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Roundup of Social Lending News – August 25, 2012

by Peter Renton on August 25, 2012

Every Saturday I bring you the latest news from the world of peer to peer lending. These are the best of the news articles and blog posts from around the web that I shared on Twitter this past week.

Everyone should check out the latest Prosper blog post below. Their July investor update shared this interesting tidbit: credit card delinquencies in the U.S. are the lowest on record, despite the fact that we still have high unemployment and a sluggish economy. Fascinating. There was also an excellent article this week on Kung Fu Finance by Larry from Investor Junkie, who frequently appears in these news roundups with his own blog. There were also a few Lending Club updates from bloggers. Enjoy your weekend.

Five Cent Nickel – Lending Club Update – August 2012

BBHart.com – Lending Club update – 10 months later

Kung Fu Finance – Adventures in Income…Peer-to-Peer Investing

Shareable – The Quickstart Guide to Peer to Peer Lending (my guest post)

Troy Davis – EXAMINING BORROWER PRIVACY IN PEER-TO-PEER LENDING

Prosper – July, 2012 Investor Monthly Update

Random Thoughts – Lending Club Loan Amount: Defaults for Credit Grade B Loans

Wall Street Oasis – WSO CDO Update August 2012

{ 16 comments… read them below or add one }

Dennis August 26, 2012 at 12:02 am

Not sure of the best place to post this……..

All of last week I had only 1 note originate out of 36 in review with Lending Club (between 2 LC accounts). The notes are fully funded but just sitting there. I’ve never experienced this kind of slowness before at LC. Is anyone else experiencing this?

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Bryce M. August 26, 2012 at 8:43 am

Loans are getting funded faster, but the underwriting process is labor intensive and takes the same amount of time. Therefore, the loans sit there at 100% for longer periods, giving the impression if slowness.

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Peter Renton August 27, 2012 at 1:43 pm

Bryce’s comment is spot on. Underwriting is still a somewhat manual process and LC continue to add manpower in this area all the time but when their volume increases quickly this process can slow down somewhat.

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Dennis August 27, 2012 at 7:31 pm

As of today at 9:30 pm EST (Monday) still none of my funded LC notes have been issued. 4 did get cancelled though, but I’m still sitting on 32 fully funded notes for 7 days and counting. The last time I saw anything issued was last week on Monday (1 note). Many of these notes took longer than 7 days to fund as I have most in D – G. I’ve just not experienced this before with LC in my almost 1 year there.

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Lender John August 27, 2012 at 8:53 am

Has anyone experienced any unusual problems lately with Lending club or FolioFn in particular?
I keep a few hundred notes for sale and for the last few weeks I’ve seen some or all of them expire at seemingly random times.
I’ve also noticed that the option to instantly transfer money in through PayPal disappeared from one of my accounts and I didn’t add a bank account or make any other changes.
On the upside, they seem to have fixed some UI problems with FolioFN.

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Dan B August 27, 2012 at 12:03 pm

What do you man by random times? Do you mean before it was supposed to? I haven’t noticed anything unusual, but then I don’t really keep track of expiration dates. As for paypal, on one of my accounts, the same thing happened a bit over 2 years ago. When I called to inquire, I was told that the paypal transfer option is supposed to only be available for the initial investment &/or only up to a certain aggregate dollar limit. I don’t recall exactly, but I’m going to guess & say $5k. So…………..

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Lender John August 27, 2012 at 12:47 pm

I mean significantly before they were supposed to. A number were set to expire on Aug 29th.. and instead expired on the 24th.

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Peter Renton August 27, 2012 at 1:41 pm

I am not a big user of the Folio platform so I can’t comment on any problems there – Dan B. would be able to provide a much more informed opinion.

As for Paypal and LC I can say this. It is supposed to be used for opening an account and for transfers up to $5,000. I believe there was a loophole that allowed investors to continue investing in this way without a linked bank account but earlier this month that loophole was closed. It didn’t make sense for LC to pay a 2% charge on every new investment, but they are willing to pay it for a first investment to get everyone started right away.

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Lender John August 27, 2012 at 1:48 pm

That makes sense.
One person’s bug is another person’s feature.. (I may be giving away my profession here)
I’ve contacted LC about the foliofn weirdness and they are hopefully looking into it.
I’m a fairly heavy user of the platform and usually have over 1000 notes for sale at any one time. Since I’m from one of the states that doesn’t allow direct investing, I’m quite dependent on FoilioFn.

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Dan B August 27, 2012 at 2:06 pm

Lender John…………You’re too modest. You’re a very heavy user of Folio. I’ve never come close to having that many notes for sale. There was a time when I had 400-500 up when I was re-balancing a portfolio & getting rid of some declining credit scores, but that was a one time thing. Of course I’m not in one of the Folio dependent states & I do very little buying there.

So, are you essentially putting up lots of notes for sale with a 3-5% premium & simultaneously buying others at a slight discount??

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Lender John August 27, 2012 at 6:11 pm

More or less. I view it as a continuous re-balancing of my portfolio. It isn’t so much geared towards making profit from the sale as it is for avoiding loss from defaults, late notes, etc. Whenever possible I prefer to hold the notes for the first third or half of their term in order to maximize my returns.

Larry Ventura August 27, 2012 at 2:15 pm

Hi LJ, I responded to your post below….

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Larry Ventura August 27, 2012 at 2:11 pm

The last 2 weekends I had all my late loans for sale expire on Folion, but i make a screen print everyday. The expiration dates on those orders were still days away. This weekend I had 10 loans expire, even though the expiration date on the sale was 8/31. I update my listings using REPRICE, and the expiration date displayed gets updated, but i wonder if some date field in the background isn’t updated.

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Lender John August 27, 2012 at 2:27 pm

It sounds exactly like what happened to me, except with a few more notes.
Larry, you should definitely email LendingClub, maybe they will put more effort into tracking this down.
When I contacted them, they seemed surprised as if they haven’t heard about this issue before.

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Larry Ventura August 27, 2012 at 2:43 pm

Just sent them an email.

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Sean August 28, 2012 at 10:55 am

I saw this as well – 11 loans expired on Saturday that had expiration dates set for late this week. They were also existing notes for sale that I used Reprice to extend. I don’t remember whether I actually changed the price for this set or not.

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