Simplified Secondary Market Investing on Lending Club

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Investors in P2P loans have long wished to get some guidance on pricing and risk when trading on secondary markets like folioFn (or private platforms for whole loans). Till date the only thing they could do was ad-hoc analysis basis on some factors but it made most uncomfortable. The questions like how is this the right price ? Will prepayment of this performing loan result in a loss if I pay a premium always haunted us.

Enter Croudify !!! a trading platform provides just that. Croudify has updated ratings and pricing guidance on each and every loan that was issued on Lending Club and is integrated completely for you to trade seamlessly.

To make your decision simpler it even provides a Buy & Neutral (Sell & Keep) recommendations using a proprietary selection criteria.

Buy/Sell Recommendation

Using a combination of updated ratings (Default & Prepayment) recommended price and propriety algorithm we provide three ratings for a loan, “Must Buy”, “Buy” & Neutral. For an investor struggling with millions of filters and data overload that is the only single data-point they can use to make a buy decision.

Similarly for notes owned by an investor we provide “Sell”, ‘Keep”, and “Neutral” ratings. These ratings can help investor to make an informed decision for portfolio management and tax planning.

Ratings Engine
Croudify has built a investor focused loan default model that rate each loan through the life. These models use advanced analytics and Machine Learning to assign a ratings to each loan through its maturity cycle. The ratings are updated daily as new information is received. To create this engine we have used more than 11 Million loan records and have used the same rigor as we will use to underwrite a new loan.

Interest Rate Determination

Once a risk rating is assigned to a loan we get the pricing of the loan using the current interest rate on new loans and the forward interest rate curves.  This interest rate determination allows an investor to compare mature loans with new loans on a similar scale.

Prepayment Discount

Finally, we discount the loan price using a proprietary prepayment model. As you would expect a loans propensity to prepay goes up as the outstanding loan balance decreases and paying a premium at the later part of cycle can result in significant losses if loans prepay faster. The prepayment discount ensures that you are sanitized from these issues.

Pricing Guidance 

All these steps are combined to come up finally with a pricing guidance for a particular loan. This guidance is updated as the loan matures daily.

Cost – FREE
We are currently in beta face till the end of 2016 and are completely free.

Marketplace update Frequency
The Secondary market on Lending Club is updated every 5 minutes and out platform follows the same schedule with a 1 minute delay. So if the data on Lending Club is updated at 10:05 our data is updated at 10:06*.

Coming Soon

  1. Automatic execution: We are in the process of completing our automatinc execution engine that will be launched in Mid November.
  2. New Loans Ratings: We are in works to launch our proprietry ratings for new loans soon. This will again provide a single point of guidance for buying loans.
  3. Customized recommendation: We are also developing a customized buy & recommendation engine that will look at your portfolio and your goals to give you custom buy & sell recommendations

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One thought on “Simplified Secondary Market Investing on Lending Club

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