Lending Club Experiences

In My Humble Opinion
522

Man, that’s rough. I’ve done the same thing though, so you are not alone. Since the listings can sort by %discount those do get snatched up quickly, right at the top of the list.

They do indeed nab such stuff, and are extremely aggressive about banning IP addresses after so many page hits. In fact I think if you sat there and clicked reload for an hour that would be enough to trigger it. When I update my data I set it to crawl through there verrrrrry slowly. And use a few different IPs.

Wow, you actually called eh? What do you mean by they “have no transparency” in this context? Oh I guess that must mean foliofn just sets up the legal crud and LendingClub is the one who actually handles settlement. How did the calls go? I never thought to call about such things so I’m curious what exactly they said.

523

It’s been a while since anyone posted!!

Aside from that accidental undersell (and another identical goof), all has been going well until I checked the other day. Shoulda been monitoring things better, I have a D3 going bad. Payment was due December 6.

Oddly, no “collections activity” is posted; usually they post something by now!! I think I’ll contact LC and ask.

I’ve had little luck selling loans lately (aside from the ones I’ve accidentally underpriced!!). Most of my loans are pretty principal-heavy now since I sold most of my older ones, of course.

We met with a financial planner at Fidelity last month to tweak our retirement savings and I mentioned having LC for “fun money”. I told her about those insane loan purchasers (the ones who paid more than the total of the outstanding payments); she was amused.

524

Ok, I’ll give an update. I am different from some of the posters here in that my Lending Club investment is very passive. I select notes according to a filter and do not look at each individual loan at all. I do not monitor them or attempt to sell likely non-performers.

According to Lending Club, I made 9.7% last year, but according to Quicken it was 13%

I put $1,000 in in March 2011 and another $5,000 in March 2012. I have had 346 notes:
[ul]
[li]304 Current[/li][li]31 fully paid[/li][li]1 16 - 30 days late[/li][li]2 31 - 120 days late[/li][li]8 charged off[/li][/ul]

I might throw a little bit more money at it soon.

525

Yeah I have been seeing this a lot lately. No collections activity and then just poof it’s in grace status. And the payment line for that date doesn’t even appear! The month is just missing like nothing ever happened there. Irks me, to say the least.

Well, for all you buy-and-hold people, this time of year is a great time to buy notes on FolioFN. More last month than right now, but it’s still great (if you’re a buyer only). And if last year is any indication, soon the prices will get even lower as people realize they have a hefty tax bill to pay. At least that’s what I’m assuming causes it – dunno why else Jan-Mar would have seen so much selling off this last year. I’m seeing notes right this second posted for 20% discount (and not selling) when in normal times they’d easily sell for just a 4% discount.

526

Oh heh and speaking of taxes, I can’t wait to get my 1099 from them. If they send out paper copies they’re going to have to send me a banker’s box of paper if they list allllllll those trades. Getting all those entered is not going to be fun.

Here’s a thought though… You know how the 1040 says you’re allowed to round to even dollars as long as you round all schedules and other forms to even dollars as well? What if your average profit is quite small? Seems to me if you played your cards right pricing notes the whole year you could end up with a $0 tax liability just because of rounding issues with all the individual sales coming out to zero profit.

527

All this talk of buying and selling loans has finally piqued my interest. I just posted my whole 2010 portfolio for tiny discounts (say 1-3%) but still profitable to me overall due to my payments recieved.

528

and they all sold…

529

Should be interesting. I got some kind of year-end report already that listed all the sales, and it listed everything at “par” which I think is principal + interest accrued to sales date.

Of course that makes it VERY hard to track your real income for that loan.

Say its principal is 20.00 and it has 15 cents accrued interest. You sell it for 20.50. Par is 20.15. You have a fee of 21 cents. So your profit is 20.50 - (20.15 + .21) or 20.50 = 20.36, or 14 cents.

That 14 cents doesn’t appear anywhere as far as I can tell.

I’d been tracking my sales in Quicken, by putting the “number of shares” equal to the principal amount, and ignoring the accrued-interest portion. That would show up as a profit of 29 cents (20.50 - 20 - 0.21).

I wound up taking that report, putting it in a spreadsheet, and adding columns for the principal at sale and backing out to get the interest component and the true capital gain (or loss).

530

Dumb observation/question-for-verification -

After getting a few late payments (prosper.com), I see that I don’t seem to benefit from any penalties the payer pays when they eventually do pay.

Is that the way prosper “really” makes their money? They get all the penalty money, and the individuals putting up the capital still just get P+I?

