over a few bucks.
I ACH'd the funds to STRATA and initiated a rollover to Vanguard. Vanguard requires a statement from within the past 90 days, and STRATA only posts quarterly statements. And their Q2 statement doesn't post until the last week of July, WTF! So just waiting on that to finish the rollover. Upside is if any recoveries come in between now and then, I can bring them along.
Post by: Yankuba on July 17, 2018, 01:33:26 PM
January 2014 to June 2018
Invested $27,000, withdrew $30,200
1,313 notes, mostly B and C
154 defaults
So I made $3,200, but it was spread over four years so the annual return is about 3% per year. Less taxes.
Post by: chasesfish on July 17, 2018, 06:09:18 PM
My Lending Club experiment is over.
January 2014 to June 2018
Invested $27,000, withdrew $30,200
1,313 notes, mostly B and C
154 defaults
So I made $3,200, but it was spread over four years so the annual return is about 3% per year. Less taxes.
You rocked past my 1.52% return
Post by: Villanelle on July 18, 2018, 01:38:18 AM
$3616 withdrawn
So roughly 20% return total, not annualized. [edited because I forgot a zero and that makes a big difference!]
124 notes paid
46 charged off
So ~27% of my loans defaulted before completion and didn't pay off in full, and $730 was written off.
Loan categories
A (0.0%) B (1.1%) C (7.3%) D (36.4%) E (29.5%) F (24.3%) G (1.4%) (According to a note on my balance sheet, as of 11/2017, LC stopped doing F &G loans.)
Late Fees Received: $0.70
Recoveries: $102.79
Recovery Fees: ( $10.34 )
Service Fees: ( $49.39 )
Collection Fees: ( $7.19 )
So I paid about $68 for them to collect $103 (of about $730 that didn't get paid).
Since I only dabbled in this, it really doesn't matter, but if I had it to do over again, I'd certainly skip it.
Post by: FIPurpose on July 18, 2018, 06:06:29 AM
$3000 invested
$3616 withdrawn
So roughly 2% return total, not annualized.
124 notes paid
46 charged off
So ~27% of my loans defaulted before completion and didn't pay off in full, and $730 was written off.
Loan categories
A (0.0%) B (1.1%) C (7.3%) D (36.4%) E (29.5%) F (24.3%) G (1.4%) (According to a note on my balance sheet, as of 11/2017, LC stopped doing F &G loans.)
Late Fees Received: $0.70
Recoveries: $102.79
Recovery Fees: ( $10.34 )
Service Fees: ( $49.39 )
Collection Fees: ( $7.19 )
So I paid about $68 for them to collect $103 (of about $730 that didn't get paid).
Since I only dabbled in this, it really doesn't matter, but if I had it to do over again, I'd certainly skip it.
I think you mean 20% total, not 2%
Post by: Villanelle on July 18, 2018, 06:13:46 AM
$3000 invested
$3616 withdrawn
So roughly 2% return total, not annualized.
124 notes paid
46 charged off
So ~27% of my loans defaulted before completion and didn't pay off in full, and $730 was written off.
Loan categories
A (0.0%) B (1.1%) C (7.3%) D (36.4%) E (29.5%) F (24.3%) G (1.4%) (According to a note on my balance sheet, as of 11/2017, LC stopped doing F &G loans.)
Late Fees Received: $0.70
Recoveries: $102.79
Recovery Fees: ( $10.34 )
Service Fees: ( $49.39 )
Collection Fees: ( $7.19 )
So I paid about $68 for them to collect $103 (of about $730 that didn't get paid).
Since I only dabbled in this, it really doesn't matter, but if I had it to do over again, I'd certainly skip it.
I think you mean 20% total, not 2%
Yes, thank you!
Post by: sisto on July 18, 2018, 08:41:54 AM
$3000 investedI too only invested $5K and would not have done it knowing what I know today. I'm still fighting to get the rest of my money out.
$3616 withdrawn
So roughly 20% return total, not annualized. [edited because I forgot a zero and that makes a big difference!]
124 notes paid
46 charged off
So ~27% of my loans defaulted before completion and didn't pay off in full, and $730 was written off.
Loan categories
A (0.0%) B (1.1%) C (7.3%) D (36.4%) E (29.5%) F (24.3%) G (1.4%) (According to a note on my balance sheet, as of 11/2017, LC stopped doing F &G loans.)
Late Fees Received: $0.70
Recoveries: $102.79
Recovery Fees: ( $10.34 )
Service Fees: ( $49.39 )
Collection Fees: ( $7.19 )
So I paid about $68 for them to collect $103 (of about $730 that didn't get paid).
Since I only dabbled in this, it really doesn't matter, but if I had it to do over again, I'd certainly skip it.
Post by: Villanelle on July 19, 2018, 03:04:03 AM
$3000 investedI too only invested $5K and would not have done it knowing what I know today. I'm still fighting to get the rest of my money out.
$3616 withdrawn
So roughly 20% return total, not annualized. [edited because I forgot a zero and that makes a big difference!]
124 notes paid
46 charged off
So ~27% of my loans defaulted before completion and didn't pay off in full, and $730 was written off.
Loan categories
A (0.0%) B (1.1%) C (7.3%) D (36.4%) E (29.5%) F (24.3%) G (1.4%) (According to a note on my balance sheet, as of 11/2017, LC stopped doing F &G loans.)
Late Fees Received: $0.70
Recoveries: $102.79
Recovery Fees: ( $10.34 )
Service Fees: ( $49.39 )
Collection Fees: ( $7.19 )
So I paid about $68 for them to collect $103 (of about $730 that didn't get paid).
Since I only dabbled in this, it really doesn't matter, but if I had it to do over again, I'd certainly skip it.
What do you mean when you say you are fighting to get your money out? I couldn't be bothered to sell off my notes, especially at the horrible discount required, so I just waited until they all paid off (or were charged off). Every few months, I'd go and transfer out the few dollars in my account, and this last time, I realized it was the last of it. To me, this makes so much more sense than putting any work in to it, especially if you have so little invested. Just let it reach it's natural conclusion.
~~
Overall, my ROI was actually decent, but it was a fair amount of work and I could have done about as well in average stock market returns, with much less time spent finding notes, especially after the first few months when LC took off and I had to log on at exactly the moment new loans posted and try to scan as many notes as possible as quickly as possible, watching as they disappeared on my as I tried to find loans I liked. I mean, it wasn't exactly arduous, but it was PITA and far more time and brain intensive than clicking "Buy" on some more Vanguard. Because my returns were okay, I'm not sure I'd call it a failure, but I definitely don't categorize it as a success.
Post by: sisto on July 19, 2018, 09:48:10 AM
@Villanelle I mean exactly what you are saying. Fighting = waiting for them to be paid back or charged off. I wait until I have around $500 and then cash it out.$3000 investedI too only invested $5K and would not have done it knowing what I know today. I'm still fighting to get the rest of my money out.
$3616 withdrawn
So roughly 20% return total, not annualized. [edited because I forgot a zero and that makes a big difference!]
124 notes paid
46 charged off
So ~27% of my loans defaulted before completion and didn't pay off in full, and $730 was written off.
Loan categories
A (0.0%) B (1.1%) C (7.3%) D (36.4%) E (29.5%) F (24.3%) G (1.4%) (According to a note on my balance sheet, as of 11/2017, LC stopped doing F &G loans.)
Late Fees Received: $0.70
Recoveries: $102.79
Recovery Fees: ( $10.34 )
Service Fees: ( $49.39 )
Collection Fees: ( $7.19 )
So I paid about $68 for them to collect $103 (of about $730 that didn't get paid).
Since I only dabbled in this, it really doesn't matter, but if I had it to do over again, I'd certainly skip it.
