Countries

Lending Club Observations

wiseclerk 6 Comments

Recently I noticed two changes on p2p lender’s Lending Club website.

On the statistics page the link to download the loan data was removed. Before it was possible to download the complete loan data since inception of the service. Furthermore the predefined setting for the parameter “Loans issued from” is set on March 1,2008 now. That means, if you look on the page and do not change that parameter manually you see how loans performed that were issued between March 1, 2008 and today. Older loans issued between June 1, 2007 and Feb 29, 2008 are not included in the displayed results.

When I noticed that, I was reminded of what Prosper did with it’s statistics. Prosper segmented it’s loans (e.g. prosper select index) and cited only results for better performing segments in press releases. Furthermore the predefined values on Prosper’s statistic page, were set in a way that lowered the late payments and default ratios compared to an average over all Prosper loans.

But Lending Club had successfully positioned itself with transparency a core value in the past, so I asked Lending Club to comment on the reasons for the changes.

Rob Garcia, Director Product Strategy told P2P-Banking.com:

This is a temporary situation. We chose to take down the files due to privacy concerns raised by our customers. We are working to address these concerns in a way that continues to provide full transparency to platform data, while protecting the privacy of our customers….

On the setting of the parameter he stated:

The default setting for the statistics page is a year. So since we are now in March, the “From” date is defaulted to March 2008. This is to show the most relevant annualized indicators for the last year. Users can then change the “From” and “To” dates to explore the indicators for a specific time frame they may be interested in, including from inception (June 1, 2007). We did this based on numerous email inquiries from lenders asking for annual default rates instead of a general default rate since inception (so that they can compare annual defaults to annual interest rates to get actual net returns). We’re looking at tools to make that calculation easier…

Yesterday Lazy Man wrote about his observations on how Lending Club reports risk. The posted screenshots show that interpretation of the risk figures is not obvious under certain circumstances.

TuitionU acquires p2p lending service GreenNote

wiseclerk

TuitionU.com, a wholly owned subsidiary of Cology Inc., today announced the acquisition of GreenNote (see earlier description), a p2p lending service for student loans. The agreement enables TuitionU.com to add peer-to-peer lending technology to its student loan options. TuitionU says not-for-profit credit unions that are currently featured will be joined in the future by foundations, charities, corporations and other community lenders to further enhance the network.

(Source: press release; related: Netbanker article)

Sobralaen brings p2p lending to Estonia

wiseclerk

Today Sobralaen.ee, the first Estonian p2p lending service, has launched.

Sõbralaen’s borrowers fill in a loan application for up to 15,000 EEK (approx. 1,200 US$), specify the loan length (up to 2 years), maximum interest rate and sign the loan application. This application will start an auction, during which Sõbralaen’s investors can bid for the right to invest in that loan. When making a bid, Sõbralaen’s investors specify how much they are willing to invest and how high interest rate they are looking to earn. The investment amount can be between 100 and 15,000 EEK. Before making the investment, the investors can see the borrower’s credit score, history of previous Sõbralaen transactions and also personal details. Investors also have the possibility to ask various questions from the borrower. In the end of the auction, the system will automatically pick the best bids and combine them into one loan. Sõbralaen’s system will thereafter manage the rest of the loan process from the payment of loan to debt collection.

Estonians are fast in adapting new internet technologies. This is reflected in the process of Sobralaen’s sign-up, too. Users identification is done at the moment of sign-up electronically. This is possible, because users can only sign up using a government issued ID-card (currently 80% of Estonians had an active ID card – but only 20% make use of its functionalities so far) and a smart card reader or Mobile-ID. Furthermore banking transactions and court documents are signed with digital signatures.

Sobralaen was founded by Pärtel Tomberg, Mikhel Tasa and Martin Rask.
I was invited to test-drive the platform in summer 2008 while it was still under development. The usability was good and I liked the detailed FAQs that explained everything to the point.

Continue reading →

Lubbus.com – p2p lending in Spain

wiseclerk 1 Comment

The Spanish translation of p2p lending is “Préstamos P2P”.  In 2008 Vicente de Luna (Economist and lawyer, expert on finance and taxation of companies) and Maria J. Bustamente (Lawyer specialized in collection and recovery) founded the company P2P Lending, S. L. The company operates the p2p lending site Lubbus.com. The site is online since January 1st, but not in operation yet. It is based on invitation only registration of users. For the  launch Lubbus awaits the go ahead of the Data Protection Authorities, which currently are reviewing the invitation system.

Users can be registered only through an invitation from a relative or friend, who benefits or suffers (in case of non-repayment) economically (0.10%) of any transaction the invited user makes. There is also a voting mechanism.

Lubbus.com charges a fee of 1% from lenders and 1.5% of the loan amount from borrowers. Lubbus offers the borrowers optional insurance which covers risks like unemployment (2.5% fee of the insured amount).

Lubbus has a secondary market (“mercado secundario“). The unusual feature about it is, that not only lenders can trade loans, but the secondary market also allows borrowers to repay early and let another borrower step in and continue to use the remaining loan. Lubbus charges a 1% fee on transactions. As a lender on an affected loan I would be wary of the exchange of the person I did lend to.

Credit scores used are supplied by Delta-R and Axesor.

Founder Vicente de Luna told P2P-Banking.com:

It is quite possible that in March [it] can function .. as the social platform. Community Projects will be effected through a foundation that works with local NGOs in various countries of the Third World. If all goes well, the business model is to develop in all Spanish speaking countries as possible (2010). Now it is possible for users [with an] domiciled bank account in Spain [to sign up]. We are the first Spanish company to invest in the p2p lending [market]. We hope to have over 3000 registered user in the first half of 2009.