Lending Club Sadness
Re: Lending Club Sadness
Shhhh -- his consistency hobgoblin may be gnawing on him a little.
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reepicheep
- Posts: 383
- Joined: Mon Dec 29, 2014 7:45 am
Re: Lending Club Sadness
I have a Roth IRA with LC and a taxable account; I'm slowly drawing down the taxable account so I don't have to worry about the taxes any more. I expect it'll be gone by the end of the year; there's around $600 in there now.
The IRA has been open since January 2013.
I've maxed it out each year since. In 2014 I rolled over a Roth IRA account I had in Vanguard that I'd contributed to in 2012.
Current account value: $26,273.13
Current account value after projected past-due notes*: $25,430.60
Current interest rate (combined return): 9.16%
Number of notes:
Not Yet Issued--38
Issued & Current--1,217
In Grace Period--9
Fully Paid--255
Late 16 - 30 Days--6
Late 31 - 120 Days--25
Default--2
Charged Off--79
Payments to Date--$19,777.75
Principal--$13,070.60
Interest--$6,706.36
Late Fees--$0.79
* I adjust the predicted values for notes that are over-due; I am more aggressive than LC in assuming that somebody who is late with payment will default. Therefore, my actual account value and interest rate are likely slightly higher than what is shown here, although I've also heard it's better to adjust the interest rate LC provides down about a % point due to some unknown-to-me malarkey with how they calculate the interest rate.
I'm pretty happy with it. All my other accounts are basically flat or negative this year.
The IRA has been open since January 2013.
I've maxed it out each year since. In 2014 I rolled over a Roth IRA account I had in Vanguard that I'd contributed to in 2012.
Current account value: $26,273.13
Current account value after projected past-due notes*: $25,430.60
Current interest rate (combined return): 9.16%
Number of notes:
Not Yet Issued--38
Issued & Current--1,217
In Grace Period--9
Fully Paid--255
Late 16 - 30 Days--6
Late 31 - 120 Days--25
Default--2
Charged Off--79
Payments to Date--$19,777.75
Principal--$13,070.60
Interest--$6,706.36
Late Fees--$0.79
* I adjust the predicted values for notes that are over-due; I am more aggressive than LC in assuming that somebody who is late with payment will default. Therefore, my actual account value and interest rate are likely slightly higher than what is shown here, although I've also heard it's better to adjust the interest rate LC provides down about a % point due to some unknown-to-me malarkey with how they calculate the interest rate.
I'm pretty happy with it. All my other accounts are basically flat or negative this year.
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steelerfan
- Posts: 127
- Joined: Wed Feb 27, 2013 3:33 pm
Re: Lending Club Sadness
Laplanche is stepping down. I am holding off on reinvesting any more for now.
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steelerfan
- Posts: 127
- Joined: Wed Feb 27, 2013 3:33 pm
Re: Lending Club Sadness
I have noticed several loans getting retired early - like in the first month. Maybe this is the cherry picking that was sort of implied.
Re: Lending Club Sadness
Too bad this news is overshadowing the solid earnings they had. The peer to peer space has been moving into more difficult waters last year and this year. It's still a good investment...but keep your eyes out.
Re: Lending Club Sadness
I set up an account and was getting ready to try it out only to find out they don't offer investor services in Alaska. If only Alaska was part of the US. 
Prosper is open to investors in AK. I'm going to look into that.
Prosper is open to investors in AK. I'm going to look into that.
Re: Lending Club Sadness
For anyone who is interested in following what's going on with Lending Club, I'd suggest checking out Lend Academy. I have followed Peter Renton for the last 5 years or so. He is always honest and transparent with his thoughts and assessments and has been positive about peer to peer from the get go.
The news on Monday is frankly mind blowing. I am not sure how to justify it other than these are growing pains and some really bad decisions were made. How Lending Club recovers from this will tell whether this industry is around for good...or not.
My risk assessment for peer to peer never included massive insider scandals.....
I'm curious what Draglines thoughts are on this news.
The news on Monday is frankly mind blowing. I am not sure how to justify it other than these are growing pains and some really bad decisions were made. How Lending Club recovers from this will tell whether this industry is around for good...or not.
My risk assessment for peer to peer never included massive insider scandals.....
I'm curious what Draglines thoughts are on this news.
