I first noticed these loans back in July when I did a download of the entire Lending Club loan history. There was a new column added to the download file called policy_code. And some recent loans had been added that had a policy_code value of 2, whereas previous loans had a value of 1.
I had been told some changes were coming where different kinds of loans were going to be made available and this looked like it. When you look at these Policy Code 2 loans in the downloadable CSV file you will notice they are different. In fact there are several differences between these loans and the regular loans. For Policy Code 2 loans:
- All of the credit data fields are blank.
- They are all F and G grade loans with interest rates ranging from 23.5% to 26.06%.
- They are all 36-month loans.
- Average loan size is around $8,500, well below the roughly $14,000 average of all loans.
- Maximum loan size is $15,000.
These Policy Code 2 loans have been growing rapidly in volume. The first one was issued on July 12, 2013 and each month has seen a significant increase:
|Month||Policy Code 2||Total Loan Volume||Percent|
|July||$2.7 million||$173.5 million||1.6%|
|August||$10.3 million||$190.3 million||5.4%|
|September||$15.4 million||$203.4 million||7.6%|
|October||$18.3 million||$223.1 million||8.2%|
When I chatted with Scott Sanborn, the Chief Operating Officer at Lending Club, about these new loans he was able to answer many of my questions and clarify exactly what is going on. So here is the rundown on Policy Code 2 loans: [Read more…]