Harmoney

[beacon]

for all the loans in status arrears or current, by taking their loan term less payments remaining. This should give the term the loan has been “active”. You get a total months figure for each loan grade, and then you divide by loan counts to get the average length of loan...

Excluding Paid-offs from calculation can only give you expected return from your current portfolio - rather than actual overall. Also, use of months and Harmoney classification thereof should increase margin of error.

[mccollr]

AI assists in assessing credit risk.

https://www.cio.co.nz/article/632369/ai-helps-harmoney-improve-ability-assess-credit-risk/

[alistar_mid]

Interesting concept Alistar. Segregating and analysing v1.5 only loans (rather than your to-date totals) might provide you purer insights by grade and be more useful. :)

oh yeah right, apples and oranges.

good point.

[leesal]

I've covered what I do/have done a while back - the most basic was to write of any portion in arrears over 31 days - at the time I prefered to over estimate losses (still do). I still track that so I know if a big hit is likely to come through - but I'm not seeing this is really necessary, but nice to have. With over 100K, defaults, at the current rate I'm getting them, are looking stable. I'm expecting some growth in defaults but predict compounding will keep up with it at the very least. If that changes I'll see it coming.

I'm in a unique situation that I've invested 100K quite quickly (3-4 months) and have not withdrawn, so I'm getting quite a good picture of what's going on without being tainted by deposits/withdrawals. I'm surprised at, what is currently, a rock steady straight line of growth. Perhaps I've just hit on a reasonable loan selection process and range? [I gave up trying to get an accurate figure when the new rates etc. came in - not worth the effort for me - started up another account to be a little more conservative, but have pretty much fallen back to the same as my original account as it's doing well and looks like the sweet spot I'm after and still fit's with the new rates].

One thing I did in the lead up to Christmas was to tighten up my selection process as it's been shown that P2P is similar tos Credit Card default rates - this period being a higher default rate period. This has created a bit of a 'wobble' as I couldn't match enough loans and my available principle crept up to >10K (it comes back quickly!), working on getting most of it back in now. It is a finicky beast, with so many influences...


An elegant way of treating, that will give you a conservative view; What is the payment rate of 31-60 that you are finding so far? Are you taking the data from the "export" button in reports, or doing your own ageing?





Aware of what it means - not sure how PP at a lower rate, is different from PP at a higher rate, hence my query.



Some insurers use credit risk as part of their underwriting criteria. This is due to the relatively high correlation between loan default and claims incidence (through moral hazard - eg using imdemnification to ones advantage to engage in risky behaviour).

So - imagine holding a $20000 Harmoney loan with PP, in the knowledge that layoffs are coming...

The thought process of a borrower who has diligently settled all their past obligations (grade A), vs somebody with a track record of defaulting (grade E/F) may lead to different behaviours. Thus E/F on average showing an increased incident in envoking payment protect. Would expect this to hold true here.

[leesal]

Your "harm est chg%" figures differ from Harmoney stats a bit leesal, more than rounding down to 1 decimal place should. Eg., In Harmoney supplied stats, F charge-off averages out at 8.06% in v1.5, not at 7.6%. Where are you sourcing yours from?

So those stats are specific to my portfolio...

Each grades "harm est chg%" is the weighted average of the est default risk of loans I hold... So for F, I hold nearly all F1 F2 and F3, and very few F4 or F5. So overall my average default on F's will be lower then simply the average of grades F1 to F5.

[beacon]

So those stats are specific to my portfolio...

Each grades "harm est chg%" is the weighted average of the est default risk of loans I hold... So for F, I hold nearly all F1 F2 and F3, and very few F4 or F5. So overall my average default on F's will be lower then simply the average of grades F1 to F5.

Cut to perfection.... Sometimes that can be the critical difference between exceptional and mediocre... :)

[alistar_mid]

Cut to perfection.... Sometimes that can be the critical difference between exceptional and mediocre... :)

the bigger question is what are you doing up at 5:56am

[beacon]

the bigger question is what are you doing up at 5:56am

I am an early bird...:)

[Soolaimon]

I am not up with all this technical analyzing of returns but I thought some may be interested in a little exercise I have just done. My first loan purchase was in Sept 2014, In the next 4 months I took out 88 Loans all 36 months and for $ 25 to $ 150. Of those 88 loans, only 8 went full term and there are 3 still running and for some reason well behind in payments. 10 were charged off. The spread of grades was pretty even through A to E with only 5 F's.
I have steadily invested since but have to take 60 month loans to keep up and as far as RAR goes it was up around 15-16% for the first 6=8 months but then went down to about 13% where it has stayed ever since. ( now at 12.7%)
Still happy enough but no new funds in for more than a year now.

[leesal]

I am not up with all this technical analyzing of returns but I thought some may be interested in a little exercise I have just done. My first loan purchase was in Sept 2014, In the next 4 months I took out 88 Loans all 36 months and for $ 25 to $ 150. Of those 88 loans, only 8 went full term and there are 3 still running and for some reason well behind in payments. 10 were charged off. The spread of grades was pretty even through A to E with only 5 F's.
I have steadily invested since but have to take 60 month loans to keep up and as far as RAR goes it was up around 15-16% for the first 6=8 months but then went down to about 13% where it has stayed ever since. ( now at 12.7%)
Still happy enough but no new funds in for more than a year now.

Thanks Soolaimon. Could have been a bad first up batch, low sample size.

Harmoney 1.0 suggests you should have only had 6 defaults, in all likelihood you'll end up with 12 or 13. Hopefully the rest of the loan book isn't running similar.



