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OfflineYthanA
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Re: Lending Club [Re: Ythan]
    #12882435 - 07/11/10 01:07 PM (13 years, 8 months ago)

Just wanted to give a quick update since it's been about 2 1/2 years since my original post. Out of 91 loans I've made through Lending Club, six were paid off early, eight were charged off after partial payment, four are 30 - 120 days late, and 73 are current. My annual return is 7.34%, compared with -6.2% during the same period for my investments in index funds. I'm pleased with my experience so far and feel comfortable recommending Lending Club to diversify your portfolio.

If you choose to invest with Lending Club, I recommend you use the following filters. I have never had a loan go delinquent when it meets these criteria:

Credit Score (check all three):
714-749
750-779
780+

Interest Rate (check all three):
A
B
C

Months since last delinquency:
60 months or more

Reviewed by Lending Club:
Approved

Verified Income:
Verified

Also, there is now a trading platform for outstanding loans, so you aren't locked in for the full term. If you need cash in hand, you can sell off some notes.

They're also offering a bonus in July if you have extra cash to fund your account:
$200 if you transfer in $10,000-24,999
$500 if you transfer in $25,000-49,999
$1,500 if you transfer in $50,000-99,999
$4,000 if you transfer in >=$100,000

Before sending any money you must e-mail jsteward@lendingclub.com to enroll for the bonus.

So that's about it. If anyone has questions let me know.

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OfflineGroovy Grant
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Re: Lending Club [Re: Ythan]
    #12886052 - 07/12/10 07:40 AM (13 years, 8 months ago)

Very cool Ythan! I had totally forgotten about these sites.

The charge-offs, were those defaults?

Were those spread out, or just recently?

-Grant

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OfflineYthanA
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Re: Lending Club [Re: Groovy Grant]
    #12887194 - 07/12/10 01:09 PM (13 years, 8 months ago)

Yeah loans are charged off when the borrower either disappears or declares bankruptcy, and collection efforts are exhausted. Generally they occur pretty quickly after the loan is issued. In one case the borrower only made two of 36 payments before going MIA. I assume most of these people never really had an intention of paying off these loans, since Lending Club is pretty good about working with borrowers to offer payment plans when necessary. Of my four loans which are classified as "30 - 120 days late", they've all made partial payments recently (or at least paid the late fees). I've had about five other borrowers who could only make partial payments for a while, but were able to get their finances in order and their accounts are now current.

I haven't had any delinquencies in 2010, probably because I started investing less aggressively, and also began evaluating individual loans instead of relying on Lending Club's automated tools to build a portfolio. I trust that Lending Club does their best to set interest rates so statistically all loans perform the same, but it seems reasonable that you can get better than average performance if you look at factors which are not included in their weighting algorithms, like the purpose of the loan, the borrower's housing situation and nature of their employment, and how responsive and engaged they are when answering questions from prospective lenders. My sample size isn't really large enough to draw any conclusions, but so far none of the borrowers I've selected manually have ever been late with a payment.

So yeah, if you like the concept and have an extra $25 kicking around, I can definitely think of worse ways to invest it. :smile:

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OfflinegeokillsA
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Re: Lending Club [Re: Ythan]
    #12887420 - 07/12/10 01:54 PM (13 years, 8 months ago)

Thanks for the update Y, I actually just added funding to my LendingClub account last month, to take advantage of a similar promotion to the one you noted.  Looking forward to putting that money to work. :yesnod:


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OfflinegeokillsA
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Re: Lending Club [Re: geokills]
    #20483815 - 08/27/14 12:06 PM (9 years, 6 months ago)

Source: http://www.cnbc.com/id/101923926

Quote:

LendingClub IPO to reward Silicon Valley approach to banking

Alibaba has dominated the IPO headlines since the Chinese e-commerce and digital marketplace behemoth filed for a U.S. initial public offering in May. But it's the coming share sale of another online marketplace that likely has greater relevance to Americans.

LendingClub, the largest U.S. provider of peer-to-peer loans announced plans Wednesday to raise $500 million in an IPO. Located in San Francisco, clear across the country from the nation's money hub of Wall Street, Lending Club has gained popularity by focusing on a piece of the financial universe that the banking industry has long neglected: consumer loans.

