well my first grace period note hit - their credit score has gone up since the loan was issued too

https://www.lendingclub.com/account/loanDetail.action?loan_id=26899562

10/28/2014 3:52:31 PM

Yeah, I was pretty picky with the notes I bought, so I'm pretty surprised to see the default rate so high.

10/28/2014 4:49:01 PM

My Notes at-a-Glance   165
Not Yet Issued         21
Issued & Current       140
In Grace Period        0
Fully Paid             3
Late 16 - 30 Days      1
Late 31 - 120 Days     0
Default                0
Charged Off            0

Adjusted Net Annualized Return    15.16%
Historical Returns:               7.10% - 12.10%

11/18/2014 4:13:55 PM

so far the biggest return has been being able to participate in the IPO - few months in but i added more cash in december so most of my notes haven't been held for a full month yet - the late notes keep rising but not to a concerning level yet

My Notes at-a-Glance   344
Not Yet Issued         64
Issued & Current       268
In Grace Period        1
Fully Paid             7
Late 16 - 30 Days      1
Late 31 - 120 Days     3
Default                0
Charged Off            0

Adjusted Net Annualized Return    11.70%
Historical Returns:               7.40% - 12.20%

1/20/2015 1:52:12 PM

At least the IPO was nice

My Notes at-a-Glance 303
Not Yet Issued 0
Issued & Current 244
In Grace Period 2
Fully Paid 38
Late 16 - 30 Days 0
Late 31 - 120 Days 9
Default 0
Charged Off 10

1/20/2015 3:39:56 PM

I just got a solicitation for a business loan from LC to my home address.

1/20/2015 4:30:08 PM

Someone explain this to me in very simple terms how to get started.

1/21/2015 1:29:33 AM

this shit looks like a P-O-N-Z-I

unverified debtor identities? Are you kidding me?

Returns of 11%?

Who files suit on your behalf to collect on a defaulted debt?

1/21/2015 1:55:30 AM

Ok so I did some more digging on Lending Club.

Looks like the Fed Reserve is digging hard....

Quote :

" Focusing on funded applications, we note that funded business loans were slightly larger on average than loans funded for other purposes but paid similar interest rates. However, relative to small business loans from traditional sources, peer-to-peer small business borrowers paid an interest rate that was about two times higher. Regression results that control for application quality show that peer-to-peer loans for small businesses were charged almost a percentage point interest rate premium over non-business loans. Logistic regression results that look at loan performance indicate that loans for small businesses were much more likely to be delinquent or charged off."

I don't even have to interact with the fundamentals of the software or whatever methods they use for soliciting bids; the business model is excessively clear (for you non-math types)....

the network is most certainly above board, but the scheme is on the borrower-end

The orchestrators are setting up small business shell corps and promising higher returns and then defaulting on it. Novel ponzi. Objective Federal Reserve data supports it.

Strongly believe is Ponzi
The way it runs is injection of shell corps listings, that are sure losers, yet attractive in appearance, designed only to bait investors to extending lines of credit that will surely default after paying out returns a few times. Data supports it. Full report here http://www.federalreserve.gov/pubs/feds/2014/201410/201410pap.pdf

1/21/2015 3:27:23 AM

i'm fairly certain you don't know what the definition of ponzi means - spend more than a few minutes googling next time - lendingclub (and others like prosper) are very transparent with loan data

not to mention all of the loans that we've been talking about are peer-to-peer with individuals and not small businesses - there are companies that focus on small businesses for peer-to-peer lending, but it's a non-public portion of lending club - it's likely that they will very likely open it up to the public in the future and let accredited investors participate

Quote :

"Who files suit on your behalf to collect on a defaulted debt?"

Quote :

"Collection Fee When borrowers miss payments and loans become late, Lending Club uses best practices from the banking industry to bring delinquent loans back to "current" status. Currently, Lending Club charges investors one of the following collection fees, which is deducted from any amount recovered:1) 18% of the amount recovered if the loan is 16 or more days late and no litigation is involved, or 2) 30% of hourly attorneys' fees, plus costs, if litigation is involved. Lending Club does not charge a collection fee if no payments are collected, and no collection fee will be charged in excess of the amount recovered. Please note that Lending Club currently charges investors a reduced collection fee, which may be discontinued at any time. The normal collection fee is a percentage of the amount recovered: 30% if the loan is less than 60 days past due and was made to the borrower during the previous 90 days; 35% in all other cases, except litigation; 30% of hourly attorneys' fees in the event of litigation, plus costs."

