P2P-Banking.com

Found this today. Someone using Lending Club’s new Note Trading Platform seems to speculate that a bulk buyer of notes might overlook the added zero in the value?

Retrieved Nov. 3rd, 2008 - some columns have been removed to allow better overview.

ABC interviewed Renauld Laplanche of Lending Club on ABC Money Matters. Laplanche says in the last 10 days over 1 million US$ in loans were funded and states that the default rate has been lower than 2% over the last 18 months. Watch the video.

Asked by Netbanker whether Loanio.com will face an SEC filing process and a quiet period like Prosper and Lending Club, Loanio CEO Michael Solomon answered:

“…from the perspective of (Prosper) going silent, it is actually great for us as I think we will quickly gain lots of lenders and hopefully we can wow them into sticking around. From a regulatory standpoint, we believe that at some point we will seek to introduce a secondary market platform, but we will focus the greater part of the next 12 month on building our platform and seeking out a national bank partner to cover the rest of the U.S. Our plans for a secondary market are too far ahead for me to contemplate at this time.”

A day after the start of the secondary market (see: “Lending Club allows lenders to trade their investments“) of Lendingclub.com, today 3 loans are offered for sale. I doubt that these Lendingclub loans will find a buyer, since they are all more then 60 days late and the discounts of the asking price versus the outstanding interest and accrued interest are rather small (13.64% to 23.13%). But maybe someone will purchase the first note (it’s only 20 US$) just to experience and test the process.

There have also been reports by lenders, that do not fit the new requirements, but were able to sign up at FolioFn, raising the question if these lenders can buy notes even if they are prohibited from lending themselves.

Lendingclub.com has introduced a secondary market for lenders. This is a major step, because one disadvantage for lenders in p2p lending was the lack of liquidity. Once the money was lend it was tied up (apart from repayments) until the end of the loan term (typically 36 months and more).

Through it’s secondary market - called Note Trading Platform Lendingclub allows lenders to offer their loans (or more precisely notes representing these loans) to other lenders.

Sellers list Notes that they would like to sell and enter an asking price. Buyers browse Notes that are available for sale, review payment history and the evolution of the borrower’s credit score, and buy Notes at the asking price. Buy orders received before 4pm Eastern time will generally settle same day, while buy orders received after 4pm Eastern time will settle next day.

Information about the Notes
Each listing contains the Note’s interest rate, issue date, outstanding principal, accrued interest, number of payments left, payment history to date, and the variation of the credit score of the underlying borrower since the issue date. Note, however, that the Notes are not “re-graded” over time, so you should not rely on grades assigned to Notes at the time they were issued to assess the current risk of a Note.

The Lending Club note trading platform is operated by FolioFn, a registered broker dealer. Foliofn charges to the seller a trading fee equal to 1% of the transaction amount. There is no fee charged to buyers.

Right now there are no notes offered for sale.

As reported in the previous post, Lendingclub.com is open for new lenders. However lenders have to meet two requirements:

Resident in one of 15 approved states:

The Notes are presently being offered and sold solely to residents of the states of Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Louisiana, Minnesota, Mississippi, Montana, New York, Rhode Island, South Dakota, West Virginia, and Wisconsin, and are not presently being offered or sold to residents of any other state, the District of Columbia, any other territory or possession of the United States, or any foreign country.

Compliance with Financial Suitability Standards and Investment Limits

I confirm that I (a) have an annual gross income of at least $70,000 and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000; or (b) have a net worth (determined with the same exclusions) of at least $250,000. In addition, I agree that I will not purchase notes in an amount in excess of 10% of my net worth, determined exclusive of my home, home furnishings and automobile.

I think Lendingclub probably will be adding more states to the list of approved states over the next months.

P2P lending service Lendingclub.com, which was in a quite period not accepting new lenders and bids from existing lenders, today announced that it completed it’s SEC registration. LendingClub is now resuming it’s full p2p lending service and again accepting new lenders.

See: Lending Club completes $600 million SEC filing

More to follow…

Lendingclub.com has in a new release some new account management features for lenders.
Lendingclub is currently not open for registration of new lenders.

On June 20th, Lendingclub.com filed a registration statement with the SEC to issue up to 600 million US$ in Member Payment Dependent Notes. The notes will be backed by loans and sold to lenders. The process for lenders remains pretty much the same as before the quiet period, only the legal setup will change to comply with regulation.

Link to SEC filing of Lending Club

Press release by Lendingclub regarding the SEC filing

Netbanker extracted some interesting data from the 100+ page Lendingclub filing. 

A recent Bankrate.com article gives an update on the development of p2p lending in the US.

Chris Larsen of Prosper.com sees the current financial situation as a chance for p2p lenders:

Home equity used to be the cash management tool for the credit-worthy borrower, and that has really, really dried up. In many ways, Prosper's three-year, 25,000 US$ loan is a pretty good proxy for what people were using home equity for — improving their home, starting a sole proprietorship, college costs and certainly for replacing credit card debt.

Javelin Strategy & Research is quoted that credit card debt is the main reason people want to use p2p lending:

We're forecasting that P2P lending specifically for credit card balances will grow from 38 billion US$ in 2007 to 159 billion US$ by 2012

The final advice of the article is:

Prospective borrowers and lenders would do well to thoroughly research P2P companies before jumping at the chance for a lower rate on a loan or a higher return on an investment. …