Families wanting to remodel their homes, take overseas vacations or relocate have been forced to rack up credit card debt at high interest rates, because banks stopped putting forth the resources into underwriting those relatively low dollar loans.

LendingClub and smaller rival Prosper Marketplace invite borrowers looking for loans of up to to $35,000, with more than three-quarters of customers using the funds to consolidate existing debt. For LendingClub's lowest-risk borrowers, rates on three-year loans start at below 7 percent.

As of the end of June, LendingClub had issued more than $5 billion in loans since its launch in 2007, including over $1 billion just in the latest quarter. If the stock market behaves, LendingClub plans to go public before the Thanksgiving holiday in late November, said a person close to the company. Morgan Stanley and Goldman Sachs are leading the offering.

Here's what makes it a marketplace. Rather than acting like a bank, which makes money on fees to consumers as well as the spread between its borrowing costs and interest rates charged to customers, LendingClub lets outside investors—retail and institutional—buy loans from its website.

After a prospective borrower applies for a loan, LendingClub uses software and lots of data to underwrite the customer and determine if the loan can be issued. If the application makes it through the screening, it's made available for the investing public.

A retail investor can open an account with a few hundred or few thousand dollars and build a portfolio of diversified loans by putting as little as $25 into each. When a loan gets fully funded, it gets issued to the borrower and LendingClub gets paid an origination fee. LendingClub's net revenue more than doubled in the second quarter to $48.2 million, though operating expenses surged, leaving the company with a $9.2 million net loss.

And here's why there's been so much growth. According to LendingClub, notes with the highest three ratings have historical returns of 5 percent to 8.7 percent, meaning an investor with an array of those loans is somewhere in the middle. Compare that with other fixed income options, like the 10-year Treasury that's holding stubbornly below 3 percent and certificates of deposit, which are right around 1 percent.

"Being in a record-low interest rate environment coming up on six years has helped tremendously," said Peter Renton, an industry blogger and founder of Lend Academy, a money management and research firm that focuses on peer-to-peer loans. "The investor growth has been what's driving it. Borrowers are always looking to borrow money."

The investors Renton is referring to are institutions, ranging from small family offices across the country to some of the world's biggest hedge funds and investment banks. Renton is at the center of the action. He's co-founder of the LendIt conference, which attracted 950 people to its second annual event this year in San Francisco, more than triple the number at its debut in New York in 2013. Renton said he's expecting 1,500 next year.

All that activity has, to some degree, undermined the peer-to-peer concept, with the majority of money now coming from institutional or high net worth investors. LendingClub founder and Chief Executive Officer Renaud Laplanche is working to ensure that more than half the investor base remains individuals, despite all the demand from those with the fattest wallets.

"The retail and individual investor base will be more loyal to us, more predictable and more likely to maintain their investments in an economic downturn," Laplanche told the blog LendingMemo in June.

That brings up what may be Lending Club's biggest risk. Almost all of the company's growth has come since the financial markets bottomed in 2009. Since then, the economy has been on a steady uptick, with the Federal Reserve loading up on Treasurys to keep rates low and stimulate spending. In Lending Club's hometown, housing prices are back at records and the tech boom has spurred a resurgence in employment levels.

While LendingClub has put in place plenty of risk modeling to analyze how its loans will perform in less frothy times, you never really know until you know.

To ensure he's getting adequate insight on just how crazy and unpredictable financial markets can become, Laplanche has built a board of directors featuring some of the most high-profile names in high finance. it includes former Morgan Stanley CEO John Mack, ex-Treasury Secretary Larry Summers and former Morgan Stanley Internet analyst Mary Meeker.

And though its size and brand are trumped many times over by Alibaba, LendingClub is backed by an even bigger Internet company that's placed a pricey bet on its future: Google. In May 2013, the search engine bought a minority stake in LendingClub at a valuation of $1.55 billion. By April of this year, the value had skyrocketed to $3.8 billion, as LendingClub raised more money and acquired a company that focuses on loans for education and medical procedures.

If you could imagine what a next-generation bank might look like, LendingClub may very well fit the description. So when the company's shares start trading n the coming months, Wall Street will be paying very close attention, for more than one reason.