Grade
3 yr default
loans

defaults


A
0.5%
16

0.1


B
1.6%
17

0.3


C
3.6%
17

0.6


D
5.9%
17

1.0


E
12.3%
16

2.0


F
29.4%
5

1.5


Tot

88


5.4




What is your profit on these loans if any? (eg taking your interest received and deducting all premium outstanding, whether defaulted or in arrears)

[RMJH]

I am not up with all this technical analyzing of returns but I thought some may be interested in a little exercise I have just done. My first loan purchase was in Sept 2014, In the next 4 months I took out 88 Loans all 36 months and for $ 25 to $ 150. Of those 88 loans, only 8 went full term and there are 3 still running and for some reason well behind in payments. 10 were charged off. The spread of grades was pretty even through A to E with only 5 F's.
I have steadily invested since but have to take 60 month loans to keep up and as far as RAR goes it was up around 15-16% for the first 6=8 months but then went down to about 13% where it has stayed ever since. ( now at 12.7%)
Still happy enough but no new funds in for more than a year now.
Looks like you were not sufficiently diversified. Best to have, say, at least 100 per grade.

[BJ1]

Just as a matter of interest people: when looking at your export sheet, what proportion of live loans which should have received a payment recently are recorded as Current but actually have had no payment this past month - say up to and including the 15th of the month. I have 4% of my live loans recorded as Current which are actually in arrears. That's on top of the 2.5% recorded as in arrears. Anyone else chatting to Harmony about this?

[777]

Just as a matter of interest people: when looking at your export sheet, what proportion of live loans which should have received a payment recently are recorded as Current but actually have had no payment this past month - say up to and including the 15th of the month. I have 4% of my live loans recorded as Current which are actually in arrears. That's on top of the 2.5% recorded as in arrears. Anyone else chatting to Harmony about this?

Probably reflects the delay in actual payment and you actually being credited with it. Usually 2-3 days.

[Soolaimon]

Thanks Soolaimon. Could have been a bad first up batch, low sample size.

Harmoney 1.0 suggests you should have only had 6 defaults, in all likelihood you'll end up with 12 or 13. Hopefully the rest of the loan book isn't running similar.



Grade
3 yr default
loans

defaults


A
0.5%
16

0.1


B
1.6%
17

0.3


C
3.6%
17

0.6


D
5.9%
17

1.0


E
12.3%
16

2.0


F
29.4%
5

1.5


Tot

88


5.4




What is your profit on these loans if any? (eg taking your interest received and deducting all premium outstanding, whether defaulted or in arrears)

Hi Leesal, I will get to this in the next day or so, bit on at the moment, just had another couple of defaults tho.

[BJ1]

Probably reflects the delay in actual payment and you actually being credited with it. Usually 2-3 days.
Not so. There are real issues with Harmoney's recording of overdue payments and have been for months.

[CageyB]

In case anyone cares, here are my results, investing since March 2016.

Total RAR (from Harmoney): 15.80%
Total loans: 962
All 36-month loans
Loan breakdown by $invested: A 19.4% / B 25.7% / C 21.7% / D 20.5% / E 12.7% / F 0%
# Loans in arrears >30 days: 7
# Loans canceled: 11
# Loans paid off: 354
# Loans charged off: 12
Charged off breakdown by Grade: A 0 / B 1 / C 1 / D 1 / E 9 / F N/A

[alistar_mid]

In case anyone cares, here are my results, investing since March 2016.

Total RAR (from Harmoney): 15.80%
Total loans: 962
All 36-month loans
Loan breakdown by $invested: A 19.4% / B 25.7% / C 21.7% / D 20.5% / E 12.7% / F 0%
# Loans in arrears >30 days: 7
# Loans Charged off: 12
Charged off breakdown by Grade: A 0 / B 1 / C 1 / D 1 / E 9 / F N/A

Nice, thems some good stats.

[CageyB]

Thanks. Since 1.5 I've been consciously putting less into A and trying to invest more heavily into the C and D grades.

[beacon]

In case anyone cares...

People may not write here regularly, but if this thread is over 200 pages, they do appreciate and engage, when they can. By the way, Enviable stats CageyB.

Your numbers are too thin for confident analysis, Soolaimon, but good to see you are reasonably content. Defaults can impact highly on thin numbers, skewing observations.

[leesal]

Not so. There are real issues with Harmoney's recording of overdue payments and have been for months.

Agreed.

If you go into Loan Export, The data there shows the arrears accurately (Time in arrears (days))

To take a shot in the dark as to why. It could be "Status" reporting relate to Harmoney's own internal Credit Control. (eg "CURRENT" = ???successful contact with borrower, adequate explanation & plan to get back on track???).


Loan ID

Date
Status
Time in arrears (days)
Grade


LAI-00106881

22/08/2017
Arrears
31-60
E3


LAI-00108053

24/08/2017
Current
31-60
D1


LAI-00112018

29/09/2017
Current
1-30

F4

[Soolaimon]

Thanks Soolaimon. Could have been a bad first up batch, low sample size.

Harmoney 1.0 suggests you should have only had 6 defaults, in all likelihood you'll end up with 12 or 13. Hopefully the rest of the loan book isn't running similar.



Grade
3 yr default
loans

defaults


A
0.5%
16

0.1


B
1.6%
17

0.3


C
3.6%
17

0.6


D
5.9%
17

1.0


E
12.3%
16

2.0


F
29.4%
5

1.5


Tot

88


5.4




What is your profit on these loans if any? (eg taking your interest received and deducting all premium outstanding, whether defaulted or in arrears)

Back again. Figures for those 88 loans as follows. Total $ invested $7285 ,gross interest $1136.77 less 101.70 fees, less $ 255.78 lost capital through defaults. This is over my first 4 months, all 36 mnth loans, after the 3 years.
Not sure how you calculate actual earnings as all returns were reinvested.
Does not stack up with Harmoney's 12-15% returns, that's for sure

[RMJH]

Thanks. Since 1.5 I've been consciously putting less into A and trying to invest more heavily into the C and D grades.
Me too but way behind your returns!

[Cool Bear]

In case anyone cares, here are my results, investing since March 2016.

Total RAR (from Harmoney): 15.80%
Total loans: 962
All 36-month loans
Loan breakdown by $invested: A 19.4% / B 25.7% / C 21.7% / D 20.5% / E 12.7% / F 0%
# Loans in arrears >30 days: 7
# Loans canceled: 11
# Loans paid off: 354
# Loans charged off: 12
Charged off breakdown by Grade: A 0 / B 1 / C 1 / D 1 / E 9 / F N/A

15.8% pa. is a fantastic return for any investment!