What do you mean when you say you are fighting to get your money out? I couldn't be bothered to sell off my notes, especially at the horrible discount required, so I just waited until they all paid off (or were charged off). Every few months, I'd go and transfer out the few dollars in my account, and this last time, I realized it was the last of it. To me, this makes so much more sense than putting any work in to it, especially if you have so little invested. Just let it reach it's natural conclusion.
~~
Overall, my ROI was actually decent, but it was a fair amount of work and I could have done about as well in average stock market returns, with much less time spent finding notes, especially after the first few months when LC took off and I had to log on at exactly the moment new loans posted and try to scan as many notes as possible as quickly as possible, watching as they disappeared on my as I tried to find loans I liked. I mean, it wasn't exactly arduous, but it was PITA and far more time and brain intensive than clicking "Buy" on some more Vanguard. Because my returns were okay, I'm not sure I'd call it a failure, but I definitely don't categorize it as a success.
Post by: maginvizIZ on July 19, 2018, 02:43:06 PM
Using XIRR, I get 10.8%
4/18/2016 $5,500.00
1/1/2017 $5,500.00
1/2/2018 $2,750.00
1/24/2018 $2,750.00
7/19/2018 ($19,176.10) << Current Value
XIRR 10.8%
Allocation:
AA = 0
A = 0
B = 0
C = 3%
D = 23%
E = 44%
HR = 30%
It's been a fun experiment for sure... I'm not yet sure whether I plan to put 2019's IRA money in this or not.
Post by: sisto on July 20, 2018, 03:33:26 PM
Adjusted Net Annualized Return 1.84%
Post by: chasesfish on July 20, 2018, 08:07:37 PM
Post by: sisto on July 23, 2018, 02:17:17 PM
Just curious, are you continuing to build your number of notes or is your portfolio steady? My returns started declining when I stopped adding money. I've found their borrowers have to be further past due than what a Bank considers past due before they charge off the note.I haven't added new money ever and quit reinvesting paid off notes several months ago maybe even a year now.
Post by: appleshampooid on August 15, 2018, 12:40:07 PM
Finally sold my last note a few weeks ago. Total invested: $9700; total balance now: $8808.Sent off the rollover paperwork on 2018-07-30. Was a little hiccup since the STRATA statement showed "debt instruments" still, since it is slow to update. Told the Vanguard rep that it was all in cash and just proceed.
I ACH'd the funds to STRATA and initiated a rollover to Vanguard. Vanguard requires a statement from within the past 90 days, and STRATA only posts quarterly statements. And their Q2 statement doesn't post until the last week of July, WTF! So just waiting on that to finish the rollover. Upside is if any recoveries come in between now and then, I can bring them along.
Yesterday the transfer status changed from "awaiting client paperwork" to "transfer submitted/requested" to "transfer in progress." Today, I sit staring at the transfer status. Transfer, god damn it, transfer!
FWIW I got $10 of recoveries while I've been waiting. Pissed off that LC will get the future recoveries, but it's not worth the $100/year to keep the account open to just to get them. Cut my losses, out.
Post by: chasesfish on August 15, 2018, 07:56:46 PM
217 active notes remaining for just over $2,500 left. Slowly winding out, the remaining notes can't seem to be sold for their face value.
Post by: Padonak on August 15, 2018, 09:04:57 PM
Post by: MrUpwardlyMobile on August 15, 2018, 09:13:48 PM
“Lending Club has gradually drawn more attention to the effect of prepayments on loans and this guide is no different.
“Prepayments impact returns because they reduce the amount of principal earning interest from Notes. A Note is considered prepaid when the dollar amount received is greater than the amount due for any given month,” they say. “It is inevitable that certain loans will charge-off or prepay and result in a loss of investment capital.”
Not mentioned however is that investors are charged a 1% fee on all outstanding principal if a borrower pays off their entire loan early despite it being no fault of the investor. And investors are less likely to monitor the impact of these fees if they keep reinvesting their cash which of course Lending Club advises investors to do.”
Between that and allegations that the early payoffs were from lending club refinancing all the good borrowers thereby causing the early payoffs, I concluded lending club wasn’t something I could personally trust or invest through.
Post by: chasesfish on August 16, 2018, 04:48:59 AM
Post by: appleshampooid on August 16, 2018, 07:27:46 AM
I'm debating how much I need to leave in there to keep seeing the recoveries. Maybe $250.Not sure I understand, I don't think there's an account minimum? For reference, I transferred out my entire balance in early July, and I still received a trickle of recoveries in late July (they always seem to post at the end of the month).
My account is an IRA but I doubt it would be any different in a taxable account. Maybe they would shut you down after a certain amount of time with a $0 balance? I haven't read the rules in detail on this point.
Post by: uwp on August 16, 2018, 09:36:28 AM
Not mentioned however is that investors are charged a 1% fee on all outstanding principal if a borrower pays off their entire loan early despite it being no fault of the investor. And investors are less likely to monitor the impact of these fees if they keep reinvesting their cash which of course Lending Club advises investors to do.”
Wait... LendingClub charges the investors 1% of the loan balance if the borrower pays it off early?
Post by: FIPurpose on August 16, 2018, 10:00:32 AM
Not mentioned however is that investors are charged a 1% fee on all outstanding principal if a borrower pays off their entire loan early despite it being no fault of the investor. And investors are less likely to monitor the impact of these fees if they keep reinvesting their cash which of course Lending Club advises investors to do.”
Wait... LendingClub charges the investors 1% of the loan balance if the borrower pays it off early?
No:
Quote
Lending Club provides servicing for the loans facilitated through our platform. This includes maintaining investor accounts, collecting and processing principal and interest payments from borrowers, and distributing these payments net of fees to investors. Investors pay Lending Club a service fee equal to one percent (1%) of the amount of any borrower payments received within 15 days of the payment due date. If borrowers miss a payment, investors do not pay a service fee.
When borrowers prepay their loans (pay off all or part of a loan earlier than the contractual due date) during the first 12 months after a Note is issued, we limit the size of the service fee charged to investors in Notes corresponding to the applicable loan in order to protect their returns. For those first 12 months, an investor will never pay a monthly service fee greater than 1% of the contractual monthly payment amount due to such investor. For example, if the contractual monthly payment amount due to an investor is $300 and a prepayment of $4,000 is distributed to the investor's account, he or she would only be charged a service fee of $3 (1% of $300) that month.
Post by: MrUpwardlyMobile on August 16, 2018, 11:08:21 AM
Not mentioned however is that investors are charged a 1% fee on all outstanding principal if a borrower pays off their entire loan early despite it being no fault of the investor. And investors are less likely to monitor the impact of these fees if they keep reinvesting their cash which of course Lending Club advises investors to do.”
Wait... LendingClub charges the investors 1% of the loan balance if the borrower pays it off early?
No:QuoteLending Club provides servicing for the loans facilitated through our platform. This includes maintaining investor accounts, collecting and processing principal and interest payments from borrowers, and distributing these payments net of fees to investors. Investors pay Lending Club a service fee equal to one percent (1%) of the amount of any borrower payments received within 15 days of the payment due date. If borrowers miss a payment, investors do not pay a service fee.
When borrowers prepay their loans (pay off all or part of a loan earlier than the contractual due date) during the first 12 months after a Note is issued, we limit the size of the service fee charged to investors in Notes corresponding to the applicable loan in order to protect their returns. For those first 12 months, an investor will never pay a monthly service fee greater than 1% of the contractual monthly payment amount due to such investor. For example, if the contractual monthly payment amount due to an investor is $300 and a prepayment of $4,000 is distributed to the investor's account, he or she would only be charged a service fee of $3 (1% of $300) that month.
I think you’re referring to a recent change, as opposed to how it was for years. This was a pretty big scandal.
Post by: laserlady on August 16, 2018, 01:07:42 PM
I have lost money when someone paid off their loans early before -- e.g., in 2014 someone paid off a $19.67 loan on a B note, which gave me $0.18 in interest and cost me $0.20 in investor fees, so I didn't even get back all of the principal on the note. All of my loans now are old enough that they're more in the range of $0.07 in interest and $0.05 in investor fees when they're paid off early. I don't mind the earlier pay offs, though, since that's one less loan that's going to default on me. I feel relieved whenever I can get any money safely out of Lending Club.
