Lending Club December update

Here is the early December update on the status of the test cases.

Description	Current	Other	Fully Paid	Charged Off	Index
Test 1 End in 2017	2%	1%	93%	4%	96.0
Test 2 End in 12 months	75%	0%	25%	0%	97.3
Test 3 LC Picks	90%	5%	5%	0%	98.8
Test 4 Zip Grade	95%	5%	0%	0%	99.4
Test 5 By Percent	90%	5%	5%	0%	95.6
Test 6 By Funded	93%	5%	3%	0%	99.5
Test 7 Random	95%	0%	5%	0%	98.6
Test 8 FOLIOfn Zip Grade	89%	0%	11%	0%	100.0

Test case 1 are notes that I purchased early in 2017 from the secondary market FOLIOfn. They were selected randomly with the two criteria that they had to end in 2017 and were selling at a slight discount.  Most have been paid off by now, although 6 were charged off. There must have been some bad circumstances for someone to default on a loan after paying for several years. There are still 4 outstanding (1 in the grace period). These should close out this month and I’ll be able to estimate the return on this approach.

Test case 2 has the same type of notes as test case 1 except that they don’t pay off until mid-2018. Some have been paid of and none have defaulted. The index of these notes is slightly higher than test case 1. (Recall the index is an attempt to measure the flow of payments received versus the ideal situation. Early paid offs and defaults lower this number.)

Test case 3 are notes recommended by LC Picks, a 3^rd party service. They are doing reasonably well, although 1 is in the grace period and another 1-30 days late.

Test case 4 were selected using the borrowers zip code area and the loan grade as described in an earlier posting. These are performing well with only 1 in the grace period.

Test cases 5-7 were new notes purchased on the day they became first available within and hour or two of their posting. Test case 5 were notes chosen with a high percent of their funding completed, test case 6 were notes selected by a high amount invested, and test case 7 were randomly picked during the same time period. All have had a couple paid off and no defaults. But the random group is the only one with currently no potential problems.  One note was apparently fraud, none of the first 3 payments were made. A second made 1 of the first 3 payments. Obviously, defaults will occur.

Test case 8 (buying notes from FOLIOfn that met my zip/grade criteria) is working well. But I could find so few of these, I decided to quit looking.

Maybe I’ll update the table at the end of the year. Follow me on Twitter, @billlanke, to know when I do this.