[beacon]

Back again. Figures for those 88 loans as follows. Total $ invested $7285 ,gross interest $1136.77 less 101.70 fees, less $ 255.78 lost capital through defaults. This is over my first 4 months, all 36 mnth loans, after the 3 years.
Not sure how you calculate actual earnings as all returns were reinvested.
Does not stack up with Harmoney's 12-15% returns, that's for sure

If I have understood it right, those numbers are after 3 years of investment ...
Simplistically, 1136.77 gross interest for $7285 invested = 15.6% over 3 years (assumes no early repaid!)
Fees 101.7 over 1136.77 interest = 9% over 3 years vs 20% pa in v1.5
Obviously, I'm missing something

[Vagabond47]

Hmmm, a $30,000 loan for home improvements with a residential status of Boarding. Am i the only one that thinks there is no point at all in reading the loan details as they are obviously not at all verified?

[leesal]

If I have understood it right, those numbers are after 3 years of investment ...
Simplistically, 1136.77 gross interest for $7285 invested = 15.6% over 3 years (assumes no early repaid!)
Fees 101.7 over 1136.77 interest = 9% over 3 years vs 20% pa in v1.5
Obviously, I'm missing something

without stealing Soolaimon's thunder

4 months ago I modelled the expected interest with some assumptions on early repay and default. I used Harmoney's data in the dashboard (eg currently 690k issued, and 278k paid off), you got an annual early repay rate of approx 35-40%. Considering Soolaimon's mix of fewer F's it would be in the higher end of that band

Modelling that gives interest around about as Soolaimon is showing. (3 year loans also on average will pay back 30% of their principal in the first year, ontop of nearly 40% repaid early). So you get somewhere around 60-65% of principal paid off first year.

[Soolaimon]

Back again. Figures for those 88 loans as follows. Total $ invested $7285 ,gross interest $1136.77 less 101.70 fees, less $ 255.78 lost capital through defaults. This is over my first 4 months, all 36 mnth loans, after the 3 years.
Not sure how you calculate actual earnings as all returns were reinvested.
Does not stack up with Harmoney's 12-15% returns, that's for sure

Back yet again, this time for an apology. My skills with a calculator are not good. This time done manually as I was somewhat suspicious and worried by my original figures. Sorry for any inconvenience.
Total Loans (all 36m) 88
Full term 8
Still current 3
Invested 6475
Charge off princ. 346
Gross interest 1165
Fees 91
Taxable interest 734
Net return 11,35%

I guess the net return figure is not accurate, as all principle and interest was re-invested over the 3 years.
Still happy even though the charge off's were on the high side
Sorry Harmoney, you are not that far out after all.

[Robuste]

Vagabond47 another today for home improvements but status Renting. Possible I guess but seems unlikely.
Another for debt consolidation plus some "play money" he ain't playing with any of mine :)

[alistar_mid]

without stealing Soolaimon's thunder

4 months ago I modelled the expected interest with some assumptions on early repay and default. I used Harmoney's data in the dashboard (eg currently 690k issued, and 278k paid off), you got an annual early repay rate of approx 35-40%. Considering Soolaimon's mix of fewer F's it would be in the higher end of that band

Modelling that gives interest around about as Soolaimon is showing. (3 year loans also on average will pay back 30% of their principal in the first year, ontop of nearly 40% repaid early). So you get somewhere around 60-65% of principal paid off first year.

Or a monthly early pay off rate of about 3%...

[Cool Bear]

Or a monthly early pay off rate of about 3%...
From my 30+ months investment, the average for the last 12 months - early payoff AND principal (exclude interest) repayments - is 6.58%. This is the percentage over the principal outstanding at the beginning of each month. For the last 18 months, I get back between 5.51% to 8.09% of the outstanding principal each month.
As noted above, this figure does not includes interest.
Further Note: My principal outstanding is from my own spreadsheet and not the one on Harmoney's dashboard which includes the effect of Payment Protect.

[alistar_mid]

From my 30+ months investment, the average for the last 12 months - early payoff AND principal (exclude interest) repayments - is 6.58%. This is the percentage over the principal outstanding at the beginning of each month. For the last 18 months, I get back between 5.51% to 8.09% of the outstanding principal each month.
As noted above, this figure does not includes interest.
Further Note: My principal outstanding is from my own spreadsheet and not the one on Harmoney's dashboard which includes the effect of Payment Protect.

i correct myself the number harmoney gave me was 3% per month which I forecast with, my actual for the last 12 months has averaged at 5.5%, with 10.43% in December.

[BJ1]

Sorry Harmoney, you are not that far out after all.

I've been investing in Harmoney for 3 years now. I have reviewed my returns very carefully as I manage 3 sub-portfolios within the total invested and I am confident that Harmoney's RAR is accurate provided investors accept two matters: the RAR does not include any money in "cash" awaiting investment and the calculation is rubbish for those few investors with minimal investment who suffer a writeoff in excess of interest earned, within the first 12 months.

[leesal]

Back yet again, this time for an apology. My skills with a calculator are not good. This time done manually as I was somewhat suspicious and worried by my original figures. Sorry for any inconvenience.
Total Loans (all 36m) 88
Full term 8
Still current 3
Invested 6475
Charge off princ. 346
Gross interest 1165
Fees 91
Taxable interest 734
Net return 11,35%

I guess the net return figure is not accurate, as all principle and interest was re-invested over the 3 years.
Still happy even though the charge off's were on the high side
Sorry Harmoney, you are not that far out after all.

I can model a similar scenario (35% early repayment, randomised data, platform 1.0 rates + defaults) and iterate until find a similar result (below). Using the reinvestment assumption gives 12.6% gross pa. Wouldn't swear by it, but gives you an indication. Still pretty good considering the high number of defaults






Starting Capital
6500


Out Principal Y1
2387


Out Principal Y2
866










IRR%
12.64%


principal charged
331.15


interest earned
1,170.20


harmoney fee
70.21

[leesal]

One of my arrears....

Last payment amount: $1.42
Payments to date: $0.25

Anyone come across something like this?