Post by: chasesfish on August 16, 2018, 06:03:24 PM
Not mentioned however is that investors are charged a 1% fee on all outstanding principal if a borrower pays off their entire loan early despite it being no fault of the investor. And investors are less likely to monitor the impact of these fees if they keep reinvesting their cash which of course Lending Club advises investors to do.”
Wait... LendingClub charges the investors 1% of the loan balance if the borrower pays it off early?
I would love to find the class action suit related to that one
Post by: FIPurpose on September 05, 2018, 02:25:51 PM
My account is down to $1500 and if I can close out my account before 2019 I'd really prefer that rather than the maybe $100 I'd accrue in interest over the next 3 years. However, when I went to the Folio'n site to sell the notes, I kept hitting errors that I couldn't sell certain notes. It'd tell me that even if I only selected one note. Anyone else experience this?
Post by: FIPurpose on September 05, 2018, 02:27:01 PM
Post by: chasesfish on September 06, 2018, 05:07:04 AM
Post by: DaveSch on September 06, 2018, 12:59:02 PM
Anyway, a few weeks ago, I got an e-mail from LC telling me that if I wanted to keep my account open, I have to put in at least $25. They said that if it doesn't happen soon, they will transfer my $1.56 and close the account. That is where I stand now.
I did ok with my involvement, but I didn't like the idea of their customers getting loans and then ducking out. I realized it was a risk, but it happened more often than I thought it would. I wanted to help others out, but not quite to that extent!
Post by: Syonyk on September 06, 2018, 01:31:28 PM
I did ok with my involvement, but I didn't like the idea of their customers getting loans and then ducking out. I realized it was a risk, but it happened more often than I thought it would. I wanted to help others out, but not quite to that extent!
Yeah, the charged off notes are pretty bad. I'm still just letting mine "naturally drain out" and transferring money out every month or two from the cash balance. It'll take a few years, but I've got property projects I'd rather put the money into, and... next economic "correction," I expect the number of current notes to drop a lot. Not enough to bother selling stuff out, but it's been an interesting experiment, just one I'm done with.
Not Yet Issued: 0
Issued & Current: 746
In Grace Period: 14
Fully Paid: 932
Late 16 - 30 Days: 10
Late 31 - 120 Days: 37
Default: 2
Charged Off: 301
Post by: appleshampooid on September 06, 2018, 02:01:05 PM
In the time between ACH'ing the funds to STRATA and initiating the rollover, and Vanguard actually receiving the funds, I had accumulated $40 in recoveries, which was both surprising and annoying. At that point STRATA had officially closed my account, but I could still log in to my LC account and see the recoveries in cash.
What's clear to me is that STRATA and LC don't really communicate that well. After I finished the rollover, I contacted LC support to close my account, so I didn't get hit with the $100 yearly fee to STRATA. They send me a distribution form that was clearly going to be sent to STRATA. I contacted them again, pointing out that the account with STRATA was already closed, and if there was some other form or process. They said fill out the form anyway, and send it, which I did. So I should be getting a check for that $40 or so, which will be a distribution, but since it's a Roth there won't be tax consequences - just withdrawal of principal (which I will note on my Roth basis tracker spreadsheet).
I am now a little bit frustrated that so many recoveries were coming in (it was more like $10/month before this, so I figured not worth it to pay the $100 fee to get maybe $100 back over the next 10 months). But if it was $40/month...would have been worth it to pay the fee and collect some. Oh well, it's over now.
Post by: sisto on September 07, 2018, 11:36:21 AM
Post by: ChpBstrd on September 17, 2018, 02:08:22 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.I'm checking in on the performance of my synthetic short idea from December 6th.
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.
Last put price 1.55
Last call price 0.91
----------------------
Current profit: 0.64
Assuming you had to deposit 100% margin ($4.50/share) for the short call, that's an ROI of 14.2% since December 6th. Multiply by roughly three to annualize that! Interestingly, most of the profit came from deterioration of the call.
Today the call is worth 0.53 and the put is worth 1.45. Factor in the 0.08 received upfront to enter the trade and you'd be up $1 per share. In that time, the share price dropped about 84 cents.
It might still be a good deal to short LC. Options expiring in 2021 are now available, plus several reliable recession indicators are now in the red zone. However, someone might still acquire LC for a premium. High risks and high rewards...
Post by: chasesfish on September 17, 2018, 06:36:09 PM
Post by: MrUpwardlyMobile on September 29, 2018, 05:40:44 AM
Everything you need to know about lending club straight from the SEC....
Post by: OrchardTree on September 29, 2018, 08:17:24 AM
Post by: FIPurpose on September 29, 2018, 10:59:37 AM
How does a stock go to 0 in 2 years when a company's debt is all collateralized by loans or cash and it even has excess cash?
Well if the loans won't be paid back and the business still can't make a profit, it's a worthless company.
Post by: chasesfish on September 30, 2018, 06:52:14 AM
How does a stock go to 0 in 2 years when a company's debt is all collateralized by loans or cash and it even has excess cash?
It can't make a profit...its operating costs exceed servicing fees it receives on loans.
If the loans its selling to investors are garbage and the portfolio is declining, they make less in servicing fees. No money to pay people and IT. Company bankrupt.
Post by: FireLane on October 01, 2018, 05:43:59 AM
Post by: chasesfish on October 01, 2018, 06:08:40 AM
I have about $8K left in Lending Club that I'm withdrawing as repayments trickle in, to the tune of a few hundred bucks a month. At this point, I'm just hoping they survive long enough for me to get all my money out.
This was me last year. I ended up listing all notes someone would pay me the principal balance plus 1% and got $7500 or so back
Post by: chaskavitch on October 01, 2018, 06:37:53 AM
https://www.sec.gov/news/press-release/2018-223
Everything you need to know about lending club straight from the SEC....
Ouch.
I've just been cashing out any accrued balance at the end of every month. Is it even worth it to try to sell what I have left on the trading platform anymore? I've got about $1600 left in my account, but listing my notes for sale after that nonsense ^ just seems like a waste of time.
Post by: FIPurpose on October 01, 2018, 06:46:07 AM
https://www.sec.gov/news/press-release/2018-223
Everything you need to know about lending club straight from the SEC....
Ouch.
I've just been cashing out any accrued balance at the end of every month. Is it even worth it to try to sell what I have left on the trading platform anymore? I've got about $1600 left in my account, but listing my notes for sale after that nonsense ^ just seems like a waste of time.
I've been selling off somewhat successfully. I'm fine with taking a 5% discount though. I have about $600 left in LC notes, but I see I get about $2-3 per month on recoveries...
Post by: WonderfulLife43 on October 01, 2018, 01:51:22 PM
Post by: DS on October 01, 2018, 01:54:43 PM
Celebration time: Withdrew my final $0.02 from LC today !!
Woohoo! Time to panic? :D
Post by: FIREball567 on October 01, 2018, 07:12:59 PM
Post by: Padonak on October 01, 2018, 07:16:15 PM
https://www.sec.gov/news/press-release/2018-223
Everything you need to know about lending club straight from the SEC....
Ouch.
I've just been cashing out any accrued balance at the end of every month. Is it even worth it to try to sell what I have left on the trading platform anymore? I've got about $1600 left in my account, but listing my notes for sale after that nonsense ^ just seems like a waste of time.
I have 3K and change left, also withdrawing funds regularly. Can't be bothered trying to sell notes.
Post by: marty998 on October 02, 2018, 03:04:35 AM
I have $5,000 invested in 200 notes that I started a month ago. Now I'm regretting putting my money in here. It's a taxable account and I've made about $4.77. Don't think I should reinvest anymore.
