Yeah - in the 7 or so hours since I posted it, someone nabbed it. I listed another one, with similar figures, for 6.50 (principal 5.72).
I feel kind of dirty, actually!
I had a few more sell successfully. For the ones that were within 6+ months of being done, I was able to sell for more than the total of the remaining payments. One, I played around with the pricing; the outstanding principal was 5.72 and I tried listing it for 7 dollars and up and leaving it there for a couple of days. It finally went for 6.20. So, the lunatics clearly aren’t seeing my loans; admittedly, the buyer still shot himself in the foot with that one (as the total of the remaining payments was less than 6 dollars).
I sold a couple of others that had gone into the grace period at least once; had to mark them each down by a couple pennies from the principal figure. In each case, I’d earned enough already that the markdown still leaves me well in the green. I’m glad I dumped them; one is still in the grace period, and the other is now officially 15-30 days late. Yeesh.
I’m routinely listing new loans for a dollar or so above purchase price (26.00 or thereabouts) just for the heck of it, though none of them have sold yet. That bears out what Chessic Sense observed.
I don’t know if Lending Club’s net annualized return figure ever gets updated based on folio sales; mine still shows roughly what it did a while ago (just under 9%). Quicken’s figures are a little screwy as well, it’s hard to tell if that includes all the deposits I’ve made, and the figures from one quarter to the next don’t match up when I generate a report showing performance. I do know I’ve got a whole dollar or more in capital gains this month :).
Nope, the net annualized return does not include folio purchases nor sales. If you always sell your notes before a payment gets made then NAR will remain at 0.00% (actually N/A). Works the same way at Prosper, just for the record.
I don’t know anything about Quicken, but if you’ve got records of your deposits and such: I hear other traders are using a simple Excel calculation to calculate their actual returns. I believe the name of the function was XIRR() or something but you’d have to check. Plenty of blog posts and comments out there on using it.
Just found this on the FolioFn FAQ: At the end of the year, FOLIOfn will post in your trading account a 1099 statement that shows the proceeds from sales in the applicable tax year. The official 1099 is comprised of Page 1 and the 1099-B (gross proceeds from sales); other sections are supplemental. 1099 information is furnished to the IRS and must be included in your tax return.
So presumably they’re keeping track of this as well. It’ll be interesting to see how their figures mesh with mine.
Is there anyone here who’s sold notes in prior years and can attest to the 1099?
Hey, I just put $1k in my LC account and bought 20 loans for $500. I’ve used nickelsteam roller to come up with a strategy that I think will provide 11.171% gross so “Let the great experiment begin!”
Also reading through all 10 pages of this has been great.
Here’s my starting mix:
A (35%)
B (40%)
C (25%)
D (0%)
E (0%)
F (0%)
G (0%)
Bought “in bulk” according to my nickelsteamroller strategy, but I agree that some of these seems odd in the details (one guy listed that every payment he has is for $300/month).
Come now, don’t be so simple. They’re laundering money by buying your loans at a loss (c.f.: gift cards selling on ebay at higher than face value; Amazon disallowing gift cards to be purchased with gift credit). One percent is but a small price to pay to wash money.
I found something strange going on in the trading platform. Here’s this loan:
Principal Interest $4.07 $0.03
Total $4.10
Asking $4.09
Markup /
Discount (0.05%)
Yield to
Maturity 9.91%
With a green credit score, that sounds like a smokin’ hot deal, right? I opened it up and here’s what I see:
Remaining Payments (5) $4.03
Expected Final Payment 2/5/13
Outstanding Principal $4.07
Nevermind how a never-late loan can have less payments remaining than principal. What I don’t get is where they’re getting this yield to maturity. Clearly you’re losing money here. There’s no way you’re making 9.91%. I’m guessing that their formula to calculate annual yield is screwing up the annualization. The math probably is running the numbers like there are going to be twelve payments remaining, and perhaps they’re using the note interest rate to do it.
So I doubt anyone is laundering money. The company is probably just screwing the pooch here and showing bad numbers to buyers. The buyers are buying notes that look discounted and yield-bearing, but are actually poisoned.