9451

[beacon]

One of my arrears....

Last payment amount: $1.42
Payments to date: $0.25

Anyone come across something like this?


9451

Very interesting, Leesal. On top of slipping investor margins at Harmoney and their sloppy track record of returning investor phone calls, looks like they are bad at accounting and book-keeping too. Here's an interesting case:

Principal Loaned : $50 (18.12.17)
Principal Received : $49 (03.01.18)
Status: Paid-Off :eek2:

[beacon]

9452

Here is a jpg of the above case.

[leesal]

9452

Here is a jpg of the above case.

I've got that loan too.

Its sloppy alright. But fortunately in this case we're not getting short changed. For Payment protect transactions, HM have a funny way of showing the early repayment.

[beacon]

Its sloppy alright. ..HM have a funny way of showing the early repayment.

Funny alright, although it's only them laughing...

Another funny thing they do is report $100 Gross Interest received one day, and $98 Gross Interest received the next day on the same account. :confused:

[icyfire]

The platform RAR has now dipped below 11% for the first time and it's now sitting at 10.89%.
Is the shine coming off p2p lending?

[myles]

Nope :) but shares might be in for a bumpy ride :ohmy:

[RMJH]

The platform RAR has now dipped below 11% for the first time and it's now sitting at 10.89%.
Is the shine coming off p2p lending?
Due to financial realities fees are up and rates are down. Plus we had a golden period of very low defaults. How low is too low? That's up to you. Considering the alternatives I am still re-investing.

[Cool Bear]

The platform RAR has now dipped below 11% for the first time and it's now sitting at 10.89%.
Is the shine coming off p2p lending?
From the market stats today, the latest (as at 6th February) stats for RAR are:
Retail 12.84%
Platform 10.89%
and Wholesale 10.18%

If you have a portfolio that return any of those percentages year after year for many years, you will be doing very well.

From the stats, you can make out that 73.3% is wholesale and only 26.7% is retail. The big boys must be very happy with their 10.18% for very little effort as they only pay us 2 to 3% for our bank deposits with them.

[CageyB]

A noteworthy event today: after 23 months, I received my first recovered funds. Perhaps the new collections efforts discussed recently are beginning to function?

[WingingIt]

A noteworthy event today: after 23 months, I received my first recovered funds. Perhaps the new collections efforts discussed recently are beginning to function?

Interesting, last time I checked I had 5 loans charged off from June 2016 to April 2015, now the three oldest ones have now changed to debt sold. Zero communication from Harmoney when these went to a charged off status and still zero communication when they went to a debt sold status.

[CageyB]

Interesting, last time I checked I had 5 loans charged off from June 2016 to April 2015, now the three oldest ones have now changed to debt sold. Zero communication from Harmoney when these went to a charged off status and still zero communication when they went to a debt sold status.

That is interesting, "Debt Sold" is a new category. Of my seven loans in "Debt sold", I have recoveries from three. I won't complain about the lack of communication if they are actually recovering some funds, I had just assumed that there was little to chance of recovering anything once charged off.

[777]

Debt sold appears to include a taxable portion as well as some principal repaid. Whether this is a final payment on those loans remains to be seen. Of five sold I got money from two.

[permutation]

Have noticed a few minutes ago, Harmoney platform RAR jumped up 13 pips to 11.02%, probably, a result of Fridays recoveries from " Debt Sold" across all levels.
I have personally had 13 Loans sold and money credited from 12 of those.
My personal RAR is inching ever closer to 15% with over 1750 All-time loans taken over 35 months.

[RMJH]

Have noticed a few minutes ago, Harmoney platform RAR jumped up 13 pips to 11.02%, probably, a result of Fridays recoveries from " Debt Sold" across all levels.
I have personally had 13 Loans sold and money credited from 12 of those.
My personal RAR is inching ever closer to 15% with over 1750 All-time loans taken over 35 months.
How did you find the debt sold numbers? No mention of that on my dashboard and have had 74 charge-offs. cheers R

[777]

How did you find the debt sold numbers? No mention of that on my dashboard and have had 74 charge-offs. cheers R

Go to the report section and select all loans then sort by status. Scroll down until you get to "Debt Sold".

You need to select each individual loan to see sale price (if anything).

[permutation]

How did you find the debt sold numbers? No mention of that on my dashboard and have had 74 charge-offs. cheers R

You could see an increased $ Value in the recoveries on your Dashboard.

Unfortunately Harmoney have removed the "Debt Sold loans" from the standalone "Charged Off Loans" Filter; you can make a copy of the Charged Off filter yourself and select Charged-off an Debt Sold sub filters, this will then show a total of the Charge-Offs you originally had.

To see individual $value details of the "Debt Sold" loans you have to download a CSV file from Harmoney and convert the data in Excel from "text to columns"; then sort status to view "Debt Sold", you will then see the actual $ amounts you received in Column V .. Make Sense??;)

[RMJH]

You could see an increased $ Value in the recoveries on your Dashboard.

Unfortunately Harmoney have removed the "Debt Sold loans" from the standalone "Charged Off Loans" Filter; you can make a copy of the Charged Off filter yourself and select Charged-off an Debt Sold sub filters, this will then show a total of the Charge-Offs you originally had.

To see individual $value details of the "Debt Sold" loans you have to download a CSV file from Harmoney and convert the data in Excel from "text to columns"; then sort status to view "Debt Sold", you will then see the actual $ amounts you received in Column V .. Make Sense??;)
Yikes! But thanks!

[kiwi783]

Ouch indeed. 3% recovery from debt sold on what was originally an A loan with mortgage (although residential status changed when reported as deep in arrears). and ongoing job still reported. I understand why we can't know the details but I'd really like to see an independent review of LC from perspective of how accurate was original details and how good they are at negotiating debt sale i.e. contrast with whatever eventual recovery is. It would take some time but even knowing stats were being independently reviewed might help ensure investor interests are protected.

[RMJH]

Go to the report section and select all loans then sort by status. Scroll down until you get to "Debt Sold".