531

You’d have to read the info at Prosper. Lending Club supposedly passes on any late fees they may collect, to the lenders. Of course that would be subject to their 1% cut of all payments.

I have yet to ever see a late fee, personally. Of the two loans I’ve had go bad (and I have a third one that’s 2 months overdue now) I’ve gotten a few cents in collections activity but that’s a fraction of the balance.

532

Things are going pretty well for me. Every few days I log in and buy a few notes to clear out the ‘Available Cash’ I have built up. I haven’t made a bank transfer into my account in well over a year.

I could probably make more than I do if I spent a little time daily managing each of my notes, but I don’t have the time nor the patience for that, so I am usually in and out of the account in less than 10 minutes.

I’m currently at a Net Annualized Return rate of 7.57% after a couple of charge-offs last month. I tend to float between 7.25% and 8.25%

After buying 3 more notes last night, one thing I’m reminded of that I absolutely cannot stand is the Foliofx search functionality. It is so ridiculously deficient that it makes the process of managing and buying notes an almost unbearably frustrating experience.

533

My NAR is showing around 16.80% but that’s totally meaningless because of the way they treat purchases and sales. (Meaning ignore them) I get rid of notes at the first sign of trouble and the hit that I take doesn’t get taken into account with their creative math. I wonder what the numbers on their home page would really look like if that were brought into the picture.

Unrelated gripe of the day:
I sat around all evening waiting for my notes to settle. Monday evening’s always a biggie because a whole weekend’s worth of notes comes in. They never showed up. Then it dawned on me: Federal holiday. Duh. But I would sure like to know why it being a holiday has anything to do with a virtual note going into my virtual account. Flip a couple bytes, sheesh. It’s not like they have an employee there who has to sit and type out all these transfers. I’ll go even further to say that having them change hands instantly would make the site a lot more fun. They can’t claim that interest calculations are the reason because that interest just tags along with the note to the new owner, nothing to calculate.

So I really do not understand the delay.

And yes, LendingClub, please do something nice with the Folio search functionality. If I could figure out how to make a buck from it without getting my rear end sued off I’d put a working search up myself.

Here is why notes are selling for pennies these days, I just discovered this last week: They’ve changed the way the search works. It used to be that the ‘Never Late’ checkbox would match notes with payments made in the grace period. Now it doesn’t, at least not all the time. Now it pulls them up whenever it feels like it. Usually the ones that come up are ones where only the most recent one was a grace period payment.

End result is I just had a note that I had to bring down all the way to 17% discount, and the only thing wrong with it was he had one grace period payment 6 months ago. Really, 17%? The only way that happens is if nobody saw it, which is precisely what I think happened. Folks got used to the way it used to work and now God help you if you have to sell any with any graces. An additional checkbox or at least a nice message saying the search has been changed would have been nice.

534

Yep, I was looking for my nice Monday bump as well. I also forgot about the holiday. :frowning:

535

It looks like FolioFn is actually a separate company from Lending Club, they just have a deal to have FolioFn handle sales.

And yes, their search capability absolutely SUCKS. For one thing, there’s no way to specific initial filters - you have to wait for it to pull everything.

If you want to filter by remaining term, all you can do is maximum payments. No minimum. So a search for 35 payments gets everything from 1 remaining to 35 remaining. You can’t filter by term (36 vs 60). Etc. etc.

And the various reports etc. sometimes show note, sometimes show loan, but never both. So if you try to keep both numbers, you’re screwed.

The fact that the year-end report doesn’t list interest is an invitation to scam the IRS. Unless you captured the principal figure at the time the note sold, that is - then you can figure out the interest accrued and account for that as interest income (separate from the profit / loss on the sale itself).

Aaaaand, when selling notes, they really need to have a screen that says “here’s what you’re list, please confirm”. Omitting that is a really boneheaded failure to provide error-correction. I’ve twice listed notes for far less than I meant to - in both cases they were snapped up immeditely (I grumbled about this upthread).

Anyone have last year’s 1099 information from FolioFn? I am curious as to how what they said may have matched up with your own record-keeping.

My own performance lately:
One note went bad, didn’t make its December 6 payment. I listed it several times, finally sold it this weekend for 3 dollars (a loss of just over 20 dollars). At least it’s out of my portfolio.

My 2012 selling activity shows a net loss of about 8.50 for 50+ loans. Would have been a gain if not for those two errors I made.

Per Quicken, my rate of return for last year was 9.82%. That’s slightly skewed by the way I record regular loans / repayments (I record a trio of transactions at the end of the month, for money loaned, money repaid, and interest income). So for example I show a loss for the month to date because I haven’t recorded any interest repayments. My rate of return per Lending Club is 9.65%, which I think is for all the time I’ve been lending. Doesn’t account for profits (or losses) when selling on FolioFn.

