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.

Lending Club November Update

Gee, it’s been a month since I last posted on this blog. One reason is that we’ve made our annual migration south for the winter. With that comes a bunch of doctor visits and medical tests. I’ve completed 8 so far and have 6 to go. In my condition, each of these pretty much kills the day. Hence, little time for other stuff.

The other reason is a pretty low level of activity on the Lending Club front. I’m still trying to sell my notes that finish in 2021. That isn’t as easy as it would seem on the secondary market, FOLIOfn. I’m down to about a dozen and a half to go. I put these out there today. I decided to start these at a 2% discount to move them along. A few will sell, but most won’t. So, I’ll increase the discount by another 2% a day. In about a week most will have sold. Unfortunately, a few of the sell offers will have been cancelled because they will have entered a payment processing cycle. Then I’ll repeat the process and hopefully eliminate my 2021 notes in early December.

It also makes sense to start to eliminate notes finishing in late 2020. The goal will to have none left at the end of that year. It’s likely some will be late at that time. Eliminating some of those close to the end might reduce this possibility.

Following is the test cases update.

Description	Current	Other	Fully Paid	Charged Off	Index
Test 1 End in 2017	8%	0%	88%	4%	96.0
Test 2 End in 12 months	75%	0%	25%	0%	97.3
Test 3 LC Picks	95%	0%	5%	0%	98.9
Test 4 Zip Grade	98%	3%	0%	0%	100.0
Test 5 By Percent	88%	10%	3%	0%	97.0
Test 6 By Funded	95%	3%	3%	0%	99.7
Test 7 Random	95%	0%	5%	0%	98.6
Test 8 FOLIOfn Zip Grade	100%	0%	0%	0%	64.3

Test case 1 is the only one mature enough to have meaningful results. In fact, all these notes should be completed in the next 2 months. I’ve just now received more than I invested. Soon I’ll be able to hang a percent return on this approach.

I acquired a few more notes in test case 8. Its index is low since I haven’t received any payments yet. I will probably continue to buy a few more of these.  I’m not sure when I’ll update my Lending Club stuff again, but I’ll post on twitter when I do (@billlanke).