You need to select each individual loan to see sale price (if anything).
Thanks, 41 sold but 5/8 of the proverbial recovered!

[BJ1]

Only 2 charged off, both sold, the E for 8% and the A for 7.95% of the charged off amount. Both sums processed as interest. But Harmoney's records show that the last payment amount was more than the amount originally charged off. After 3 years it's about time they fixed this stuff. To me this feels like an exercise in removing work rather than a genuine attempt to maximise for investors. With no independent audit report to investors, who is to say this transaction is above board?

Investors are left having to decide if the return over alternative investments is worth the issue of dealing with this organisation. That we are still here says it all?

[Darchie]

So you're saying that you'll be paying tax on that principal figure sold albeit actual principal that was returned! Ouch!!!

[beacon]

An independent audit should help them sort out their reporting, accounting and bookkeeping practices, failing which there is always the option to complain to the overseeing authority, if they seem entrenched. Transparency and trust would help them and the industry grow.

[RMJH]

So you're saying that you'll be paying tax on that principal figure sold albeit actual principal that was returned! Ouch!!!
Assuming that you claim chargeoffs the tax will come out right in your tax return.

[darrenc]

$7300 in write-offs, $43 recovered. Not exactly stellar. I was expecting it might be around the $200 mark. Most of the loans that say debt sold don't actually have any return, i.e. they were 'sold' for zero dollars.

I'm starting to pull my money now and put it into silver which I made a lot of money in a few years ago (it paid off my mortgage). It looks like it's turned and will head back up again, even though I'm at 15% for Harmoney.

[icyfire]

An independent audit should help them sort out their reporting, accounting and bookkeeping practices.
I don't see Harmoney ever agreeing to having an independent audit. I'd love to be proven wrong though. Perhaps annual independent audits should be compulsory as part of their peer-to-peer lending licence.

[alistar_mid]

$7300 in write-offs, $43 recovered. Not exactly stellar. I was expecting it might be around the $200 mark. Most of the loans that say debt sold don't actually have any return, i.e. they were 'sold' for zero dollars.

I'm starting to pull my money now and put it into silver which I made a lot of money in a few years ago (it paid off my mortgage). It looks like it's turned and will head back up again, even though I'm at 15% for Harmoney.

$4450 of write offs and $32 of recoveries here. This is on a $117k initial investment in split into 2 blocks 6 months apart which through withdrawals (interest + prepaids) down to $73k.

On the bright side with this "correction" in the sharemarket losing a me a bit of money, Harmoney stays consistent with its ~10% IRR after tax.

[myles]

BORROWER COMMENTS: continue to save for a house - on a $28K loan... WTF

From memory I think I read that Harmoney are audited by PWC annually - this would/should include the entire borrow/loan process. PWC don't miss much.

[icyfire]

From memory I think I read that Harmoney are audited by PWC annually - this would/should include the entire borrow/loan process. PWC don't miss much.
If that was the case I'm sure that Harmoney would mention it on their website. And there is no info on that online.

[myles]

To hold a peer-to-peer lending licence the FMA require an Annual Audit - so it will be happening. I doubt they would make it public if that's what you're after?

[icyfire]

The Platform RAR had a pretty big drop today from 11.03% to 10.33%

[permutation]

The Platform RAR had a pretty big drop today from 11.03% to 10.33%

It appears all the RARs have been reduced have a look at the platform charts. My personal rate has gone down by the same amount, 14.87>14.18%, even though it is usually one week behind and normally changes on a Sunday..

It would be nice of Harmoney to explain what they are up to!

[777]

It appears all the RARs have been reduced have a look at the platform charts. My personal rate has gone down by the same amount, 14.87>14.18%, even though it is usually one week behind and normally changes on a Sunday..

It would be nice of Harmoney to explain what they are up to!

And mine went up.

[CageyB]

Mine also dropped by about 0.6%.

[CageyB]

An email just arrived explaining the RAR calculation changes. Apparently there was an error when calculating the RAR on Payment Protect loans. From the FAQ:


What was the issue found with the previous calculation?Payment Protect loans have two principal outstanding amounts:


the investor principal amount (which is the amount that lenders invest), and
the borrower principal amount (the amount the borrower owes the lender)

When Payment Protect was introduced, the RAR calculation should have updated to use the borrower principal amount, but continued to use the investor principal amount as it had always done. Prior to the introduction of Payment Protect, the borrower principal amount and the investor principal amount had matched. After launch, this wasn’t the case.
The knock on effect of this was that when using a lower principal balance, this resulted in some Lenders seeing a higher RAR than they should have.

[RMJH]

Down 19 pips

[BJ1]

So. have I got this right. Harmoney introduces an option to increase investor revenue and now produces a calculation change which shows that investor revenue streams have fallen because of it? Why should the RAR calculation have updated to use the borrower principal amount? The point of the exercise was to increase investor returns? It seems to me that some techo has noticed the disparity between the borrower and investor principal amounts, panicked, and pushed the "correct" button when no correction was needed. The correct denominator is what the investor has invested - it is the investor's RAR, not the borrower's.

[RMJH]

So. have I got this right. Harmoney introduces an option to increase investor revenue and now produces a calculation change which shows that investor revenue streams have fallen because of it? Why should the RAR calculation have updated to use the borrower principal amount? The point of the exercise was to increase investor returns? It seems to me that some techo has noticed the disparity between the borrower and investor principal amounts, panicked, and pushed the "correct" button when no correction was needed. The correct denominator is what the investor has invested - it is the investor's RAR, not the borrower's.

I read the explanation on the Harmoney site and to be honest it is a bit hazy in my mind not least because they don't define the term principal funded. I am assuming this is the total that we invest less payment protect sales commission fees going to Harmoney (up front). It appears at first reading that the calculation effectively writes off this up front sales commission rather than matching it to the income it generates. I'd be interested how others see it, not least the tax man!

[leesal]

completely agree with BJ1 - if an investor places $100 in a loan, and it generates $20 interest (inclusive of PP)... then the return is 20%.

If the borrower takes PP as an additional obligation which increases his principal to $110, this doesn't diminish the return to 18.18% from the investors point of view.