Wow - you might have bought your notes from a seller on this page....
Post by: chaskavitch on October 02, 2018, 06:22:18 AM
https://www.sec.gov/news/press-release/2018-223
Everything you need to know about lending club straight from the SEC....
Ouch.
I've just been cashing out any accrued balance at the end of every month. Is it even worth it to try to sell what I have left on the trading platform anymore? I've got about $1600 left in my account, but listing my notes for sale after that nonsense ^ just seems like a waste of time.
I have 3K and change left, also withdrawing funds regularly. Can't be bothered trying to sell notes.
I just put the 20 or so newest notes up at about a 2% discount. If they don't sell, I'll increase the discount and see what happens. I'm mostly trying to get as much out as I can in case they go completely under.
Post by: Syonyk on October 02, 2018, 08:42:33 AM
I don't think them totally going under is likely, but I expect the note repayment will drop badly at some point. Hoping to be clear by then, but if I take a loss on the last notes, oh well.
Post by: FIREball567 on October 02, 2018, 08:17:45 PM
I have $5,000 invested in 200 notes that I started a month ago. Now I'm regretting putting my money in here. It's a taxable account and I've made about $4.77. Don't think I should reinvest anymore.
Wow - you might have bought your notes from a seller on this page....
Yikes! What is the time frame for getting the notes paid? I've had the account for a month and only have earned $4.77.
Post by: FIPurpose on October 03, 2018, 06:00:03 AM
I have $5,000 invested in 200 notes that I started a month ago. Now I'm regretting putting my money in here. It's a taxable account and I've made about $4.77. Don't think I should reinvest anymore.
Wow - you might have bought your notes from a seller on this page....
Yikes! What is the time frame for getting the notes paid? I've had the account for a month and only have earned $4.77.
Well if you bought the notes all at the same time, the first payment is going to be until you hit about 1 month + 1-2 weeks. So give it a bit of time, it'll come in waves.
Post by: grettman on October 04, 2018, 05:15:27 AM
I recall a couple years ago LC had the financial blogging community sing their praises.
I think MMM was one of them. Curious to know if he feels differently and has said so.
Post by: MrUpwardlyMobile on October 04, 2018, 05:19:01 AM
I am really surprised people from this forum invested with lending club.
I recall a couple years ago LC had the financial blogging community sing their praises.
I think MMM was one of them. Curious to know if he feels differently and has said so.
http://www.mrmoneymustache.com/the-lending-club-experiment/
He felt it was private welfare for responsible borrowers to offset deadbeats
Post by: chasesfish on October 05, 2018, 05:52:13 AM
I am really surprised people from this forum invested with lending club.
I recall a couple years ago LC had the financial blogging community sing their praises.
I think MMM was one of them. Curious to know if he feels differently and has said so.
The praises were due to high referral/affiliate fees. Those dried up, performance tanked, and praises stopped.
Post by: appleshampooid on October 05, 2018, 08:11:09 AM
Sure, that's the cynical view. The more optimistic outlook is that MMM legitimately thought it was an opportunity for another passive revenue stream. It did look pretty good at the start.I am really surprised people from this forum invested with lending club.
I recall a couple years ago LC had the financial blogging community sing their praises.
I think MMM was one of them. Curious to know if he feels differently and has said so.
The praises were due to high referral/affiliate fees. Those dried up, performance tanked, and praises stopped.
I'm not saying he didn't get affiliate revenue (he is very transparent about this). But when the performance tanked, he was transparent about that as well and no longer recommends LC. His original article is still up, with some in-line edits saying he doesn't recommend it anymore.
Post by: FireLane on October 05, 2018, 07:36:05 PM
I am really surprised people from this forum invested with lending club.
I recall a couple years ago LC had the financial blogging community sing their praises.
I think MMM was one of them. Curious to know if he feels differently and has said so.
I invested with Lending Club because I want to be diversified and it seemed like a good idea to have one income source that wasn't stocks (here was my reasoning if you're curious (https://forum.mrmoneymustache.com/journals/maybe-we'll-make-it-after-all/msg977902/#msg977902)).
Naturally, this was dependent on them delivering the return they promised. For a while, they did. But my rate of return started to sink in 2017 and never recovered. Either their risk model is bad or they've loosened their standards, and either way I've lost faith in them.
Post by: chasesfish on October 06, 2018, 06:27:16 AM
Interest Earned: $494.65
Late Fees: $1.32
Loan Losses: ($1,028.72)
Wowza
No wonder this company won't report YTD, 1 Year, 3 Year, and 5 Year Returns. They continue to just report return since inception, which included 2011-2013 notes when this was a good idea.
Post by: MarciaB on April 18, 2019, 10:36:57 AM
Post by: ChpBstrd on April 18, 2019, 12:06:12 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.I'm checking in on the performance of my synthetic short idea from December 6th.
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.
Last put price 1.55
Last call price 0.91
----------------------
Current profit: 0.64
Assuming you had to deposit 100% margin ($4.50/share) for the short call, that's an ROI of 14.2% since December 6th. Multiply by roughly three to annualize that! Interestingly, most of the profit came from deterioration of the call.
Today the call is worth 0.53 and the put is worth 1.45. Factor in the 0.08 received upfront to enter the trade and you'd be up $1 per share. In that time, the share price dropped about 84 cents.
It might still be a good deal to short LC. Options expiring in 2021 are now available, plus several reliable recession indicators are now in the red zone. However, someone might still acquire LC for a premium. High risks and high rewards...
Thanks for the reminder to check in @MarciaB
Put price: 1.40
Call price: 0.20
————————
Synthetic short value: 1.20
+ 0.08 original credit
————————
1.28 gross profit per share
Well that escalated quickly!
Post by: FIPurpose on April 18, 2019, 12:33:45 PM
Any new updates from anyone?
I have 2 more loans left. I've been selling them when they're current at about a 10% discount. I think I'll come out overall at a 5% loss over 3 years. I'll be very happy to have my money OUT! I should be able to dump them within the next 2 months. I'll keep the account around for the rest of the year to see if anything recovers and then close it out.
Post by: chasesfish on April 18, 2019, 04:32:21 PM
Any new updates from anyone?
My portfolio still sucks. Finally had a month where interest income exceeded chargeoffs
Post by: Villanelle on April 18, 2019, 05:04:30 PM
I wonder, at what point, it will be done. I just want to be finished dealing with it come tax time. But I assume that I have to keep dealing with this as long as they keep recovering. It's not worth the $10, or whatever it is I will make this year.
Also, I looked through the charged off notes and have $25 (meaning they didn't make a single payment), $24.0X, etc. Hard to believe these people didn't take the loans knowing they weren't going to pay them off.
Post by: chasesfish on April 18, 2019, 07:22:38 PM
Post by: FireLane on April 18, 2019, 07:28:42 PM
When all's said and done, I'm guessing I'll make a profit, but only a small one. I would've done better to just put the money in Vanguard.
Post by: pdxvandal on April 18, 2019, 10:57:32 PM
Post by: chasesfish on April 19, 2019, 04:55:43 AM
Its so little money for me now and they finally fixed the ability to import into turbotax.
Post by: Tyson on April 19, 2019, 09:27:32 AM
Post by: Villanelle on April 19, 2019, 11:28:34 AM
One question for those who've wound out your account - At what level do you say "I'll keep $500 or $1000 in here". I have 633 charged off notes that are generating some recoveries for me every month and theoretically should for years now that almost all of my loans are at the end of their life.
Its so little money for me now and they finally fixed the ability to import into turbotax.
I kept basically no money in (I think due to the scheduling of my withdraw, I never dropped below $.27) , and I'm still getting money from recoveries, so unless I'm missing something, there is no need to keep that $500 in the account.