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steelerfan
- Posts: 127
- Joined: Wed Feb 27, 2013 3:33 pm
Re: Lending Club Sadness
When you are choosing to invest in anything, trust is a big factor. When you have a company in a new business type (p2p lending) a healthy degree of skepticism is warranted. You want them to keep their word and do things above board. As small as this is it makes me question my trust I placed in them. I already question a lot of what I have seen from them and have still continued to send them money. I have a multitude of concerns about this company. Overall it is like 1 percent of my investments so I keep investing out of curiosity. I want to see how it plays out.
The board of LC reads like a who's who of Wall Street insiders which is good and bad. LaPlanche is a Wall Street insider as well. These guys are set up to favor the big guy. I kind of like that as I want to be invested in things that people are willing to make big bets on. I want to be able to participate as fairly as possible. I can't invest the sums that the big guys can and can't borrow at the near 0% rates they can. The system is already tilted from the start.
I actually am happy there was a mechanism in place to investigate something that was not right and that no one was above scrutiny. I hope the inquiry was truly internal and was not based on regulatory questions. I hope this was not window dressing and business will continue as usual (meet the new boss same as the old boss). I am worried that this may be the tip of the iceberg. What I am really worried about is that if this company has problems, the shaky borrowers just stop paying their oversized unsecured loans.I have no confidence in the grading that their system places on borrowers Today, I have two new loans in grace period that have made one payment. An A and a B. The A has a stated income of 20K a month. I disgusts me to rely on unreliable high salary people when I have always paid my bills on time. But there is no place for emotion when investing. As this plays out, it increasingly seems like a hard way to earn the long term 5-8 percent they are now saying is typical vs simply buying a quality stock. Why would I send a thousand to LC to have them sit on the money and slow play everything when I can buy HCP or MO yada yada in an instant and know they will do as promised?
As before I will hang tight on what is there. But I am obviously pretty pessimistic.
The board of LC reads like a who's who of Wall Street insiders which is good and bad. LaPlanche is a Wall Street insider as well. These guys are set up to favor the big guy. I kind of like that as I want to be invested in things that people are willing to make big bets on. I want to be able to participate as fairly as possible. I can't invest the sums that the big guys can and can't borrow at the near 0% rates they can. The system is already tilted from the start.
I actually am happy there was a mechanism in place to investigate something that was not right and that no one was above scrutiny. I hope the inquiry was truly internal and was not based on regulatory questions. I hope this was not window dressing and business will continue as usual (meet the new boss same as the old boss). I am worried that this may be the tip of the iceberg. What I am really worried about is that if this company has problems, the shaky borrowers just stop paying their oversized unsecured loans.I have no confidence in the grading that their system places on borrowers Today, I have two new loans in grace period that have made one payment. An A and a B. The A has a stated income of 20K a month. I disgusts me to rely on unreliable high salary people when I have always paid my bills on time. But there is no place for emotion when investing. As this plays out, it increasingly seems like a hard way to earn the long term 5-8 percent they are now saying is typical vs simply buying a quality stock. Why would I send a thousand to LC to have them sit on the money and slow play everything when I can buy HCP or MO yada yada in an instant and know they will do as promised?
As before I will hang tight on what is there. But I am obviously pretty pessimistic.
Re: Lending Club Sadness
It's bad news, but having lived through the infamous "Prosper shutdown and reformation to get in compliance with SEC regulations" circa 2009, I don't think its earth shattering. They (Prosper) did end up refunding some of the money, fixed their problems and kept going. The lessons I learned from that experience were:
1. Don't get too greedy -- those high interest offerings are high for a reason; my early performance problems were caused by almost entirely by this, not fraud.
2. Diversification across 100s or 1000s of loans is necessary. You may have a few loans that are interdependent, but it won't matter much if you own enough different ones.
3. Expect defaults -- for all kinds of reasons, including ones involving fraud.
4. This is a speculative investment -- don't bet the farm on it.
On the positive side, its good that they took quick action to dump Laplanche and that all of these things are coming to light.
My biggest problem on LC right now is still not having enough loans of my liking to invest in. The cash continues to flow like a spigot, though.
1. Don't get too greedy -- those high interest offerings are high for a reason; my early performance problems were caused by almost entirely by this, not fraud.
2. Diversification across 100s or 1000s of loans is necessary. You may have a few loans that are interdependent, but it won't matter much if you own enough different ones.
3. Expect defaults -- for all kinds of reasons, including ones involving fraud.
4. This is a speculative investment -- don't bet the farm on it.
On the positive side, its good that they took quick action to dump Laplanche and that all of these things are coming to light.
My biggest problem on LC right now is still not having enough loans of my liking to invest in. The cash continues to flow like a spigot, though.
Re: Lending Club Sadness
Evidence that marketplace lending is here to stay I think.