1/21/2015 9:43:30 AM

Interesting. Good data. I hope it's legit for the sake of the financial services sector's recovery.
The NASDAQ is pretty legit too, and it was once chaired by Madoff.


But I have another question


If best practices includes filing collection for the defaulted loan on your behalf, are you the named plaintiff, or is your security instrument pooled into a trust where the suit is brought on behalf of the trust?
Upon recovery or judgment, at what point does execution of the judgment result in disbursement to the party plaintiff?

So if your personal loan defaulted and you wanted to go after the debtor, would it be [Your name] v. [Dude you loaned to] ?


I ask because if the mode of bringing suit could result in future issues with employers. Mostly because your history shows you have brought hundreds of lawsuits in your lifetime.
This could potentially be a deterrent to job prospects in the future at first blush.
Further, being party plaintiff too many times on a bad debt (i.e. over the course of 10 years you make 500 bad loans) over too long of a time can invoke federal debt collection jurisdiction over your activities (FDCPA). Does P2P lending account for that?

(these are serious questions)

A future employer could pull your name and see that you've sued 500 different people, and that is the direction that employment applications are going these days.....
alternatively you could just lose the money? How then?


[Edited on January 21, 2015 at 1:51 PM. Reason : ]

1/21/2015 1:42:15 PM

I just figured it out. Thanks for the advice on spending more than a few minutes googling.

This is mortgage backed securities all over again, except I think it should be called retail investor backed securities.

The reason why NC locks its citizens into the secondary markets is standing in the primary markets would result in standing to file suit, and at that point you would be the named party plaintiff directly suing for recovery of your money. However, whether you are locked into "secondary" market or not, you are probably always limited to purchasing in the secondary market.

The reason why is you are not making direct loans or placing orders directly to the consumer but rather pricing what you're willing to contribute to a theoretical borrower who matches certain criteria. The software then matches that information into equivalent placement of your order into a tranche of the pooling of security instruments.

At that point the loans are disbursed to the borrowers and the software reports your data as though you had personally made the loan to this person, when all you did was buy into a tranche where the investments are pooled.

The lower grade investments are split by the company into a pool of investments and suit is brought on behalf of all the investors.

My question is how this actually operates though? How do you avoid the pitfall of trumping up investment opportunities just to get more people to pour in money into the trust?

And unless someone can prove to me that they did P2P lending and actually sued someone personally for recovery of the debt, then the model described above using a trust for recovery of the loans is exactly what rules the day in their business model.

......

Ahhh, and you're prohibited from buying in the primary market because of the FDCPA.

Yo..um...I still think this is a Ponzi because you can't show me the linkage between the dispersal of the aggrieved lenders and how a trust could possibly organize tranches by specific buyer unless they were using shell corps as the named defendants.

It's Ponzi mixed with a little bit of self dealing because essentially they are suing themselves and certifying judgments as uncollectible so that they can keep judgment proceeds.

1/21/2015 2:15:07 PM

IN THIS VERY THREAD:

Quote :

"Yeah, I was pretty picky with the notes I bought, so I'm pretty surprised to see the default rate so high."

1/21/2015 2:33:42 PM

Quote :

"all of the loans that we've been talking about are peer-to-peer with individuals and not small businesses"

1/21/2015 2:48:36 PM

Quote :

"you can't show me the linkage between the dispersal of the aggrieved lenders and how a trust could possibly organize tranches by specific buyer unless they were using shell corps as the named defendants."

WTF?

Quote :

"this shit looks like a P-O-N-Z-I Returns of 11%? "

Yeah, I got better returns in the stock market. Must also be a ponzi scheme...

[Edited on January 21, 2015 at 4:20 PM. Reason : ]

1/21/2015 4:19:19 PM

stategrad100, leave your investing to something that's easier for you to understand - perhaps a 401k / IRA if those aren't over your head as well - don't forget the under the mattress option though

1/21/2015 4:22:58 PM

When the racket is busted up, I'll come back to this thread, be it 5-6 years from now and have my gotcha moment that there was some malfeasance at the root. Of course it will take a while, and maybe tdub won't be around anymore, but if this thread is here I will be sure to post that the Lending Club is a Ponzi and I told you so.

