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Major Changes to the Lending Club Trading Platform Today

by Peter Renton on November 6, 2013

Many Lend Academy readers use the Foliofn trading platform (also called the secondary market) a lot. For some investors it is the only way that they can invest in Lending Club notes. After promising improvements for a long time Lending Club is finally rolling out some significant changes to the secondary market.

Some have already noticed one change that was rolled out a couple of weeks ago and this afternoon there were several more changes. This post will break them all down for you.

More Filters

Lending Club New Folio Filters

One of the big complaints that I (and many others) have had is that there are not enough filtering options on the trading platform. Right now you have basically three options: interest rate, loan status and number of remaining payments. That has changed with this update today as you can see in the screen shot above.

The Browse Notes section now includes five new filters:

  1. Original Loan Term
  2. Asking Price range
  3. Outstanding Principal range
  4. Yield To Maturity (YTM) range
  5. Markup/Discount range

This is a decent start. Eventually, I would like to see the exact same filters on the Folio platform as there is on the retail platform. You should really be able to use the same saved searches on both platforms but that change is probably still a long way off.

Download All Notes

This has the potential to be really useful for doing filtering offline. Or for those people who want to create a programmatic solution to their Folio investing. I know some people who do screen scraping to pull in every Folio note but at more than 67,000 notes as of this morning that is a lot of data to pull in.

Now, you can just click the Download All link and you will have access to all the loans for sale.

Cannot Sell Notes When A Payment is Processing

There is a little loophole/trick that some investors have exploited to offload their notes that are about to go late. I am not going to detail it here but there was a loophole that allowed investors to sell a note the day before it went into In Grace Period if they knew how to exploit it.

That loophole has now been closed. Investors will no longer be able to list a note for sale once Lending Club has begun processing the payment. Now, it takes several days for Lending Club to process a payment so from now on there will be a few days every month where notes will not be able to be listed for sale.

For most investors this will be an inconvenience and for some it will be a major blow because the loophole will now be closed. I support this move, though, because it will help cleanse the secondary market of notes that are about to go late.

There are a couple of other minor changes to the monthly statements. You can read Lending Club’s description of all the changes here.

I have been told there are many more changes coming this month, some that will affect all investors. I will detail them here as they happen.

So what do you think Folio users? Do you like these changes? As always I am interested to hear your comments.

{ 16 comments… read them below or add one }

SarahV November 6, 2013 at 5:50 pm

There is basically no upside and a lot of downside here as far as my strategy goes.

I can’t believe those were the filters they decided to implement after years of people begging for more and better filters. There’s still virtually nothing available filterwise that helps you judge the quality of the note. Outstanding principle range, really? And not, say, FICO? Or years of employment? Or derogatories, records, delinquencies…?? What a baffling choice of filters.

It’s really too bad this platform is so illiquid and they can spring such big changes on you like this with no warning… ugh. I’ve been slowly liquidating (down to my last $1k or so) but I think I’m going to start discounting more heavily, I very much want to get out by the end of the year so I don’t have to worry about the tax annoyances next year.

Reply

Peter Renton November 7, 2013 at 9:28 am

Hi Sarah,

Great to hear from you, but I am sad you have decided to unwind your Lending Club investment. I would just like to say thank you for all your contributions both on here and the forum over the past year or two.

As to your comments I couldn’t agree more. The new filters are kind of lame when you look at everything that is available to investors on the primary platform.

Reply

SarahV November 7, 2013 at 12:49 pm

After a bit more analysis, I’m guessing there is a technical reason for it, since it seems that they are still only filtering on things showing on the “Loan Performance” page and not a single bit of info from the original listing. (And when I say “technical reason,” I suspect this is really more like “it is slightly more work to include that information so we’re not going to bother because Folio is our lowest priority”.)

As for liquidating – yeah, it’s a shame… but after months of the Folio situation deteriorating, having trouble keeping invested, etc. I just gave up. I didn’t have the free time any more to keep slogging away at it. I managed to sell most of my notes for 3-4% markup so that was a nice bonus… I’ve got them down to about 1.5% now and we’ll see how that goes.

