Loss due to discounting notes

I’ve been selling Lending Club notes on FOLIOfn in an attempt to liquidate my account. This isn’t quick or easy and requires discounting the notes to get them to sell. How much will this approach cost me in the end?  To get an answer to this question I took a couple of snapshots of my account. One was the day before I started selling notes and the second one a recent day.

$38,412	Estimated value of my Lending Club holdings on 9/12/2017.
$25,800	Amount of cash removed from the sale of notes.
$10,925	Estimated value of my Lending Club account on 3/13/2018.
$1,687	Loss of value since selling began.
4.39%	Percent loss.

Knowing the actual value of your account at any point in time is problematic. You know what the outstanding principal balances total is and can compute what you could earn based on monthly payments and time remaining. But this assumes no loans are paid off early or are charged off. These can only be estimated, thus requiring the estimating of account value.

The loss in value computed above would include losses due to notes being written off and not entirely due to notes being sold. The number is smaller than I would have expected, but I haven’t really discounted heavily until recently. Since I’m down to about 80 notes it may be time to increase the discounts significantly.

Impact of discounts on note sales

I continue to sell off my Lending Club notes on FOLIOfn. I have a daily routine as described in my previous post. The process is working reasonably well as I’ve sold over 50 notes in the past week. I still have a little less than 100 to go.

Yesterday I decided to follow the sales to see if I could learn anything about the impact of changing the discount had on sales. I did my typical process of increasing the discount by about 2.5% and add 9 new notes to the sales offer. These had just completed payment processing and were offered at markups of 1% ranging down to discounts of 1%.

I sold 8 more notes, all were notes previously available for sale and marked down. None of the newly offered notes sold (I guess the discounts weren’t high enough). Following is a table with data relative to the 8 notes sold.

Note ID	Sale Price	Discount 1	Discount 2	Reduced
70727653	$9.10	-17.09%	-19.74%	2.65%
127455223	$10.06	-9.25%	-11.88%	2.63%
86193936	$12.67	-7.71%	-10.53%	2.82%
163913093	$19.93	-5.54%	-7.86%	2.32%
128534964	$9.86	-7.19%	-9.93%	2.74%
131160886	$11.50	-8.37%	-10.70%	2.33%
134217597	$11.48	-8.28%	-10.61%	2.33%
166633569	$20.38	-4.25%	-6.54%	2.29%

The average discount of the notes sold was about 11%, but there was quite a variance in range. Clearly there isn’t any rule of thumb to be determined from this data. I’ll continue with the sale and provide some more data about my experiences in upcoming posts. Follow me on Twitter, @billlanke, to be notified when this post occurs.

Day to day flow of sales

A few months ago, I started a process designed to close my Lending Club IRA sooner than it would naturally if no new notes were added. I wanted to simplify my wife’s life after I pass on. So, I decided to start selling notes that wouldn’t naturally terminate after the year 2020 on FOLIOfn. This had some success, so I decided to accelerate the process to see if I could close the account this year. To accomplish this, I decided to sell all my notes.

I discussed the process of selling notes in my previous post and some of the difficulties in doing this. I currently check my sales status each morning. For those that are still on the “Open Sell Orders” list I move the asking price down by increasing the discount about 1% each day. For those notes with status of in grace period or late I set an asking price way down (as far as $1 in some cases). Doing this certainly costs me money, but my priority now is to get rid of all my notes.

I then attempt to add notes to my sale list by going through the sell process again. This will find notes that aren’t listed. For those with a credit score moving up I list them with about a 1% markup. For the others, I list them with a 1% discount. And unfortunately, there are those on the list that can’t be offered for sale today.

Following is a table of counts for my sales in the past week.

Morning Status	8-Mar	9-Mar	10-Mar	11-Mar	12-Mar	13-Mar
Open Sell Orders	140	128	128	123	120	108
Canceled Sell Orders	66	76	76	76	76	84
Sold This Month	299	329	343	348	351	355
Attempt To Sell
Notes Found	59	41	27	27	27	34
Credit Score Up	6	4	0	0	0	0
Credit Score Down	22	10	0	0	0	10
Not Available	21	27	27	27	27	24

As you can see, I’ve sold about 50 notes in the past week. I have about 150 to go. I’m guessing it will take a little over a month for me to complete this process. I’ll update my progress with some interesting data in my next post. Follow me on Twitter, @billlanke, to be notified when this post occurs.