Post by: sisto on April 22, 2019, 10:05:12 AM
Post by: appleshampooid on April 22, 2019, 01:35:41 PM
Post by: meatgrinder on June 18, 2019, 12:21:46 PM
Post by: appleshampooid on June 19, 2019, 10:26:30 AM
My Lending Club Returns. Its turned out ok somehow but the taxes are brutal since defaults don't offset gains and are deferred. I started investing in 2013 and started winding down over 1 1/2 years ago.As I remember, once a loan is charged off it goes into a 1099 as a capital loss, right? So eventually it will offset income, but yeah deferred.
But with that much invested, I imagine you could hit the $3k cap in writing off capital losses against income.
Post by: meatgrinder on June 19, 2019, 12:27:48 PM
My Lending Club Returns. Its turned out ok somehow but the taxes are brutal since defaults don't offset gains and are deferred. I started investing in 2013 and started winding down over 1 1/2 years ago.As I remember, once a loan is charged off it goes into a 1099 as a capital loss, right? So eventually it will offset income, but yeah deferred.
But with that much invested, I imagine you could hit the $3k cap in writing off capital losses against income.
Right, thanks for the clarification. My account goes way past the $3K cap so a majority is deferred.
Post by: appleshampooid on June 19, 2019, 01:48:56 PM
That does suck. It's annoying that the charge offs can't go against the income in the same category and cancel out in the same year. Shrug.My Lending Club Returns. Its turned out ok somehow but the taxes are brutal since defaults don't offset gains and are deferred. I started investing in 2013 and started winding down over 1 1/2 years ago.As I remember, once a loan is charged off it goes into a 1099 as a capital loss, right? So eventually it will offset income, but yeah deferred.
But with that much invested, I imagine you could hit the $3k cap in writing off capital losses against income.
Right, thanks for the clarification. My account goes way past the $3K cap so a majority is deferred.
Post by: FIPurpose on July 30, 2019, 10:36:34 PM
Post by: FIPurpose on July 30, 2019, 10:41:10 PM
Post by: chasesfish on July 31, 2019, 04:32:52 AM
Oh I didn't notice this, but LC just did a reverse stock split this month of 5:1. So their stock of $3 is now readjusted up to $15. Why is this company still valued at 1.25 Billion?Its amazing to me. I didn't earn anything on my put options, I guess the market can remain irrational longer than my options can remain open
Post by: FIPurpose on July 31, 2019, 07:47:49 AM
Oh I didn't notice this, but LC just did a reverse stock split this month of 5:1. So their stock of $3 is now readjusted up to $15. Why is this company still valued at 1.25 Billion?Its amazing to me. I didn't earn anything on my put options, I guess the market can remain irrational longer than my options can remain open
My guess is that your option were also readjusted? Can you tell what happened to them? Does it only represent 20 stocks now or how does that work? I have to think selling .2 of an option isn't possible.
Post by: AlanStache on July 31, 2019, 09:52:04 AM
All my loans are in a IRA account, does anyone know what the fees will be to transfer the balance to my Schwab IRA? I fear that I will be left with 5.32$ in the account and it would cost 20$ to do a transfer.
Post by: sailinlight on July 31, 2019, 10:51:37 AM
Two weeks ago I started selling off my LC loans. I am probably 80-90% into cash by now. The returns have just not been worth keeping the account open and the larger worry of something else going to zero.
All my loans are in a IRA account, does anyone know what the fees will be to transfer the balance to my Schwab IRA? I fear that I will be left with 5.32$ in the account and it would cost 20$ to do a transfer.
What discount you do you offer them at? I've been trying to sell my notes for several months now, and only get a few bites. Usually offer at around a .25% discount. Should I go lower?
Post by: FIPurpose on July 31, 2019, 11:07:40 AM
Two weeks ago I started selling off my LC loans. I am probably 80-90% into cash by now. The returns have just not been worth keeping the account open and the larger worry of something else going to zero.
All my loans are in a IRA account, does anyone know what the fees will be to transfer the balance to my Schwab IRA? I fear that I will be left with 5.32$ in the account and it would cost 20$ to do a transfer.
What discount you do you offer them at? I've been trying to sell my notes for several months now, and only get a few bites. Usually offer at around a .25% discount. Should I go lower?
Depends on the loan, but yes. Much much lower.
Here is my general assessment for what you can sell notes for:
Never late/ credit score is up since bought: -5 to +2%
Never late/ credit is same/down: -5 to 0%
Current: -15 to -5%
In grace period: -30 to -20%
Late: -40 to -30%
Super Late: -50 to -40%
Post by: chasesfish on July 31, 2019, 11:52:03 AM
Oh I didn't notice this, but LC just did a reverse stock split this month of 5:1. So their stock of $3 is now readjusted up to $15. Why is this company still valued at 1.25 Billion?Its amazing to me. I didn't earn anything on my put options, I guess the market can remain irrational longer than my options can remain open
My guess is that your option were also readjusted? Can you tell what happened to them? Does it only represent 20 stocks now or how does that work? I have to think selling .2 of an option isn't possible.
They're January puts at $2 share. I only have $150 worth left, made the trade break-even back in December when the market was crashing. Just holding them until end of year then I'll take the loss to get it into this tax year
Post by: CanuckExpat on July 31, 2019, 03:16:59 PM
What discount you do you offer them at? I've been trying to sell my notes for several months now, and only get a few bites. Usually offer at around a .25% discount. Should I go lower?
At what discount would you consider buying the notes if you didn't already own them?
Post by: appleshampooid on August 09, 2019, 12:32:40 PM
Two weeks ago I started selling off my LC loans. I am probably 80-90% into cash by now. The returns have just not been worth keeping the account open and the larger worry of something else going to zero.Do you have STRATA as your custodian? I think that's the only option...(formerly SD IRA Services).
All my loans are in a IRA account, does anyone know what the fees will be to transfer the balance to my Schwab IRA? I fear that I will be left with 5.32$ in the account and it would cost 20$ to do a transfer.
I recently went through this, but STRATA closed my account (can't even log in) so I'm not 100% sure what the fee was. Basically you have to transfer it twice. First you go to your LC account and tell them to ACH all your cash to the custodian. Then the custodian (STRATA) has your cash and you initiate the rollover with the destination IRA (Schwab in your case). In my case, Vanguard was able to initiate the rollover and grab the money. I think it was a $200 fee for this crap (which was noted in the initial SD IRA account agreement docs). So you really only want to do it once.
It was a balancing act for me... I wanted to get the money out of cash ASAP and back into my investment portfolio, but I also wanted to collect those recoveries for as long as possible. Basically I had to cut it off at a certain point and just pull the trigger.
Post by: FireLane on September 25, 2019, 08:12:09 PM
Quote
Investment activity in LendingClub Notes is limited for residents of some states. We are working to expand access in these states.
AK, AZ, FL, NC, ND, NM, NY, PA, TX: Residents are unable to purchase LendingClub Notes on the primary market. However, they are permitted to buy and sell LendingClub Notes on the Folio Investing Note Trading Platform.
OH: LendingClub Notes are currently unavailable for residents to purchase or trade.
I'm positive this wasn't there last week. I live in New York, and although I haven't been putting new money into Lending Club for a while, I never ran into any issue doing so before now. There's no explanation of what specifically has changed, and other people seem baffled and frustrated by it:
https://www.lendacademy.com/some-investors-locked-out-of-investing-in-lendingclub-loans/
This could be another sign that Lending Club is circling the drain. I'm just glad that I've been withdrawing my money for months rather than reinvesting. Just over $2000 left to go now.
Post by: chasesfish on September 26, 2019, 04:15:17 AM
Post by: AlanStache on September 26, 2019, 05:48:32 AM
The bulk of my balance was sold off and is in the process of being transferred to my schwab account. I ended up with ~400$ in loans that I could not sell off, I progressively raised the discount every few days and still no takers. Figure I will give it a few months and try again or just let the loans mature/default then transfer the balance.
Post by: ChpBstrd on September 26, 2019, 11:36:52 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.I'm checking in on the performance of my synthetic short idea from December 6th.
