How Lending Club Deals With 121+ Days Late

Much to my chagrin, I have managed to pick a Lending Club loan that is now 121+ days late. I thought it a good time to go over how Lending Club handles these situations… They take a different approach and it seems a much more clear cut approach from my account’s perspective.

Here is the page where Lending Club details there approach: http://www.lendingclub.com/info/collection-agencies.action. Here is the relevant portion:

If a payment can not be collected for 3 months after the loan was sent to the collection agencies (that is, 120 days past due), the loan will be removed from the lenders’ portfolios as a total loss (a charge-off). Lending Club will continue to collect on the charged-off loans until the loans are finally packaged and sold to a debt purchaser, which may take another six to nine months. Any recovery of the loan will be credited to the lenders’ accounts as extraordinary income.

The key points:

The loan is immediately defaulted as a total loss. (Total loss is good from a tax perspective.)
Any future collections or debt sale will be credited back as extraordinary income.
Lending Club will work the loan as it see fit and gives no definite time frame on a sale: “may take 6 to 9 months”

This is a clean approach from my perspective (trying to keep an accurate representation of the account in Quicken.)

I also now have a total of 4 loans from Lending Club that are in some form of late and I continue to move money out on a semi-regular basis until such time as Lending Club reopens to lenders. Here is my current account screen.

Lending Club Defaults

2 Comments | May 16, 2008 | Filed Under Collections, Lending Club | 2 Comments

Doug Fuller Update Legal Test

The New Agency Test aka Legal Test has been updated via the blog: Legal Test Update

We have obtained service on 12 of the suits – and have sent “proof of service” back to the courts. Another 41 have been formally entered on the dockets of the court in and are currently out for service. I would believe that some number of these have been served, but we only have a “batch” interface with the process servers, so I don’t have real time date on this. Finally there are 7 suits on which we are waiting for the “file stamped” copy back from the court to send out to service.

At this point, we keep pushing for service. Once we have received proof of service, the minimum time to move for default judgment is 30 days. As a rule, the law firm will wait until 45 days after the service date to file a request for default judgment. Thus far, none of the defendants have “answered” the suit.

I have opted into this lawsuit test (I did not take the junk debt sale price of ~$30 for my loans.) I have hopes that this will eventually yield more than the $30. Either way, I will keep me readers informed if any additional information becomes available.

No Comments | May 9, 2008 | Filed Under Collections, Prosper.com | Leave a Comment

Prosper Debt Sale Offer Roughly 0.93%-4.83%

On Friday, Doug Fuller gave an update on the debt sale.

Synopsis: Prosper put the bid file on an auction site, 8 bids received, all the bids were very disappointing, Prosper has not accepted a bid yet, and is exploring options for getting a better deal.

When asked how disappointing Doug Fuller further responded via comment…

In round numbers, the bids that we received were approximately 1/3 the prices bid in December. The price difference between the August and December represented about a 20% reduction.

Ok so then the next question is how bad is that?

Looking at the December results we see that the range of bids was from 2.8%-14.5%. Extrapolating, that would mean the current bids where roughly 0.93%-4.83%… I would say that is pretty disappointing… (I received a little over 25% from my 1st loan in a debt sale.)

I am willing to let Doug Fuller find other options… 3 cents on the dollar sucks.

No Comments | May 5, 2008 | Filed Under Collections, News, Prosper.com | Leave a Comment

My Second Lending Club Late

My second lending club late has infected my account. It was a small loan to a super clean borrower… These loan are not the one that typically go late. I have high hopes that it will cure…

Chech out these stats.

FICO Range:	714+
Earliest Credit Line	11/2000
Open Credit Lines	6
Total Credit Lines	7
Revolving Credit Balance	$4,500.00
Revolving Line Utilization	13.00%
Inquiries in the Last 6 Months	0

Accounts Now Delinquent	0
Delinquent Amount	$0.00
Delinquencies (Last 2 yrs)	0
Months Since Last Delinquency	0
Public Records On File	0
Months Since Last Record	0

Clean as a whitsle…

Much has been made of the Prosper collections (or lack thereof until the hiring of Doug Fuller). I wonder… will Lending Club’s collections be any better? I hope so, but only time will tell. I will be sure to keep my readers informed.

Update… I just logged into my LC account and this loan is back to current…

If you would like to try Lending Club I suggest you sign up with a referral link. You will receive $25 signup bonus ($50 if you deposit $1000 or more), which covers your 1st (or first 2) defaulted borrowers. Here is a referral link to sign up and receive the $25 bonus: Signup via this link and receive a $25 startup bonus.

Cheers.

2 Comments | March 26, 2008 | Filed Under Collections, Lending Club | 2 Comments