—By CNBC's Ari Levy





Thanks Y, for making me aware to get into this on the ground floor.  It has been a profitable journey, and some of the easiest/most consistent income I've earned. :biggrin:

My account is set to auto-invest into the highest three grades with additional filter criteria pertaining to borrower income, delinquencies, credit report inquiries and duration at their current job.  The above article mentions returns between 5% and 8.7% for investments into the highest three grades without additional filters, and over the seven years that I have been involved, I am averaging a 9.09% adjusted annualized return with only a 1.2% charge off rate.

To be fair, I recently added quite a bit of additional funding to my account, and have a handful of new borrowers late on payment that could ultimately bump my charge off rate up to 2% if they all default, which is still way below LendingClub's projected default rate for my investor mix.  Even if all the late borrowers default, it will not affect my 9.09% annualized return figure, as that is an adjusted figure.  If the currently late borrowers become current, I'll be cruising at a smooth 10% annualized return.

:thumbup::thumbup:


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OfflinegeokillsA
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Re: Lending Club [Re: geokills]
    #20488395 - 08/28/14 10:22 AM (9 years, 6 months ago)

Source: http://www.cnbc.com/id/101952784

Quote:

Lending Club's silent backer poised for windfall

There's a certain irony to the upcoming IPO of Lending Club, the nonbank lender that's used algorithms, software and a Web-based platform to take on the traditional banking system. The biggest winner in the deal is likely to be none other than Wells Fargo, the largest U.S. bank by stock market capitalization.

It's an indirect relationship. Lending Club, like most emerging tech companies, is backed by venture capitalists, with the four top firms owning more than half the company, according to its IPO prospectus filed on Wednesday. The investor with the biggest stake is Norwest Venture Partners, based in Palo Alto, California. Norwest is unusual in that all the capital for its funds comes from a single investor—Wells Fargo. Most firms bring in money from an array of endowments, foundations and universities as well as big financial institutions.

Norwest and venture firm Canaan Partners first backed Lending Club in 2007, in a $10.3 million financing round. At the time, Lending Club was using Facebook to find potential borrowers and had yet to issue $1 million in loans. Seven years later, Lending Club is way off Facebook and has originated more than $5 billion in loans, with about 20 percent coming in the most recent quarter. Norwest's Jeff Crowe joined the board in 2007 and remains a director.

Katie Belding, a spokeswoman for Norwest, said Crowe was unavailable for an interview because of the pre-IPO quiet period.

Under a typical venture structure, the firm and its partners keep 20 percent of the profits generated from investments, sending the remaining 80 percent back to the fund's investors, known as limited partners. Based on Lending Club's most recent valuation in April of $3.8 billion, Norwest's 16.5 percent stake in Lending Club is worth $627 million. Assuming a normal 80-20 split, Wells Fargo's share of that is right around half a billion dollars.

Those numbers are rough for several reasons. Wells Fargo's arrangement with Norwest is confidential, so the 80 percent number is just an estimate. Beyond that, Lending Club's projected valuation at the time of its IPO will surely be well above $3.8 billion, but insiders are typically unable to sell in the six months after the offering. So if Lending Club debuts in November, Wells Fargo wouldn't see the gains until May 2015 at the earliest. A lot can happen between now and then.
Even if that number doubles (or triples or quadruples), it will be a drop in the bucket for Wells Fargo, which has a market value of $268 billion and assets of $1.6 trillion.

But Lending Club's revenue is more than doubling annually at a time when Wells Fargo and other banks are struggling to find growth, in part due to more strict regulations put in place after the financial crisis. With Lending Club headed for the public markets, its alternative financing model of issuing loans online with capital provided by retail and institutional investors is likely to get increased publicity.

Wells Fargo sees what's happening around it. In addition to its Norwest relationship, the bank this month announced a start-up accelerator to partner with and invest in up-and-coming technology companies.

In that regard, Wells Fargo has at least one advantage over its peers. The bank is located in the tech hub of San Francisco, a matter of blocks from Lending Club.

—By CNBC's Ari Levy




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Invisiblememes
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Re: Lending Club [Re: geokills]
    #20490892 - 08/28/14 09:14 PM (9 years, 6 months ago)

interesting info :smile:

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OfflineTerillius
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Re: Lending Club [Re: Ythan]
    #20508155 - 09/01/14 09:18 PM (9 years, 6 months ago)

Quote:

Ythan said:
Yeah loans are charged off when the borrower either disappears or declares bankruptcy, and collection efforts are exhausted. Generally they occur pretty quickly after the loan is issued.