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.
Last put price 1.55
Last call price 0.91
----------------------
Current profit: 0.64
Assuming you had to deposit 100% margin ($4.50/share) for the short call, that's an ROI of 14.2% since December 6th. Multiply by roughly three to annualize that! Interestingly, most of the profit came from deterioration of the call.
Today the call is worth 0.53 and the put is worth 1.45. Factor in the 0.08 received upfront to enter the trade and you'd be up $1 per share. In that time, the share price dropped about 84 cents.
It might still be a good deal to short LC. Options expiring in 2021 are now available, plus several reliable recession indicators are now in the red zone. However, someone might still acquire LC for a premium. High risks and high rewards...
Time to check the progress of this synthetic short idea. Since my last update LC did a one-for-five reverse split to prop up their stock price, so the options are now “non-standard” and represent 20 shares instead of 100. For comparison, I will multiply the usually quoted option price per share by 20 and compare it to the value of the entry position which is multiplied by 100.
Original idea:
Buy a put for 100 shares at 4.50 strike for $140
Sell a call for 100 shares at 4.50 strike for $148
———-
Net: +$8
Current value:
Sell a put for 20 shares at (1.68 x 20=) $33.6
Buy a call for 20 shares at (0.025 x 20=) $0.50
———
Net: +$33.10
Total return excluding commissions is +$33.1 + $8 original credit = $41.10
If I held this position I would have long ago rolled it closer to the money and to a later expiration. The reverse split and time decay have already knocked it down almost 77% since my last check in. The bleeding of time value is very high for far-OTM options nearing expiration such as these, and the liquidity of the non-standard options might get worse.
Still, this company with its horrible product still has a unicorn market cap of $1.21 BILLION. Half of that valuation will evaporate if either of the following happens next year:
1) a correction in which LC debt becomes more toxic than 2008-era NINJA mortgages, or
2) no correction and business as usual.
A short position in LC remains a compelling way to offset portfolio market beta while maintaining a chance for the appreciation of one’s hedge even if the market does go up (as would have worked in 2017 & 2018). This is offset by the risk of some fool buying LC for a premium, a change of leadership/strategy, or the issuance of a cryptocurrency by LC). Entering a bear spread would be a way to profit from LC’s probable decline while limiting risk.
Post by: chasesfish on November 04, 2019, 05:47:21 AM
I wonder what my residual will be and for how long from those? Right now its between $5 and $15 per month.
Post by: AlanStache on November 04, 2019, 10:56:56 AM
some notes that on the surface looked fine just would not sell even as I retched up the discount. maybe someone knows something about 38yo men in Ohio who make between 45-55k/year and needed to consolidate debt...?
I am not sure it was a mistake to try LC but I dont think it worked out in my favor. Even beyond LC I have been simplifying things, KISS and go outside to have some fun.
Post by: laserlady on November 22, 2019, 11:30:11 AM
I received $716.24 in interest, and lost $550.16 in charge offs. So, not as bad as it could have been, but far from a good investment, especially when you consider the unfavorable tax situation and the time I spent trying to pick good loans.
I'm now happily going back to simple, automated index-fund investing.
Post by: freya on November 22, 2019, 01:41:47 PM
However, that doesn't include the cost of Turbotax Online, which I was buying mainly for its unique ability to import Lending Club 1099s (and its multiple pages of note transactions). I am so looking forward to using freetaxusa or Credit Karma starting in 2020.
Not sure how long to wait after the last chargeoff to close my account...9 months probably. after that they'll just have to mail me a check. I'm sure it'll be < $10/year so not worried about taxes.
Post by: FireLane on February 22, 2020, 05:55:31 PM
In the "My Notes at-a-Glance" section of the account summary, there used to be an option to show the total amount of loans that were either in repayment, fully paid, or defaulted and charged off. I used that option to compare the amount of money I'd lost in charged-off loans to the amount of money I'd made in interest.
Now that feature is gone, and they only let you view the total number of loans in each status, which is much less useful. This makes it harder to judge overall performance, and I bet that's deliberate.
Just over $800 left in my account. I should have all my cash back within a few months.
Post by: chasesfish on February 23, 2020, 06:38:36 AM
I notice Lending Club has taken away another feature.
In the "My Notes at-a-Glance" section of the account summary, there used to be an option to show the total amount of loans that were either in repayment, fully paid, or defaulted and charged off. I used that option to compare the amount of money I'd lost in charged-off loans to the amount of money I'd made in interest.
Now that feature is gone, and they only let you view the total number of loans in each status, which is much less useful. This makes it harder to judge overall performance, and I bet that's deliberate.
Just over $800 left in my account. I should have all my cash back within a few months.
They've been taking away anything that shows transparency in performance for years. I still can't see a 1, 3, 5, and 10 year return data on my portfolio.
Post by: chaskavitch on February 23, 2020, 06:46:08 AM
Post by: appleshampooid on February 24, 2020, 08:54:42 AM
I notice Lending Club has taken away another feature.Ooooof, that sucks, and there is NO justification for removing that feature. I used it every day back when I still had open notes.
In the "My Notes at-a-Glance" section of the account summary, there used to be an option to show the total amount of loans that were either in repayment, fully paid, or defaulted and charged off. I used that option to compare the amount of money I'd lost in charged-off loans to the amount of money I'd made in interest.
Now that feature is gone, and they only let you view the total number of loans in each status, which is much less useful. This makes it harder to judge overall performance, and I bet that's deliberate.
Just over $800 left in my account. I should have all my cash back within a few months.
2020 should be the last year I have to report any P2P stuff on my taxes, and even this year (2019) it was almost nothing. Neither Prosper or LC paid me enough interest to merit reporting it on a 1099-INT or 1099-OID, but I added it up and reported it anyway as a good little tax payer.
I will have some recoveries into 2020 that will probably still be reported on a 1099-B. Like, maybe a whole couple dollars!
Post by: AlanStache on April 28, 2020, 06:55:32 AM
Post by: ChpBstrd on April 28, 2020, 07:35:29 AM
If defaults were this bad during the boom years, just imagine the next 12 mos!
Post by: ice_beard on April 28, 2020, 08:59:37 AM
Out of 508 original notes, 100 have been charged off. Unbelievable. I selected middle of the road level risk tolerance too. They must have been giving money to anyone who filled out an application.
I'm still showing something like a 3% gain, which beats the 1% I had the first few years. Not sure if they simply changed how this is calculated or if the charge offs decreased or what. I don't care enough to investigate.
I won't be done with this experiment until next summer.
Post by: chasesfish on April 29, 2020, 03:53:25 AM
Thanks for the reminder to log in and transfer out my available funds.
Out of 508 original notes, 100 have been charged off. Unbelievable. I selected middle of the road level risk tolerance too. They must have been giving money to anyone who filled out an application.
I'm still showing something like a 3% gain, which beats the 1% I had the first few years. Not sure if they simply changed how this is calculated or if the charge offs decreased or what. I don't care enough to investigate.
I won't be done with this experiment until next summer.
This has been my experience.
Unlike @ChpBstrd - my LC put options expired in January before everything tanked
Post by: ChpBstrd on April 29, 2020, 07:40:51 AM
Thanks for the reminder to log in and transfer out my available funds.
Out of 508 original notes, 100 have been charged off. Unbelievable. I selected middle of the road level risk tolerance too. They must have been giving money to anyone who filled out an application.
I'm still showing something like a 3% gain, which beats the 1% I had the first few years. Not sure if they simply changed how this is calculated or if the charge offs decreased or what. I don't care enough to investigate.
I won't be done with this experiment until next summer.
This has been my experience.
Unlike @ChpBstrd - my LC put options expired in January before everything tanked
The price is still irrational at 7.64. Even more so now that defaults, unemployment, and small business bankruptcies are rising.