Perhaps Harmoney have had a brainfade to err on the conservative side, not to fall foul of FMA with misleading representations

[RMJH]

completely agree with BJ1 - if an investor places $100 in a loan, and it generates $20 interest (inclusive of PP)... then the return is 20%.

If the borrower takes PP as an additional obligation which increases his principal to $110, this doesn't diminish the return to 18.18% from the investors point of view.

Perhaps Harmoney have had a brainfade to err on the conservative side, not to fall foul of FMA with misleading representations

I could be way off track but doesn't the borrower get the same cash and owe the same amount whether or not they use PP? It's not that they borrow more to have PP but rather they commit to a higher interest rate. The borrower principal is the same either way but when we invest in a PP loan we lend a sum to the borrower (which sits as an asset) and pay Harmoney an up front sales commission (which is immediately recorded as an expense rather than an asset). Since RAR is a cash measure return is reduced with PP loans initially but will rise later as the PP premium interest is paid. Essentially a degree of conservatism is being applied.

[Cool Bear]

I could be way off track but doesn't the borrower get the same cash and owe the same amount whether or not they use PP? It's not that they borrow more to have PP but rather they commit to a higher interest rate. The borrower principal is the same either way but when we invest in a PP loan we lend a sum to the borrower (which sits as an asset) and pay Harmoney an up front sales commission (which is immediately recorded as an expense rather than an asset). Since RAR is a cash measure return is reduced with PP loans initially but will rise later as the PP premium interest is paid. Essentially a degree of conservatism is being applied.
No, the interest rate remains the same, but they owe more to Harmoney. So, if they borrow $10,000, fees of $500 and PP fees of say $1000, they owe Harmoney $11500. They just receive the $10,000. We fund $10500 plus the portion of the sale and marketing commission - from memory is 35% of PP fees - so we fund $10850.

So taking the above example, if we take 4 notes, we loan $100 but our outstanding principal is $11500/$10850 x $100 = $105.99.

Hope that clarifies.

[Cool Bear]

So. have I got this right. Harmoney introduces an option to increase investor revenue and now produces a calculation change which shows that investor revenue streams have fallen because of it? Why should the RAR calculation have updated to use the borrower principal amount? The point of the exercise was to increase investor returns? It seems to me that some techo has noticed the disparity between the borrower and investor principal amounts, panicked, and pushed the "correct" button when no correction was needed. The correct denominator is what the investor has invested - it is the investor's RAR, not the borrower's.

i am not too fussed how they calculate RAR. It is just a measure. Does not affect the actual interest we get. There are merits on basing it on the outstanding principal (which includes a portion of the PP - see above post) as there will be many (not me) that use the outstanding principal for their own calculation.

[BJ1]

I'm with you Cool Bear on not caring how they calculate RAR as my decisions totally disregard it, but I do question if they know what they are doing - and to date have concluded that many there don't.

[Saamee]

I'm with you Cool Bear on not caring how they calculate RAR as my decisions totally disregard it, but I do question if they know what they are doing - and to date have concluded that many there don't.

Ha ha YES indeed. I worked that out a while ago myself :)

[Cool Bear]

I'm with you Cool Bear on not caring how they calculate RAR as my decisions totally disregard it, but I do question if they know what they are doing - and to date have concluded that many there don't.
I agree too with your conclusion although I am still happy overall and had been adding to my investment due to being a touch careful of the toppish sharemarket.

[JeremyALD]

Saw a borrower wanted 25k at about 20% interest the other day and in his comments were "to use the funds to invest into the share market". Like are you kidding me?! Pretty sure it would of triggered my autolend too as he had been in his job for a couple of years. Makes me rethink autolend with one's like that!!

[Investor]

Debt Sold Loans

So once we go back into reports and find a loan with the status 'Debt Sold', is the Last payment amount what we view to see how much was recovered? It looks like mine had 2/5 recovered at sale which isn't too bad. Also, is this just reported as a principal repayment? It looks like my principal written off amount did not change.

[BJ1]

Investor: my two write-offs were both sold for a small increase in total interest received. No principal. The only way I know is I had them in excel and could compare info. The last payment amount in the Harmony status report was a load of hogwash.

[kiwi783]

regarding the write-offs. i've just spent a frustrating hour inside excel equivalent trying to reconcile statement transactions for written-off loan vs reported on Harmoney summary. I can't figure it out. However they recorded the sale/recovery number it doesn't seem to be attributed with same loan reference - and there is no unusual transaction that doesn't have a loan reference. If I understand above comments a lot of the sale/recovery proceeds have been attributed as interest rather than principal (I'm sure the investors agreement says this is what will happen). So worst case from a tax perspective (for those who are not in the business of) and I assume best case for Harmoney who can take service fees on the additional "interest" amount. Or am I just being too cynical?

[777]

regarding the write-offs. i've just spent a frustrating hour inside excel equivalent trying to reconcile statement transactions for written-off loan vs reported on Harmoney summary. I can't figure it out. However they recorded the sale/recovery number it doesn't seem to be attributed with same loan reference - and there is no unusual transaction that doesn't have a loan reference. If I understand above comments a lot of the sale/recovery proceeds have been attributed as interest rather than principal (I'm sure the investors agreement says this is what will happen). So worst case from a tax perspective (for those who are not in the business of) and I assume best case for Harmoney who can take service fees on the additional "interest" amount. Or am I just being too cynical?

Harmoney would get the same service fee from principal repayment as interest.

[Investor]

Harmoney just charges on gross interest since about 2016, so they are better off by classing it as interest (i'd be surprised if that is the case)

[777]

Harmoney just charges on gross interest since about 2016, so they are better off by classing it as interest (i'd be surprised if that is the case)

But most ,if not all, those loans sold would be before that change. All loans taken up prior to that change are still on the old rules.

[beacon]

Good point 777. By the way, saw a defaulter listed as a B3 today. I was under the impression recent defaulters would be low down ... 9541

[alistar_mid]

hit the $20k gross interest mark

initially (harmoney 1.0) I thought E's where the best ROI.... turns out they default a lot.