This has NOT been my experience.  My first investments several years ago have seen heavy charge-offs in the last few years of the loans.  I hear people say they are making 12-18% and I am dubious at best because I never hear anyone say that they made aggregate 18% in the long term.  Anyone who takes on a loan with an interest rate that high is eventually going to say "fuck it" and quit paying.  A loan shark would break your legs, but what is Lending Club going to do?  Call your disconnected phone number 5 times?

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OfflinegeokillsA
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Re: Lending Club [Re: Terillius]
    #20509526 - 09/02/14 08:01 AM (9 years, 6 months ago)

Hence why it is important to mitigate your risks by diversifying across several hundred or thousands of individual borrowers, preferably ignoring those borrowers who fall into the highest interest rate categories as they rightfully carry the highest risk of default, and further manipulate the variable filters to ensure that you are only lending to people who have held a job for several years at a certain income level (not too low and not too high, to avoid both default as well as early payoff risk).


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InvisibleStonehenge
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Re: Lending Club [Re: geokills]
    #20519791 - 09/04/14 03:40 PM (9 years, 6 months ago)

I dabbled in prosper a few years ago and felt lucky to get out with a whole skin. Not only were there lots of defaults even with good credit ratings, the whole thing is set up wrong. You can't just deduct losses from profits which would be the logical way to do it. No, you have to pay taxes on profits even if you lost your ass and then all you can do is itemize your losses. That works fine if you always itemize but unless you have lots of deductibles to itemize like mortgage interest, it is not worth your while because you lose the standard deduction.

I too had people who paid right along and then out of the blue declared bankruptcy or just stopped paying. One thing I noticed is if they had a sad story and said in various ways "help me" they will stiff you almost every time. The ones who paid off were the ones who had a business or a good job, a plan and good credit history. But they were also the ones who paid up early. So you either got stiffed for some or most or they paid early which means you lose the interest. That is even more true on the high interest loans which are the riskiest. If someone tells you there are making 18% after a good long period on many loans, they are lying through their teeth. Or are new and think having it on the books is a guaranteed profit.

I'm averaging close to 20% return just on rent and I plan to buy more houses, not more sad luck stories. Good luck to you Geo, I hope it works out.


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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

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OfflinegeokillsA
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Re: Lending Club [Re: Stonehenge]
    #20522054 - 09/04/14 11:40 PM (9 years, 6 months ago)

Quote:

Stonehenge said:
Geo, I hope it works out.




Oh it's workin' brother.  Seven years in with an average 9%+ return, I am not complaining.  I run rentals as well and there's nothing wrong and almost everything right with that, but when the cash flow comes in, you need somewhere to put it, and LendingClub ain't a bad place.  Diversification = key.


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OfflineGroovy Grant
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Re: Lending Club [Re: geokills]
    #20528200 - 09/06/14 11:35 AM (9 years, 6 months ago)

Quote:

geokills said: Diversification = key.



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OfflinegeokillsA
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Re: Lending Club [Re: Groovy Grant]
    #20528321 - 09/06/14 12:05 PM (9 years, 6 months ago)

GG! Good to see you around here again. :sun:


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Re: Lending Club [Re: geokills] * 1
    #20846828 - 11/16/14 05:27 PM (9 years, 4 months ago)

It's groovy, I guess.


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Re: Lending Club [Re: tak]
    #20847168 - 11/16/14 06:15 PM (9 years, 4 months ago)

:chalkup:


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Re: Lending Club [Re: tokeweed420]
    #20850797 - 11/17/14 02:09 PM (9 years, 4 months ago)

I got a small check from prosper a few months ago as my part of a class action suit settlement. I think it may be the first time I got any actual cash out of one of those things, even though not much. Usually, the lawyers get 95%, the original plaintiffs get a small piece and the rest get discount coupons on the company's goods which are basically worthless. I have gotten a few of those before. One time it was 10% off airfare for a certain airline but only on first class with no other discounts. Hell, you can get a better deal on the net, the coupon cost you money if you used it.


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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755

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