1/21/2015 5:29:32 PM

^^^

Quote :

""you can't show me the linkage between the dispersal of the aggrieved lenders and how a trust could possibly organize tranches by specific buyer unless they were using shell corps as the named defendants.""

Sorry - to clarify



If you can't show me how:

Where the investors are operating on the secondary market and pick out candidates A, B, C, D, E to make individual loans;

And the assets are pooled into a trust represented as X which is the total amount of the investment representing the total number of creditors operating on the P2P exchange

and
Plaintiff-Creditor is
X = number of people who have claims because haven't been repaid

Defendants-Debtors are
A, B, C, D, E = John Doe, Harry Doe, Michael Doe, Jimmy Doe, Gracie Doe who all received loans from someone within X

Where lawsuit is X v. A, B, C, D, E

Where Y = total recovered money

Where Y = sum of proportional payouts as awarded by judgment against each individual (you said it yourself individuals are getting loans not businesses), representing something like $0.5A + $0.4B + $0.2C + $1.2D + $1.4E
Which would mean John Doe is going to pay out half of what he originally was loaned as part of the settlement, Harry Doe is going to pay out 40% of the original loan, etc.
Because sometimes debts settle.


And then show me how these specific awards to these individuals are then relayed back into X and proportionally awarded back to the creditor in the secondary market, then..... I say it's blackbox magic and you're not showing me the real money trail.

1/21/2015 6:03:13 PM

you are working on some bad assumptions and just won't give them up

investors are not involved in lawsuits in any way shape or form - while the loans are being funded by individuals they are represented by lending club - it is merely an investment and with investments there are risks - the collection fees are laid out exactly as i posted previously

1/21/2015 8:37:31 PM

^ You're right, my assumptions were correct until I realized that Prosper is really where the fight was.

¶13 of the Class Action against Prosper is basically what I was speculating about...

Apparently dug this up and it's been there done that. They settled.....so I guess if you're in the origination business with Lending Club I suppose you're ok, but Prosper was overstepping into collections...

Quote :

"Prosper initiates collection of past due loans from borrowers and assigns delinquent loan accounts to collection agencies. Lenders and borrowers are prohibited from transacting directly and are unable to learn each others' identities."

hmmmm
https://prosperclassaction.files.wordpress.com/2008/12/prosper-complaint.pdf

1/21/2015 11:26:35 PM

As a side note I have really learned a lot. This is really interesting stuff. How did I miss all of this?

1/21/2015 11:27:41 PM

http://ftalphaville.ft.com/2014/12/17/2075031/at-a-loss/

Quote :

"At a Loss Bloomberg Businessweek already wrote the definitive profile of OnDeck Capital, the latest hot initial public offering for a business with some boiler room characteristics. Check it out to see the company Peter Thiel is keeping these days. From our perspective, the market valuation of about $1.3bn seems nuts for a far simpler reason, which requires reading 15 words in the prospectus: "We have a history of losses and may not achieve consistent profitability in the future." Never mind the business partners with colourful backgrounds, hope and fairy dust is what you, dear investor, were invited to buy. "We generated net losses of $16.8 million, $24.4 million, $18.7 million and $14.4 million in 2012, 2013 and for the nine months ended September 30, 2013 and 2014, respectively. As of September 30, 2014, we had an accumulated deficit of $119.7 million. We will need to generate and sustain increased revenue levels in future periods in order to become profitable, and, even if we do, we may not be able to maintain or increase our level of profitability." The banks leading the offering for this hole in the ground into which you may pour money into were Morgan Stanley, Bank of America Merrill Lynch, JPMorgan Chase, Deutsche Bank and Jefferies. Lets not blame them for now, however, lets blame Lending Club. The so-called peer-to-peer lender listed last week and which immediately leapt to a valuation which is nuts on toast with a white truffle sauce. Lending club is valued at $9bn. Here is the relevant statement from its list of risk factors: "We have incurred net losses in the past and may incur net losses in the future. As of June 30, 2014, our accumulated deficit was $66.8 million. We anticipate that our operating expenses will increase in the foreseeable future as we seek to continue to grow our business, attract borrowers, investors and partners and further enhance and develop our loan products and platform." Lending Club lost more money in the third quarter, so its accumulated deficit is about $74m. You literally cannot put a valuation multiple on that sort of performance. The Lending Club IPO was led by underwriters at Morgan Stanley and Goldman Sachs. If the market is mad, you would be mad not to take advantage, right? Still, recall what enabled the rush of initial public offerings in the stock mania of the late 1990s: underwriters stopped caring about profits. In the role of gatekeeper to public markets, underwriters traditionally demanded three years of profits, but in the rush to market that tradition died. Three years is an age in tech. Back in 2011 Blackberry could still claim more than a fifth of smartphone users, for instance. Maybe profits don’t matter because Facebook founder Mark Zuckerberg disavowed a business model at Facebook for so long, and that one turned out alright. Maybe you have to buy everything because the next Google will make up for all the losses. Maybe it’s crazy not to dig a hole when the money hose is flowing. Maybe. But we’re at a loss. Perhaps we should IPO?"