I figured it out:
“Yield to Maturity (YTM) is a standard financial measure which gives the expected rate of return for the Note holder when the Note is held to maturity, assuming a specific purchase price, on-time payments for the remainder of the Note’s term, and continuous reinvestment of principal at the same rate.”
There it is. Their math assumes you’ll reinvest the principal, and that principal is assumed to make money for you. So near the end of a loan’s life, because the principal is being paid off so fast, the bulk of your money is being “treated safe” by this erroneous assumption.
It’s like if I loan you a dollar and you give me .90 a month later, and I calculate my return as if that .90 were generating income up until the other dime is due.
Read this thread and found it interesting what you all have gone through and answered a lot of my own questions. I am just going to kick in a little at a time just for fun. I did join prosper and even had money transferred, read more and more about it and decided im pulling that money to put here instead.
Hopefully I can start in a couple of days. 
Wise move. Prosper has higher interest rates available but all-around they are clearly inferior. Trading platform is useless in comparison. I do like their instant transfer feature though… it has saved my bacon on more than one occasion. Also they report 100% of your earnings to the IRS, unlike LC where you have per-note thresholds.
I also decided to setup on the trading platform just in case I needed to get rid of a note. I remember seeing in here, that it took people a couple of days to a week to receive approval. Thought I would just mention that in less than a Day I was approved. IDK if there is a correlation with being signed up on the regular platform before I applied or not. Anyone else have any information regarding this?
Dunno; I did it so long ago (though only recently started playing around with actually selling notes). I thought you had to be signed up on the main platform first, though, even if you couldn’t actually purchase there (from an ineligible state).
Well, to be fair, if you were able to immediately reinvest that 90 cents at the same rate, the rate-of-return figure is valid - but obviously this doesn’t take into account lead times etc. Like with a regular loan where you start out with the 25 dollars directly on the LC main site: if they showed your estimated rate of return it’d be a fraction of the stated rate because you’re earning that interest rate on a declining amount of principal. I mean, if a 25 dollar loan would earn a total of 5 dollars interest over the course of a 3-year loan, and its stated interest rate is 22%, your annualized income is $1.66 which is a lot less than 22%.
So I don’t think that assumed rate of return is useless, just not the only thing a buyer should be looking at.
if I were purchasing on the marketplace, I’d want to look at the loan’s rate (available), markup/markdown percentage (ditto), and total of remaining payments (available but you have to go to the loan’s individual page), in addition to payment history (ditto), credit rating history (ditto), etc.
Another quibble I have, and I’ve noticed this all along: When you look at a loan’s payment history, after each payment it shows the principal balance as of that payment. That is often quite different from the principal balance show at the top, and shown on the FolioFn lists. Rounding errors should be a penny at most, in my mind, but I’ve seen this at 10 cents or more.
I’m still puzzled at the people who will purchase a loan where the sum of the remaining payments is less than the loan price. I’ve gotten 3-6% markups routinely on those, but they can take a few days to sell if they sell at all. So someone purchasing those is going to have a hard time reselling them at anything like a profit. The yield-to-maturity figure on those is quite clearly negative (I just checked one of mine).
There does not appear to be any way of tracking which notes sell on a broader basis; obviously you have your own history, but there’s no “download all” like there is on the main LC page. I think that would give a lot of transparency into the process - which, perhaps, isn’t what they want.
This bugged me a bit as well. I believe it has to do with the fact that your note is but one little piece of the “real” note. $25 out of $10k, for example. For the top number they correctly take the total principal remaining and multiply it by your loan fraction and that’s the number. At the bottom they kinda try to make it look like your piece is being treated like a separately amortizing entity which introduces errors. I would expect it to vary by 18 cents over a 36 month load. That’s just a W.A.G.
Oh and I’ve gotta toss this in. Regarded the yield to maturity, from my reading various LendingClub-addict bloggers have attempted to recreate the YTM calculation and not one has succeeded to my knowledge. Yes, they are aware of the continuous reinvestment assumption. People have emailed LendingClub asking for an explanation of the formula and LC has refused to answer. I find that odd.