Post by: FIPurpose on April 29, 2020, 11:35:37 AM
However, for those buying puts, I could easily see this stock continuing to maintain a $6-8 price. While LC has still been unable to turn a profit, they are well-positioned to grow their market share. They've been steadily improving their EPS over the past year. They went from -1.52 EPS in 2018 to -0.35 in 2019. The Zacks estimate for this year is 0.09 and 0.41 for 2021. LC is estimated to have +300% growth YOY, and their future earnings estimates puts their P/E at around 17. Of course LC is a wildly speculative stock, but I don't see puts on LC as an obvious win.
Post by: chasesfish on April 30, 2020, 02:18:39 PM
Post by: Paul der Krake on April 30, 2020, 02:26:10 PM
The reason I don't want to buy more puts on this is I never underestimate the supidity of bank leadership, someone like Capital One will buy themWith what money?
Post by: ChpBstrd on April 30, 2020, 03:06:21 PM
They could borrow the money from another lending platform and not pay it back.The reason I don't want to buy more puts on this is I never underestimate the supidity of bank leadership, someone like Capital One will buy themWith what money?
Post by: marty998 on April 30, 2020, 04:03:16 PM
Not unlike most Government budgets lol. We're in the age of debt never having to be repaid.They could borrow the money from another lending platform and not pay it back.The reason I don't want to buy more puts on this is I never underestimate the supidity of bank leadership, someone like Capital One will buy themWith what money?
Post by: bwall on April 30, 2020, 06:00:20 PM
If all debt were repaid, what would investors invest in?Not unlike most Government budgets lol. We're in the age of debt never having to be repaid.They could borrow the money from another lending platform and not pay it back.The reason I don't want to buy more puts on this is I never underestimate the supidity of bank leadership, someone like Capital One will buy themWith what money?
Post by: marty998 on April 30, 2020, 08:56:51 PM
Equity perhaps. Or maybe useful projects that actually add to the productive capacity of the economy.If all debt were repaid, what would investors invest in?Not unlike most Government budgets lol. We're in the age of debt never having to be repaid.They could borrow the money from another lending platform and not pay it back.The reason I don't want to buy more puts on this is I never underestimate the supidity of bank leadership, someone like Capital One will buy themWith what money?
As it stands, when you can borrow for nothing, there's a lot of money being pissed away because there are few if any consequences.
Post by: chasesfish on May 01, 2020, 03:57:21 AM
The reason I don't want to buy more puts on this is I never underestimate the supidity of bank leadership, someone like Capital One will buy themWith what money?
Former banker here. They have plenty of capital and Lending Club has a minimal market cap. Not going to happen in the next quarter, but could after that.
Post by: bwall on May 01, 2020, 07:45:38 AM
Equity perhaps. Or maybe useful projects that actually add to the productive capacity of the economy.Not unlike most Government budgets lol. We're in the age of debt never having to be repaid.If all debt were repaid, what would investors invest in?
As it stands, when you can borrow for nothing, there's a lot of money being pissed away because there are few if any consequences.
My business borrowed lots of money for useful projects that created jobs. We then paid off the debts and still kept the jobs in place. The business owners now have more money in their pockets, company coffers are full, employees have jobs and people upstream of us in the supply chain also have jobs, as do those downstream. Now the company can invest in other useful projects with their own money. We were very happy that someone was willing to lend to us.
At no time did we ever consider defaulting on our obligations.
Post by: Padonak on May 01, 2020, 08:24:36 AM
Post by: chasesfish on May 01, 2020, 11:49:34 AM
What happens to borrowers who default on Lending Club loans? Does LC send the loan balance to collections? Do their credit scores drop significantly? Do collectors go after their assets (houses, cars)? Do they have their wages garnished?
All of that is done. As best I can tell at 120 days they charge it off and use contingency collection agencies. The amount that goes to the investor after the agency takes their fee and lending club charges a recovery fee are minimal. That's the best I can tell with 646 charged off notes in my account.
Post by: FIPurpose on June 01, 2020, 06:34:18 PM
Also congrats to everyone who bought put options. Looks like you likely will make some good money on it. LC is down 55% on the year. They are currently valued at about 330M.
Post by: ChpBstrd on June 02, 2020, 09:31:36 AM
Got an email today that LC is trying to bring in investment money by offering a free 0.5% bonus on all new investment. It's a paltry sum that is screaming "PLEASE INVEST MORE MONEY, BUT WE CAN'T ACTUALLY OFFER A GOOD INCENTIVE".
Also congrats to everyone who bought put options. Looks like you likely will make some good money on it. LC is down 55% on the year. They are currently valued at about 330M.
The market seems to like the new strategy. Stock is up 7.5% today. Great time to pick up more puts. Nothing like a band-aid solution to reveal that they can no longer attract investors and might even face liquidity issues.
I have 17 of the January 2021 puts at the $5 strike. I bought some in October and some in March. So far I’m up 113% or $903. Today looks like a good day to add exposure. If I buy more puts, it’ll be at a lower strike price. This play has lots of room to run, all the way to zero.
Post by: Padonak on June 02, 2020, 11:45:44 AM
Used Lending Club as an investor for almost 5 years. Invested about 15K, mostly through automatic purchases by Lending Robot. Focused on riskier 3 year loans. Stopped investing about 3 years ago mostly because I reached free Lending Robot limit even with their promotions, but also because the return wasn't good enough.
Didn't bother selling any loans.
Adjusted NAR 3.9%. In hindsight, it wasnt worth the hassle of setting everything up and tracking performance. Also too much paperwork with tax returns and less room for tax loss harvesting. Luckily I used turbo tax and didn't have to enter all that BS manually.
I'm glad almost all my loans expired by the time this Covid shitshow started.
Post by: FireLane on October 07, 2020, 08:34:24 AM
Quote
Endings & New Beginnings – LendingClub & Radius Bank
Earlier this year LendingClub announced that it signed an agreement to acquire Radius Bancorp, the holding company of Radius Bank. Combining the two companies is ground-breaking. By becoming the only full-spectrum fintech marketplace bank, and the first public U.S. neobank, LendingClub can unlock new value for borrowers and investors by using the marketplace to both pay less when borrowing and earn more when saving.
Since our announcement, we have been hard at work with the team at Radius, regulators, and partners about the product suite of the potential combined business and what it will mean for our members. In connection with these efforts and as part of our anticipated transition to a bank holding company, we have decided to make some changes that are important to our Notes investors.
Closing an Important Chapter—Notes Platform Retiring on December 31, 2020
As we move towards becoming a full-spectrum fintech marketplace bank, we have looked closely at our current and future product suite and have started development of new products to help our members keep more of what they earn and earn more on what they keep. Unfortunately, under a prospective banking framework, it is not economically practical for LendingClub to continue to offer Notes. So, we had to make the difficult decision to retire the Notes platform effective December 31, 2020.
This will not affect the existing Notes you own but means that the last day to purchase Notes will be December 27. In addition, we will no longer accept new accounts effective October 8 and we are targeting to retire the mobile app on November 10.
We do not take this decision lightly. Many of our investors consider Notes as a key piece of their investment portfolio, and our individual investors have been an important part of the history and growth of our company.
Ultimately, we believe new banking capabilities will enable us to serve you even better in the future. People helping people is core to who we are as a company and we’re scoping new products that would retain the peer-to-peer spirit of Notes under the prospective banking framework.
In the meantime, we are working with Radius Bank to develop an exclusive high yield savings account, only available to Notes investors, which will allow you to earn more on the available cash in your Notes account—and any additional cash you want to transfer in.
Post by: FIPurpose on October 07, 2020, 08:50:29 AM
Post by: AlanStache on October 08, 2020, 07:24:44 AM
Post by: Mr. Green on October 08, 2020, 11:05:43 PM
Post by: chasesfish on October 09, 2020, 02:47:04 PM
Goodbye Lending Club....you scummy people still would never give me a simple 1/3/5 year return calculation on my account, only wanting to tell me I've made 1.XX% since inception in 2011.