Reply

daniel morton November 21, 2013 at 1:12 am

Hi Sarah,

why are you liquidating? (“trouble keep investing”) you mean too much cash drag and/or the automatic reinvestment would not work?

good luck.

Daniel

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SarahV November 21, 2013 at 1:43 am

I feel like I’ve already answered the “why” question, but since you seem to be curious about why I was having trouble staying invested… I’m in a Folio-only state, so a lot of tools (like automatic reinvestment) are not available to me. There has only been one 3rd party site that even offers Folio tools, and LC is not that friendly to developers for Folio (have to rely on periodic screen scraping, can’t get real-time updates, etc.). It makes everything more limited and more time-consuming, and as I said, I just didn’t have time to spend on it. And for a few months there was a bit of a shortage of quality notes of the type I was looking for and it was getting harder and harder to keep my money from sitting idle. Now the Folio system is being turned upside down and I just want OUT as soon as possible. I have six notes left… which I can’t put up for sale for a week because they are “processing.” Sigh.

KK November 7, 2013 at 2:50 pm

They better not screw Folio IRA accounts until I;ve had a chance to liquidate everything!

Reply

New Jersey Guy November 7, 2013 at 7:19 pm

Sarah…..You’ve been greatly missed on the Forum! It’s really nice to hear from you. I, too, am sorry that you are liquidating your position with LC, but I understand. I wish you the best of luck!

Reply

SarahV November 8, 2013 at 10:33 am

The more I read about this latest change, the more and faster I want to get out! They’re making it so hard to sell anything on Folio.

I just lowered all my notes for sale to a range of -.5% to .75% markup. Mostly what I have left after 2.5 months of liquidating is stuff with a slight downward FICO trend (because people skip anything with a down arrow) and ones with false IGP payments, so you might find some bargains. Oh, and I still have that note with the people who wanted to buy food for their cats (loan # 3498927)… perfect payments and the FICO shot up into the 800s, so who’s laughing now! ;-)

Reply

New Jersey Guy November 8, 2013 at 10:54 am

Yea! I remember that one!
I just ran a search on that note. There was one note available at a .66% markup.
I bought it.
The 15.5% YTM was hard to pass by.

I figure if that note was acceptable for your “Pristine Bouquet”, then it would would be a standout in my portfolio of who-knows-if-they’ll-ever-pay notes.

Reply

SarahV November 8, 2013 at 11:07 am

I hope you enjoy it as much as I have… ;-)

We’ve got 12 days before payment starts processing, so hopefully we’ll make it under the wire before they cancel the sale.

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Martin November 7, 2013 at 10:29 pm

Well these changes are inconvenient for me as well, so I am bailing out as well. I have no or very little defense to protect my investments in LC now. Moving to equities. But it was nice.

Reply

GS November 8, 2013 at 10:33 am

Peter, do you have any information on what is going on with FolioFN and IRAs? Why has LC posted the notice that we can not sell IRA held notes note on Folio?

Reply

Chris November 9, 2013 at 9:24 pm

GS – Thanks for asking that question. I was not aware that LC took the postion that IRA held notes could not be sold on the secondary? Would you mind pointing me to where you read this info?

Reply

GS November 9, 2013 at 10:12 pm

It was discussed on the Lending Club Investor forum on this site. Here is a link to the page the statement appears on:

https://www.lendingclub.com/public/mainAboutTrading.action

Apparently, the new message appeared in September.

Link to discussion. More questions than answers so far :

http://www.lendacademy.com/forum/index.php?topic=1674.0

Reply

Peter Renton November 9, 2013 at 10:11 pm

Chris/GS, There is still some confusion on this matter but the official line at LC is that you cannot sell notes held in an IRA because of restrictions by Folio. I will attempt to get some clarity from LC on this issue and report back. In the meantime you can read this thread:
http://www.lendacademy.com/forum/index.php?topic=1674.0

Reply

GS November 9, 2013 at 10:14 pm

Thanks Peter.

Reply

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