And the big LendingClub news of the week! As of Monday, LendingClub is now showing the exact credit score (within 5 pts) in the credit score history charts. Used to be that they’d only show you wide ranges like 640-678, 679-713, etc.
Thank you LendingClub! (Now stop busting trades like a nanny and let the free market work.)
Has anyone else found it difficult to find loans that match their criteria recently? I reinvest in 9 or 10 loans a month. I just run a saved filter and select the loans from the top - I don’t want to put much effort into it.
The last few weeks when I run my filter it has come up with zero matching loans. I have just looked into why, and it seems as if very few loans have the applicant’s income verified. Only 19 of 666 current loans in funding have their income verified (and all of these get eliminated by my other filters). Has Lending Club become slower (or more stringent) about verifying income?
This happened to me the other day; I filtered for rates B through D and got zero hits. The only loans out there were a single A, and a bunch of Fs.
core_dump: re busting trades, any pattern? I had one loan that had been picked up for purchase but was canceled due to payment, but a couple of others that were “payment processing” but I guess the sale completed in time.
I’d been avoiding listing loans that were about to get payments, but with the last couple, decided I might as well - building the interest into the sale price, and if the purchaser gets the payment, cool.
This is interesting, although I’m not able to add any data because I’m in a disallowed state. But… Do you always tend to run your searches at the same time of the month? End/beginning of the month always gets “weird”. Since you are no doubt not the only one who searches by income verification, isn’t it possible that the income verified ones are simply getting snatched up before you get there? Possibly some wise money is flowing into LC just recently and needed to be allocated. 
Oh, the pattern is very simple: If the payment gets completed before the sale settles then it gets busted. It doesn’t matter if it’s processing, actual completion is all that matters.
What I find exceedingly sneaky is they are increasingly just erasing all records of the trade rather than canceling it with the “Canceled, payment received” message. For example today I had 34 purchases busted. Only 2 of these show up with the “Canceled” message. The other 32, well they can just deny they ever happened because all records of them have been wiped clean. If what they’re doing is above-board then why not show the canceled message so it’s on record??
The cynic in me wants to think they are engaging in front-running, essentially snagging these heavily discounted notes for themselves. Guess I could run a query and see if these “disappeared” notes have changed hands since then. Wonder what the owner of the note saw, after the trade just got erased.
Nope - tried various dates. Tried again just now and got 0 out of 703.
OK, I’ve seen “canceled, payment received” on a couple of notes. On one, the sale was actually completed after all (I felt bad for the buyer!). On another, it showed the cancellation and the sale was actually canceled).
I have had two notes completely disappear - well, the sale disappeared, they were back in my “available to sell” inventory) after having the sale “pending” briefly, so I guess that’s what you’re talking about. In my case, neither note was discounted.
How do you run queries? I don’t know any way to track down a note once it’s gone from my portfolio.
I meant run a query as in from my own stored data. I have data on all notes posted for sale since January, but one could manually keep data on certain notes that one wanted to keep tabs on.
Here’s how you tell if a note got sold and relisted by a different person:
A note link on the secondary platform will contain this info:
loanPerf.action?loan_id=1394566&order_id=2966578¬e_id=11808565
The order_id is key. As long as a given person owns a note, no matter how many times they repost it, that order_id will never change for them. But once it gets sold if the 2nd person posts it for sale then a new order_id will be generated for them. loan_id and note_id never change. Loan is of course the entire borrower loan and the note_id identifies your small fraction.
Since LC doesn’t show owner info like Prosper, and doesn’t even show data on whether it sold, this is the only way I know of to determine that a random note out there has in fact sold rather than just been pulled down by the owner or expired.
As far as your own notes, to track them down after the fact you’d need to have saved your loan_id and note_id from when you owned them. Then on the search you can easily sort by loan ID and attempt to find your matching loan+note_id. Of course it will only be there if the buyer turned around and relisted it. Another way is you can usually supply a dummy order_id=1 and you might be able to at least see payment history and status on notes long after you’ve sold them. This may only work if the note’s for sale again. It’s been a while since I’ve tried that but it’s currently working for active notes I’m trying.