Post by: ChpBstrd on October 11, 2020, 08:24:10 AM
I was right on my puts, just couldn't buy them far enough out.
Goodbye Lending Club....you scummy people still would never give me a simple 1/3/5 year return calculation on my account, only wanting to tell me I've made 1.XX% since inception in 2011.
LC has kind of flatlined lately. Apparently their bank acquisition has put a floor on the value, so my $2 puts maturing in January will most likely be worthless. I had figured they would bleed value faster or run out of liquidity faster than the bank earnings could make up for.
Post by: sisto on December 04, 2020, 10:38:10 AM
Post by: ice_beard on December 04, 2020, 10:54:06 AM
Post by: AlanStache on December 04, 2020, 11:54:04 AM
Post by: chasesfish on January 01, 2021, 08:34:58 AM
Post by: Syonyk on January 01, 2021, 11:32:58 AM
It's been an interesting experiment, but... like many things, it's over now.
Post by: Villanelle on January 01, 2021, 03:09:56 PM
All my loans are either paid in full or charged off, and have been since at least 2019. At what point can I just be done thinking about this? If I understand correctly, charge-off recoveries could still trickle in. Is that correct? Is there some cut off, or could--theoretically--I get $1.15 from LC in 2050 for some recovered defaulted loan?
Post by: Syonyk on January 01, 2021, 05:08:09 PM
Post by: AlanStache on January 01, 2021, 06:01:36 PM
Ignorant question:
All my loans are either paid in full or charged off, and have been since at least 2019. At what point can I just be done thinking about this? If I understand correctly, charge-off recoveries could still trickle in. Is that correct? Is there some cut off, or could--theoretically--I get $1.15 from LC in 2050 for some recovered defaulted loan?
I did the paper work to close my account last week and move the funds to my other IRA; as part of closing I was given the option to open an taxable account or "donate" any future earning to Leanding Club. I choose the donate option, dont like LC much but 10$ is not worth the effort.
Post by: ColoradoTribe on January 01, 2021, 10:49:47 PM
Post by: chasesfish on January 02, 2021, 04:32:15 AM
Ignorant question:
All my loans are either paid in full or charged off, and have been since at least 2019. At what point can I just be done thinking about this? If I understand correctly, charge-off recoveries could still trickle in. Is that correct? Is there some cut off, or could--theoretically--I get $1.15 from LC in 2050 for some recovered defaulted loan?
I don't know the answer to this, but I have a guess from my professional experience.
Lending club probably bulk sells the rights to all of these charge off notes and distributes what they receive. Right now it looks like the debt collectors are working on contingency.
Post by: chaskavitch on January 26, 2021, 06:59:01 AM
Post by: chasesfish on January 26, 2021, 09:13:10 AM
Post by: erutio on January 26, 2021, 10:10:38 AM
Post by: laserlady on February 01, 2021, 10:28:43 PM
I have to get tax forms from Lending club for my last few notes that were sold off in Jan 2020, and their website is constantly down. I still have a valid log-in, but I just get an error message once I am in my account. Boo.
I'm running into the same problem. I can log in, but then the website always tells me that they're experiencing technical difficulties, so I can't pull up the tax forms. So annoying.
Post by: chaskavitch on February 02, 2021, 06:17:49 AM
I have to get tax forms from Lending club for my last few notes that were sold off in Jan 2020, and their website is constantly down. I still have a valid log-in, but I just get an error message once I am in my account. Boo.
I'm running into the same problem. I can log in, but then the website always tells me that they're experiencing technical difficulties, so I can't pull up the tax forms. So annoying.
I'm glad it's not just me! I even got an email last week saying that my tax forms were ready to be downloaded, and I still can't actually access anything :( I emailed them, but I haven't called customer support yet.
Post by: HappyCheerE on February 04, 2021, 03:55:59 PM
Supposedly $800 left to wait for - even if it all vanishes, overall I'm up about 1-2% over what I put in, so technically "in the black" ignoring inflation. I'm glad I was too stubborn to sell at a loss, but I do have years more of taxes to do, so at some point closing the account might make the most sense.
Post by: Icecreamarsenal on February 05, 2021, 08:30:30 PM
No RAGRETS
Post by: fuzzy math on February 06, 2021, 11:48:30 AM
My personality doesn't let me forget about this platform. I check it at least once a week and end up transferring amounts like 1.16 and 0.89. Then that goes straight to my vanguard.
No RAGRETS
Haha me too! I'm down to $13 still invested and I'll be damned if I let them use my slush funds for any period of time.
Post by: laserlady on February 06, 2021, 09:27:07 PM
I log in at least a few times a month to see if there's enough accumulated to transfer out, and I haven't had any trouble. Just downloaded my forms. Maybe try again?
Thanks! I tried again today and was able to log in and download my tax forms.
But now I see that I had a few more dollars transferred to my account last summer, and I can't transfer the money out. I think Lending Club closed my account automatically in June after all of my loans got charged off, and they said that they'd transfer any recoveries they received to my associated bank account. Clearly that hasn't been happening, and they've disabled my ability to transfer money out myself. So, the recoveries are still being counted as income on my tax forms, but they're inaccessible to me. It's not much money for me personally, but it really bothers me to see a company carrying out this kind of fraud, and possibly getting away with it.
Post by: chaskavitch on February 07, 2021, 07:32:03 AM
I must be completely cashed out, though, because literally the only thing I can see is my statements. If I click on any of the other links to Summary or Holdings, it just reloads the tax statements page. At least I know I'm not leaving anything in there!
Post by: frozen on February 07, 2021, 07:10:07 PM
My personality doesn't let me forget about this platform. I check it at least once a week and end up transferring amounts like 1.16 and 0.89. Then that goes straight to my vanguard.I have about $20.00 left to go. 4 notes are current and 2 notes are marked late. I am glad this will be my last year with this company.
No RAGRETS
Haha me too! I'm down to $13 still invested and I'll be damned if I let them use my slush funds for any period of time.
Post by: FIPurpose on February 07, 2021, 09:52:15 PM
Post by: sisto on April 21, 2021, 03:23:35 PM
Post by: chasesfish on April 22, 2021, 01:58:19 PM
2.22% Net Return
Post by: sisto on April 22, 2021, 02:44:50 PM
$523 to go
2.22% Net Return
[/squote]
The return is abysmal, especially with all of the hassle. Hang in there!
Post by: chasesfish on January 14, 2024, 10:15:09 AM
Two remaining notes to payout, the finally removed the miserable 2.2% annualized total return from the front screen.
This entire thing was a great idea, poorly executed.
Post by: FIPurpose on January 14, 2024, 11:36:57 AM
Post by: ChpBstrd on January 14, 2024, 05:16:08 PM
This entire thing was a great idea, poorly executed.I tend to think it was a bad idea, executed as well as could be imagined, with a ton of resources and public awareness supporting it. The whole concept was let's get around all that bank bureaucracy and offset the added risk by shifting liability for bad loans to investors.
Then it was discovered by both the bank and the investors that the highly diversified and competitive banking system had evolved the costly processes it currently has because cutting all the bureaucracy out leads to... a bunch of bad, if not fraudulent loans.
P2P lending was just one of many themes which emerged in the reach-for-yield 20-teens. Each startup sought to use a web platform and some renaming of terms to get around existing norms, procedures, laws, and taxes. They promised to unlock HUGE value that was trapped in old fashioned institutions. Real estate investing platforms, Wework, art investing platforms, and "crypto banks" like FTX were other examples.
They should all be considered the illegitimate offspring of a timeshare and a ponzi scheme. If you managed to withdraw any money out of such a company, be grateful.
I'm still haunted by the posts in 2018-2021 by people on this board who were loaning bitcoin at 9% interest or doing online RE loans to failing developers at 15%. They were trying to recalculate their FIRE numbers based on this new and permanent income and it felt like watching somebody kill themselves.