9542

[beacon]

13.51% RAR - not bad, Alistar. Others have lost over a 1% and some after Harmoney changed their RAR calcs recently...
Congrats on the $20k milestone

[beacon]

I thought E's where the best ROI.... turns out they default a lot.

No wonder. If a recent defaulter is being classed a B3, there'd be no hiding from the c, D, E and Fs :scared:

[777]

beacon how does that loan above indicate that the borrower was a defaulter? I would have thought once a defaulter that they would no longer be able to borrow.

Stand easy. I have just found it noted. It does surprise me that they can borrow again though.

[beacon]

I would have thought once a defaulter that they would no longer be able to borrow..

That is what I was given to understand too, by Harmoney call-centre staff initially. But these defaulters are being considered, probably because the risk is carried solely by the investor, while Harmoney walks away with a risk-free fee (like @Investor said earlier). Eg., LAI-00120718 and LAI-00117289 = both C3, that I got invested in...

If only HM had a default filter...

[777]

That is what I was given to understand too, by Harmoney call-centre staff initially. But these defaulters are being considered, probably because the risk is carried solely by the investor, while Harmoney walks away with a risk-free fee (like @Investor said earlier). Eg., LAI-00120718 and LAI-00117289 = both C3, that I got invested in...

If only HM had a default filter...

Unacceptable in my opinion. Doesn't show much care for the lenders.

[beacon]

I'll second that. The least they can do, is provide scalable filters: default filter with 0,1, and more numbers if they choose to entertain multiple defaulters. Similarly, instead of a toggle switch payment protect filter, a PP filter with tickboxes for their options - part, full, combo - these shouldn't be too difficult to make ... That'll help them seem more responsible, and easily avoid some avoidable criticism

[RMJH]

I'll second that. The least they can do, is provide scalable filters: default filter with 0,1, and more numbers if they choose to entertain multiple defaulters. Similarly, instead of a toggle switch payment protect filter, a PP filter with tickboxes for their options - part, full, combo - these shouldn't be too difficult to make ... That'll help them seem more responsible, and easily avoid some avoidable criticism

Totally agree, sloppy work, especially at autolent.

[Investor]

It is likely that anyone who has been approved for a loan with Harmoney that has a past default has already repaid the default in full. Regardless, I can't see myself or anyone else here wanting to go anywhere near such loans.

[icyfire]

I've been asking Harmony to add a default filter for over a year now. Perhaps HM will never implement such filter as they know that every investor using AutoLend would turn that filter on.

[Vagabond47]

I've been asking Harmony to add a default filter for over a year now. Perhaps HM will never implement such filter as they know that every investor using AutoLend would turn that filter on.

I'd be interested to know from the readers here who use autolend.. how many of you filter out re-writes? I do on autolend, but will occasionally manually lend to a rewrite, but only if they managed > 12 or so payments before wanting to pay us more interest for longer..

[joker]

hit the $20k gross interest mark

initially (harmoney 1.0) I thought E's where the best ROI.... turns out they default a lot.

9542

Hi Alistar and thanks for posting. I'm amazed that your charge-offs vs interest = 22% ($4.5K vs $20K) and yet your RAR is still so good. I assume many of your original loans were at 30%+ interest rates and that current charge-offs have dropped significantly now.

Mine are 4.79% ($149 vs $3,110) RAR 12.69% but I've only been invested for 7 months so more no doubt to come.

I would be interested to read other investors' charge-off vs interest vs RAR stats for comparison.

TIA all.

[BJ1]

9544

Just for additional info Joker, my average loan is $600 and I've had two write-offs over 3 years

[alistar_mid]

Hi Alistar and thanks for posting. I'm amazed that your charge-offs vs interest = 22% ($4.5K vs $20K) and yet your RAR is still so good. I assume many of your original loans were at 30%+ interest rates and that current charge-offs have dropped significantly now.

Mine are 4.79% ($149 vs $3,110) RAR 12.69% but I've only been invested for 7 months so more no doubt to come.

I would be interested to read other investors' charge-off vs interest vs RAR stats for comparison.

TIA all.

Yeah in harmoney 1.0, off their stats, I worked out (along with some others on this forum) that E's where apparently the sweet spot in ROI.

But come 1+ year in when you can see how defaults actually pan out its been a bit different.

E's are 46% of my write offs, but have only been 11% of my loans...

[alistar_mid]

9544

Just for additional info Joker, my average loan is $600 and I've had two write-offs over 3 years

Nice.

So because you put more into each loan I assume you read the descriptions and stuff?

Also admiring your RAR with your mix, any reason for the 50/50 of 36/60 months?

[BJ1]

Apart from about 4 autolend all of my loans are carefully chosen. I don't do anything with a funny "smell" to it. I started off with 60 mth loans in A and B and 36 mth for C D E but in the past year have allowed "better" C to go to 60 mth but overall concentrated on reducing term as markets moved more and more to being over extended - when the inevitable crash comes I want to have options and also I want my borrowers to be able to extend their payment plans (and thus clear me if they do refinance).

[Cool Bear]

Hi Alistar and thanks for posting. I'm amazed that your charge-offs vs interest = 22% ($4.5K vs $20K) and yet your RAR is still so good. I assume many of your original loans were at 30%+ interest rates and that current charge-offs have dropped significantly now.

Mine are 4.79% ($149 vs $3,110) RAR 12.69% but I've only been invested for 7 months so more no doubt to come.

I would be interested to read other investors' charge-off vs interest vs RAR stats for comparison.

TIA all.
The average for HM atm is $22,880,104/$99,747,404 (market stats at 1.26pm 9 March) = 22.94%. So Alistar's 22.23% is still below average.
Mine after 33 months (5000++ loans) is 21.32%. My RAR is just above 14% atm, so I am still happy.

[Cool Bear]

And with Joker's 4.79% and BJ1's 2.27%, there must be quite a few with well over 50% for the average to be 22.94%!! But of course the real objective is the net returns - which RAR is a (not so accurate but still a) decent measure.

[IntheRearWithTheGear]

dunno, if i should be happy or sad.