GS has launched it's own competitor to Lending Club and Prosper, however, they are funding everything themselves rather than opening up to investors. They have even been recruiting people from Lending Club. The devils!
It's telling that in GS's 147 year history they have never dealt directly with everyday consumers until now. They must see something in this new industry...
GS has launched it's own competitor to Lending Club and Prosper, however, they are funding everything themselves rather than opening up to investors. They have even been recruiting people from Lending Club. The devils!
It's telling that in GS's 147 year history they have never dealt directly with everyday consumers until now. They must see something in this new industry...
Re: Lending Club Sadness
The GS news is interesting.
Also, we are starting to see more delinquencies: http://www.marketwatch.com/story/lendin ... siteid=rss
I don't have any money in loans at Lending Club, but I am interested in potentially buying its stock after it dropped from near $15 a year ago to $5 per share.
Also, we are starting to see more delinquencies: http://www.marketwatch.com/story/lendin ... siteid=rss
I don't have any money in loans at Lending Club, but I am interested in potentially buying its stock after it dropped from near $15 a year ago to $5 per share.
Re: Lending Club Sadness
Chad wrote:I don't have any money in loans at Lending Club, but I am interested in potentially buying its stock after it dropped from near $15 a year ago to $5 per share.
I bought $500 worth about a month ago. It's pretty volatile right now, I was up about 20% now I'm down 10% and am thinking of adding more. Coming from a retail investor, its a good long term bet.
The rise in delinquencies is coming alongside higher consumer indebtedness, as opposed to a struggling economy. I wonder how much it has to do with rising wages. As people make a bit more, they might be biting off more debt than they can chew.
Re: Lending Club Sadness
GS (or any bank, insurance company) getting in on smarter, more discriminatory loans makes more sense than p2p. I think p2p was just to bootstrap the capital, shift the risk, and get around some regulations in order to take advantage of cutting edge technology (along with other startup benefits, like the chance of selling out to a big bank for bukku bucks) more quickly.
In 15 years will we make laws such that the APR can only be determined by zip code, age, and income (like ACA)?
p2p lending in the digital realm could be more revolutionary but it's a ways off.
In 15 years will we make laws such that the APR can only be determined by zip code, age, and income (like ACA)?
p2p lending in the digital realm could be more revolutionary but it's a ways off.
Re: Lending Club Sadness
Stumbled upon this platform for P2P loans which are backed by collateral in the form of precious metals in 2:1 ratio (i.e., to borrow $100 you post a collateral of $200). The returns seem quite attractive (~3-4.5% p.a.) given that these seem very low risk on paper. https://www.silverbullion.com.sg/AboutLoans.aspx
Again, on paper, sounds like a great, very safe investment opportunity, much safer than holding money in most US banks. The biggest risk seems to be how legit the actual platform is. Any ideas on how to conduct a proper due diligence on that? Or perhaps any experience lending money on this platform?
Again, on paper, sounds like a great, very safe investment opportunity, much safer than holding money in most US banks. The biggest risk seems to be how legit the actual platform is. Any ideas on how to conduct a proper due diligence on that? Or perhaps any experience lending money on this platform?
Re: Lending Club Sadness
No thoughts from anyone? A bit surprised as looks to me as a quite binary situation: either a very nice investment or an outright scam.
Re: Lending Club Sadness
Why binary?
From an investors perespective, LC is close to a high yield junk bond marketplace with high fees.
Seems to me it could also be a good tool for someone looking to consolidate and cut down debt
From an investors perespective, LC is close to a high yield junk bond marketplace with high fees.
Seems to me it could also be a good tool for someone looking to consolidate and cut down debt
Re: Lending Club Sadness
I am not referring to LC but to the precious metals backed P2P lending platform I referenced above: https://www.silverbullion.com.sg/AboutLoans.aspx
Re: Lending Club Sadness
I was really happy when I finally pulled my last dollar out of LendingClub, between the defaults, tax complications, not really trusting the reporting... But I am tempted by the IRA bonus they're offering through April 30th :\ http://blog.lendingclub.com/lending-clu ... nus-offer/
Re: Lending Club Sadness
Since I weighed in several years back, I wanted to note that I've been unwinding lending club for some time. The returns dried up - not sure if I was just lucky to begin with, or people just took some time to default, but it wasn't worth the hassle. As if to reinforce my decision, just recently I was listening to one of the Mad Fientist podcasts that likened P2P loans to uncollateralized junk bonds. I'd like to be out of it by the end of the year to simplify taxes next year.