During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here.
Peer-to-peer lender Funding Circle defends Santander tie-up from The Telegraph (UK) – I agree with Funding Circle CEO Samir Desai that this is a natural extension for peer to business lending.
Lending Club on press:here from NBC Bay Area (video) – Roundtable discussion with Renaud Laplanche, CEO of Lending Club.
Credit Variables Explained – Does Income Matter? from Orchard – Analysis on what I consider to be a very important criteria for p2p investors: borrower income.
What is the impact of employer on Peer-to-Peer Loans? from Peer Lending Advisors – I have never seen an analysis of employer before…interesting.
NZ legislative regime for crowd sourcing and peer-to-peer lending as fund raising sources nears from Interest.co.nz – Crowdfunding and p2p lending are coming to New Zealand.
Lending Club vs Prosper for Borrowers: Four Big Differences from LendingMemo – A look at the different borrowing processes at Lending Club and Prosper.
Consumers Find Investors Eager to Make ‘Peer-to-Peer’ Loans from Yahoo Finance – The Wall Street Journal article that I wrote about earlier this week available without the WSJ paywall.
Not Banks, but Still Lending Money and Drawing Investors from the New York Times – Well researched article about the past, present and future of p2p lending.
Credit Variables Explained – Verified Income from Orchard -Verified income can make a difference to returns, the problem is that investors can no longer use it.
Shadow Banking: Peer-to-peer lending increasing from CNBC (video) – Short interview with Lending Club CEO, Renaud Laplanche, on CNBC’s Squawk Box.
Portrait of a Chinese P2P lender from Danwei – Really interesting article on the Chinese p2p lending sector including the profile of an individual investor.
U-Haul’s Crowdfunding Model For DIY Investing: Interview With AMERCO’s Jim Shoen from Seeking Alpha – Yes, the secured lending operation from U-Haul that I have covered before is still going strong.
From the Lend Academy Forum
The Lend Academy forum is where investors go to discuss p2p lending. Below are some topics that were being discussed this week.
Borrower Deceased – This unfortunately does happen from time to time…what does it mean for investors?
46 loans funding … – Commentary about the dearth of loans at Lending Club (it got down to 28 loans available on Friday – I think that was a record).
Prosper ditching “Scorex Plus” and moving to “FICO” mid August – Prosper is moving to a new credit scoring system this month.
“Verified income can make a difference to returns, the problem is that investors can no longer use it.”
…unless they invest on Folio, of course!
Very true Sarah. This is an advantage that Folio investors have over retail investors. By the time the notes get to the secondary market all verification has been completed.
Historically, (i.e. through 2012) the LC prospectus stated that LC verified the income OR employment of 60% of applicants. Assuming that this has not changed, the references made in both Oxnard “verified income” articles stating that 60% of applicants have their income verified is incorrect.
While I haven’t done this analysis I believe the Orchard people have. There is now a verified income flag on the historical download file so it is very easy to determine the exact percentage of loans where borrowers have had their income verified.
Actually I may have been way too generous in my response. The current April 2013 prospectus says this:
“In the limited cases in which we have selected borrower members for income or employment verification, for the 12 months ended September 30, 2012, approximately 60% of requested borrower members provided us with
satisfactory responses to verify their income or employment; approximately 8.4% of requested borrower members withdrew their applications for loans, and approximately 31.6% of requested borrower members either failed to respond to our request in full or provided information that failed to verify their stated information, and we therefore removed those borrower members’ loan postings”
Notice the words “limited cases” & the word “or”. Also note that the 60% number is not about the number of people who have their income verified, but rather the number of people who respond adequately to the verification request. A request that is made only………… in “limited cases”.
Now normally I wouldn’t ask this, but around here I can never be sure, so does anyone care to argue that the word “limited” actually means over 50%, or even over 40%? 🙂
Dan, I am not sure why you are arguing over the semantics of a phrase when as I said above the data is all publicly available. To satisfy my curiosity and for others who may read this thread let’s stick to the facts.
I just spent ten minutes downloading the latest file and finding the definitive numbers and here is what we have. As of Friday, in 2013 there have been 72,315 loans issued. Of those loans 38,296 have had borrower income verified – that is 52.96%.