[Edited on January 22, 2015 at 11:13 AM. Reason : .]

1/22/2015 11:11:35 AM

while they may not be the best stock to invest in for various reasons - investors that are backing loans are showing profits

they are still up on their IPO price though but slowly moving back towards it

1/22/2015 11:24:59 AM

Quote :

"The orchestrators are setting up small business shell corps and promising higher returns and then defaulting on it. Novel ponzi. Objective Federal Reserve data supports it."

So I should not have thrown that solicitation away that came to the now defunct LLC.

1/22/2015 10:10:45 PM

I dont understand how the market for this type of service can grow without becoming so risky that investors dry up. The credit markets are starting to thaw for the small business market. Average consumers with average and above credit who are looking for a small loan have credit card balance transfers at their disposal (0% APR for 12-18 months with only a 3% fee). That leaves the poor and those with terrible credit, both of which are extremely risky investment options. Am I missing something?

I think the demand for this rose from the credit freeze during the recession but won't be needed as we move further into recovery.

1/22/2015 11:50:59 PM

making some assumptions but it would seem it can continue grow because of their lower overhead than a typical bank - as interest rates move so will lendingclub and others - there are banks that simply utilize the lendingclub platform to issue loans as opposed to doing it themselves

i'm also under the assumption that people that need to consolidate credit card debt aren't readily being offered 0% balance transfer offers - credit card consolidation is only 1 of the reasons people need a loan

there are plenty of people obtaining loans on lendingclub with good / great credit - primarily invest in loans that are around the 20% interest rate area with the idea that there will be defaults and it will average out to ~8% over time - i also limit my investments to a credit score range of over 690 but everyone has a different strategy

1/23/2015 9:26:10 AM

Just got my tax form

"NOTE INFORMATION TO REPORT CHARGED-OFF NOTES HAVE NOT BEEN REPORTED TO IRS ON 1099-B"

So, do I just subtract this from the *Original Issue Discount for 2014 and report that # as short term cap gains?

1/29/2015 10:13:45 AM

few more months in - i've changed from using the standard adjust value for past-due notes - now i use 30% for grace and 100% for everything else which lowers the return that it shows me but seems more realistic based on what i've seen

if anyone wants to start using lendingrobot use my referral and get an extra 5k managed for free - i'm a big fan of it
https://www.lendingrobot.com/ref/alan537/

My Notes at-a-Glance   438
Not Yet Issued         13
Issued & Current       405
In Grace Period        1
Fully Paid             14
Late 16 - 30 Days      1
Late 31 - 120 Days     3
Default                0
Charged Off            1

Adjusted Net Annualized Return    13.73%
Historical Returns:               7.64% - 12.69%

3/19/2015 9:46:38 AM

few more months in - keep adding money so the weighted average age of my account hasn't increased much

My Notes at-a-Glance   611
Not Yet Issued         53
Issued & Current       514
In Grace Period        6
Fully Paid             29
Late 16 - 30 Days      2
Late 31 - 120 Days     5
Default                0
Charged Off            2

Adjusted Net Annualized Return    14.86%
Historical Returns:               7.72% - 12.72%

6/12/2015 1:50:11 PM

I recant my prior.

I actually registered for LCInvestor (inspired by this topic actually)

and have made money. I just hope to withdraw it hastily in the event that it turns out to be a scam.