536

I wouldn’t put much stock in that year end trading summary that’s currently available on the Foliofn site since that isn’t the real 1099. After reading your earlier comment about it I finally just downloaded mine today. Yes, it just shows the two par values and sale prices but no interest. But honestly I think this is just as it should be.

One of LendingClub’s tax FAQ pages says that you will receive a separate 1099-OID on any notes issued after the Great SEC Awakening (2008) for any interest you received, less fees.

Your missing $0.14 of income will be reported on your 1099-OID (assuming you received the payment), and the capital gain on the Foliofn 1099-B. That sounds legit to me? If, on the other hand, you did not actually receive any interest payments and it was just accrued, I can’t tell if they are going to treat that as a basis increase. I’m not sure why else they’d list the ending par value like that.

They absolutely cannot (errr “should not”) lump interest in with everything on the 1099-B. You might have held onto it long enough that it’s a long term capital gain for you. Interest has to be separate to be taxed at the full rate and I don’t think their answer would be “you should have kept a spreadsheet”.

I’ve mentioned the $10 threshold in earlier posts I think. They seem to have changed that this year. It seems that now for pre-SEC notes, starting this year you will get a 1099-INT if the total of all your interest was $10, not per-note like it was in previous years. (I’m going by p2p lending forum posts, not personal experience here.) For post-2008 notes it seems you get a 1099-OID no matter what – no threshold is mentioned for that one.

At any rate all of our questions will be answered in 9 short days when the actual 1099’s come out. Then the fun starts! I’ll be pouring over the numbers looking to optimize my trading strategy for tax 2013 purposes. Then with my luck they’ll change all the reporting rules again in December 2013. :wink:

If anybody needs an export tool written to copy over the 1099 pdf data into a csv file for TurboTax or something I’d be glad to offer my services as programmer free of charge. I’ll likely be writing similar things anyway, because I’m eager to run the numbers on that rounding scenario.

Anyone know how to fill out IRS form 8949 when you have thousands of entries??? There’s only 40 lines there. Obviously I’d assume you’d have to print out tons of separate pages, but would you fill in each separate page’s total on line 2, or just on the last sheet? I might have to pay for TurboTax this year just for that alone; their code surely knows the answer. Next question is does TurboTax allow you to choose if all forms and schedules are rounded to the whole dollar.

537

I use TurboTax and last year it completed three Form 8949s (although it could have fit the entries on just two). On each, line 2 was the total for that individual copy of 8949.

I cannot find an option for rounding in TurboTax. The support forum states that it includes cents where it must, but rounds automatically when permitted.

538

Thanks! That answers my most important question. As for the rounding, I may have to go back and review my information. I thought the only time cents were required was in intermediate calculations before they get entered into a blank.

Do you remember if TurboTax rounded each line item on your 8949s?

539

It did. It rounded on every form except Schedule B.

540

Thanks again for the info. That is excellent news.

Buy a note for $20.51, sell it for $21.49. Do that all year long, rinse and repeat. No taxes! This of course assumes that that’s about the price you would have sold it for anyway. If you can get $23 then it would be silly to give up $1.51 just to avoid paying the government $0.38. Unless you really dislike them. :wink:

This simple example also neglects the 1% fees. But the point is, trying to get another penny out of that note would have cost you money, substantial money percentage-wise. And if my contrived spread wasn’t so wide, you could even end up owing tax on money you never made. Obviously at that point if you caught it you’d choose not to round your whole return, or play fast and loose with the 8949 and just show one big total for LendingClub, dates as “various” – I’ve heard lots of people do this, technically correct or not.

Looks like I’ve got some more code to add to my calculator.

541

Ahhhh - that’s new this year!!! The relevant paragraph:

And it’s about damn time!!

It doesn’t really say how (or IF) they’ll handle that 14 cents. Right now it never shows up in my Lending Club balance, except as part of the proceeds of the sale. I agree, that absolutely should be treated as interest vs. included in the capital gain. I haven’t been recording it as such when recording my sales transactions, but it is the correct thing to do. Obviously for short-term vs. long-term it makes a difference; while my sales amounts aren’t especially high and it would make very little difference in my tax bill, I’m a very small-time investor compared with others.

I had a few pennies (less than a dollar) of repayments on a couple of charged-off loans. I don’t recall whether that was this year or not; if this year, it’ll be interesting to see how they handle that. Lump it in with the interest, I guess.