Peter……..I find it interesting that you seem to be suggesting that the importance & responsibility of reporting accurately has somehow diminished…………. just because we can download the files for ourselves & check!
That’s great. You have just saved me countless hours, since I can now state any number or say anything without any concern that it be true or accurate because after all…………… most everything I post here & everywhere else on the internet is also information that can be checked. Wow.
PS…………52.96% isn’t 60%. So where did the 60% number come from? Was it ever accurate? Is anyone going to even acknowledge that it may not be accurate these days or going forward?
I am often amazed at the kinds of things that raise your ire. I just don’t see a huge difference between 53% (sorry, 52.96%) and 60% of borrowers income being validated. Clearly this is a number that fluctuates.
The Peer Lending Adviser piece “Impact of employer” on loan performance was interesting. Still, the data collected from only 2 months seemed a bit narrow & unambitious, (vis a vis the sample size, if nothing else) Off the top of my head I’m thinking how many people out of the 3700 loans issued in June/July 2011 could have possibly worked for Kaiser or B of A or any of the other outfits…………………….. but perhaps a more comprehensive study & results are only made available to their clients, I don’t know.
Also, if I were their client I’d be more interested seeing results on industry groupings, rather than specific companies.Or does that reduce the performance advantage? Again, I’m just speculating. Regardless, it’s always nice to see thought processes that venture onto less traveled waters.
I agree that industry groupings would be more interesting than just individual employers. Just not sure how to achieve that without some kind of employer SIC code classification in the download file – which is not available at this time.
Two similar questions:
1) who are the “Orchard people” and
2) who are the “Peer Lending Adviser”
I will be researching these questions now but was hoping someone could maybe help a little with these questions? TIA
Along these lines here is my post of “Just Who is Bryce Mason?” or P2P- Picks https://www.lendacademy.com/forum/index.php?topic=1336.0
Fair questions:
1) The Orchard people are a New York-based team who are putting together a suite of tools for p2p investors. They have not launched yet and when they do I will be sure to profile them. They will be a combination of Nickel Steamroller/P2P-Picks/NSR Premium all rolled into one along with an educational component similar to what I do here.
2) Peer Lending Advisors are a Seattle-based team who also have not launched yet but they will be a Registered Investment Advisor specializing in p2p lending.
Peter…………..I figured you’d say that you didn’t see a huge difference between 60% & 52.98%, so here are real world examples to illustrate the hugeness in difference.
Football season is coming up. I know you don;t bet but humor me. Let’s say that you flat bet $550 (which would win you $500) on a total of 100 games throughout the season & you win 53% of your wagers, while I do the same thing & I win 60%.
The results at 53% for you would be a record of 53 wins & 47 losses…………..profit $650
The results at 60% for me would be a record of 60 wins & 40 losses…………profit $8000!
Hit 53% year after year & you’d eke out a neat little profit & be known as a above average football bettor. Hit 60% year after year & you’d not only show a much larger profit………………but you’d also be a considered a living legend, & universally acclaimed as one of the best, if not the best football bettor in the country…………. I’m being completely serious. That’s the difference between those 2 numbers.
Just think, you wouldn’t have time to do p2p because you’d be too busy juggling your radio appearances, writing books on gambling,, giving lectures etc. Major casinos will trip over each other offering you consultant positions. Just like the movie “Casino” starring Robert De Niro was loosely based on legendary bettor Frank “Lefty” Rosenthal,……………..they will make a movie about you too.
Oh, but wait, scratch all that as you didn’t hit 60%. Hell 59 or 58% would still put you among the top 1%…………..but 52.98%, & you’re just some guy. 🙂
Sure, when the baseline is 50 then 60% is a huge difference from 53%, by a factor of more than 300%. But I don’t buy your analogy in this case. We are not talking a baseline of 50%, we are talking a baseline of zero. In this case 60% is just 13% more than 53%. Not quite a rounding error but hardly equivalent to the difference you describe.
Not really, but never mind.
Peter…………..BTW, I agree that the number in question does fluctuate, it is highly unlikely that it could have actually fluctuated radically enough historically to make the current average 60%.Just FYI.