8/14/2015 9:10:11 AM

i keep adding money so my average age isn't going up - i changed to $50 purchases for a while to make sure my money was invested faster but have since changed back to $25

My Notes at-a-Glance   769
Not Yet Issued         42
Issued & Current       650
In Grace Period        6
Fully Paid             49
Late 16 - 30 Days      2
Late 31 - 120 Days     16
Default                0
Charged Off            4

Adjusted Net Annualized Return    11.32%
Historical Returns:               6.61% - 10.60%

8/14/2015 10:12:21 AM

has anyone thought more about putting more in something like LC as opposed to the market due to the past few weeks / months?

10/13/2015 3:29:56 PM

Quote :

"When the racket is busted up, I'll come back to this thread, be it 5-6 years from now and have my gotcha moment that there was some malfeasance at the root..."

http://www.cnbc.com/2016/05/16/doj-sends-grand-jury-subpoena-to-lendingclub-following-ceo-ouster.html

5/31/2016 8:36:00 AM

^ widely covered by the media already - most articles that i've read from analysts / experts have basically agreed that this wasn't systemic to peer-to-peer lending but was the result of a few bad apples - however, more oversight is needed if it was able to happen


updated values for me - added a few additional data points

My Notes at-a-Glance   1426
Not Yet Issued         17
Issued & Current       1087
In Grace Period        20
Fully Paid             204
Late 16 - 30 Days      6
Late 31 - 120 Days     26
Default                5
Charged Off            61

Adjusted Net Annualized Return        9.67%
Historical Returns:                   6.61% - 10.60%

Weighted Average Interest Rate:	      19.56%
Weighted Average Age of Portfolio:    10.7 mos

5/31/2016 9:29:07 AM

Still doing this? How did it work out overall?

2/23/2017 8:06:08 AM

updated - almost a year later

i stopped at the end of the year buying new loans but haven't pulled any money out yet - not planning to buy more notes for the next few months

My Notes at-a-Glance   2199
Not Yet Issued         0
Issued & Current       1477
In Grace Period        24
Fully Paid             431
Late 16 - 30 Days      20
Late 31 - 120 Days     59
Default                8
Charged Off            180

Adjusted Net Annualized Return        7.13% 
Historical Returns:                  this number isn't shown anymore for my account due to secondary market buying / selling

Weighted Average Interest Rate:	      20.41%
Weighted Average Age of Portfolio:    14.9 mos

2/23/2017 9:13:12 AM

So how much money have you made?

2/23/2017 2:54:05 PM

Hard to say until the account is fully liquidated but I put in 30k and the account value accounting for loss is at 33k

2/24/2017 8:04:52 AM

And that's over 15 months?

2/25/2017 12:03:40 AM

First deposit was August 2014 and last was June 2016.

2/25/2017 3:59:09 PM

Looks like my last note came due. I think I made about $70 total on my initial investment.

Payments to Date$4,881.57
Account Value$3,570.07

So happy I can automatically import to turbo tax. That first year was a bitch...

[Edited on March 4, 2017 at 6:46 PM. Reason : ]

3/4/2017 6:40:36 PM

BTTT, lots of folks gonna be needing personal loans soon

What’s everyone’s thinking on some Quality filters to use

[Edited on March 27, 2020 at 10:28 AM. Reason : .]

3/27/2020 10:28:17 AM

Did you just ask about this on reddit cause I swear like not three minutes ago I was reading about this.

3/29/2020 3:33:43 PM

Less than $1k left outstanding - ended up at 4.8% return so far

3/29/2020 6:18:53 PM

probably the final update - my account is close to being closed out completely now - 30k in and i'll get about 35k out it looks like when it's all over - this was mostly a waste of time and should have just stuck it in the market

My Notes at-a-Glance   2199
Not Yet Issued         0
Issued & Current       66
In Grace Period        1
Fully Paid             1436
Late 16 - 30 Days      0
Late 31 - 120 Days     1
Default                0
Charged Off            695

Adjusted Net Annualized Return        5.13% 

12/28/2020 3:17:56 PM

all notes are closed - my actual final update

My Notes at-a-Glance    2199
Not Yet Issued          0
Issued & Current        0
In Grace Period         0
Fully Paid              1502
Late 16 - 30 Days       0
Late 31 - 120 Days      0
Default                 0
Charged Off             697
Cancelled & Cancelling  0

For some reason it doesn't show the values it used to so showing my totals instead

Payments to Date            $62,754.81
Principal            $45,594.78
Interest            $17,147.00
Late Fees            $13.03

3/7/2023 2:26:19 PM