Start Consolidating mortgage loans htm

Consolidating mortgage loans htm

I brought this up with Rob and he made a pretty convincing argument.

His experience was that if a loan was going to default, it would typically go sour before the end of the 9th month. But if true, it sort of takes care of my concern over the aging of the loans. He also told me that Lending Club uses debt collection practices on all borrowers who default.

This runs the gamut between making nice reminder phone calls, to working out a payment schedule to legal recourse.

Here’s why: Say I open an account and make 100 loans in my first year, 200 loans in my second year and 500 loans in my third year.

I “invest” as little as $25 per loan so I can easily get lots of diversification. If those defaults are all from the first batch of loans, we’ve got a real problem.

Loans are ranked “A” through “G” to approximate the risk of default.

Some time ago, I read on the site that the default rate for Lending Club is averaged for all loans 120 days or older.

Sounds good, but my understanding is that the default rate for consumer loans increases with age, even for those who have high credit scores.

(I looked on the site and couldn’t see any details about default rates per se other than that the overall default rate is 3%.) Most Lending Club loans are for 36 months (minimum) and they have far more new loans than old. Lending Club is doing a good job of growing the company.

It’s nice to hear if you’re a lender, you still have a chance of collecting after the loan defaults.

If Lending Club were to go out of business, what happens to the money you lent the borrower? Do you suddenly find yourself in the personal debt collection business?

Borrowers flock to Peer-to-Peer lending because they can often borrow money cheaper than from other sources. A typical situation is one that a person has a need to borrow money through Lending Club at (let’s say) 7% in order to pay off credit cards that are charging 15%.