9550

[joker]

9544

Just for additional info Joker, my average loan is $600 and I've had two write-offs over 3 years

Thanks BJ1. I envy your obvious skill in picking sound loans - I could never pick/reason which loans are worthy of $600. Your low level of charge-offs is nothing short of amazing. My loans are 50/50 autolend/picking and are almost exclusively $25 units. I also like your reasoning with 36 month loans.
9551

[joker]

dunno, if i should be happy or sad.

9550

I think happy - the return still looks good. Looking at your investment grade mix, I am assuming that you are now leaving D,E & Fs alone to reduce charge-offs as surely $8K can't be as a result of A,B & Cs?

[IntheRearWithTheGear]

I intially invested in anything with a ratio of 15% monthly payment to income ratio across all bands, in the early days there wasnt enough loans to get to get the cash into the system - so you couldnt invest fast enough and maintain diversity. So early days was across all loan types. NOw i only do a-b-c

A mistake ive made is that i have 50k spread over 785 loans (most are a-b types)(roughly $75 per loan).

Most days i have less than $200 as a float in the account so constantly renewing everyday. - ideally it should be 25 per loan - world is not perfect. It took a year to spend the first aprox 80k - so its not an investment in one lump sum.

Using excel the xirr is 11.54% after tax over 1137 days since first investment.


Breakdown of charge offs, debt sold and hardship



C5

17


C4
8


E4
26


E5
27


E2
28


F3
14


C2

7


B1

3


B5

10


D1

24


D4

18


D5

18


D3

13


F2
16


F1

21


E1

16


B3
8


C1
9


C3
9


E3
28


F4
10


D2

20


B4

6


F5
36


A5
5


A1
1


B2
3


A3
1


A4

1



403

[myles]

Charge offs: 0.82% (on number of loans)
Avg weighted Interest: 20.08%
RAR: 16.32%

[beacon]

Commendable results, myles, joker and BJ1. $600 per loan is indeed brave for an early 6-figure portfolio, BJ1, but had you not shown the numbers I would never have believed what you've achieved over 3 years, could be done. Kudos!

Interesting raw default data, ITRWTgear

[reacher]

I have been reluctant to post my own results as my Harmoney investments are obviously on the riskier side, but I am certainly pleased with my current RAR at 17.57%. Since you are all so open to sharing I've felt rude just snooping and thought you might be interested.
I have been in for 12 months now, hopefully the RAR curve settles! :mellow:
9554

9553

[alistar_mid]

I have been reluctant to post my own results as my Harmoney investments are obviously on the riskier side, but I am certainly pleased with my current RAR at 17.57%. Since you are all so open to sharing I've felt rude just snooping and thought you might be interested.
I have been in for 12 months now, hopefully the RAR curve settles! :mellow:
9554

9553


ahh yeah... I would think you are gonna start to see a lot of those higher risk grades defaulting...
Thats what I have seen with my E's and F's

[permutation]

Today is my 3rd anniversary of Harmoney lending. Report card so far over this period; over 1840 all time loans taken, of which 48% have been repaid.

Personal RAR has increased to 14.31%, 410 pips above today's platform RAR. All time Charge-offs 35, E and F grades 16/101= 15.84% and A-D grades 19/1740= 1.092%

A note to these stats, 500 of my current loans have been taken since August 1 2017 when Harmoney introduced V1.5 interest rate card, so I expect more Charge offs and a possible stabilization of the RAR.

The sharp glitch downward on the chart toward the end of 2015 was a result of heavy charge-offs in the E-F grades. Today have less than 40 active loans remaining in A,E,F.

9558

[alistar_mid]

Today is my 3rd anniversary of Harmoney lending. Report card so far over this period; over 1840 all time loans taken, of which 48% have been repaid.

Personal RAR has increased to 14.31%, 410 pips above today's platform RAR. All time Charge-offs 35, E and F grades 16/101= 15.84% and A-D grades 19/1740= 1.092%

A note to these stats, 500 of my current loans have been taken since August 1 2017 when Harmoney introduced V1.5 interest rate card, so I expect more Charge offs and a possible stabilization of the RAR.

The sharp glitch downward on the chart toward the end of 2015 was a result of heavy charge-offs in the E-F grades. Today have less than 40 active loans remaining in A,E,F.

9558


Nice.
It seems the E's and F's where not as good as we thought they where. Once they cull themselves from your portfolio then your RAR can creep back up a bit.

So I've been in half of what you have (18 months), with 1,907 all time loans, the current number (active or arrears) being 1,049. I started with $100 in each loan, but now rarely do this, usually $50 or $75, my current average loan value is now $70.73.

My RAR currently sits at 13.73%

At peak I did have 43 F's and 138 E's, this has now reduced to 21 F's and 108 E's (i still invest in E1's). By value however, at peack E/F's where 18.6% of my portfolio, now they are 13%.

I hope my rar slowly edges back up as I focus on B/C/D 36 month loans with Harmoney 1.5.

9561

[Bjauck]

In the absence of tax guidance or a ruling for retail investors "not in business", given the seemingly high proportion of non-deductible charge-offs to gross interest for a moderately risky (b's and c's) portfolio of notes, would it make more sense for those investors to invest in Lending Crowd and Squirrel? In other words is Harmoney best for Big peers in the business of lending and should little peers be best investing in other P2P vehicles?

Even for less risky lower interest earning Harmoney notes (a's and b's) the Harmoney fees are higher than Lending Crowd's - and without the level of security Lending Crowd has.

[alistar_mid]

In the absence of tax guidance or a ruling for retail investors "not in business", given the seemingly high proportion of non-deductible charge-offs to gross interest for a moderately risky (b's and c's) portfolio of notes, would it make more sense for those investors to invest in Lending Crowd and Squirrel? In other words is Harmoney best for Big peers in the business of lending and should little peers be best investing in other P2P vehicles?

Even for less risky lower interest earning Harmoney notes (a's and b's) the Harmoney fees are higher than Lending Crowd's - and without the level of security Lending Crowd has.

lol, i phoned IRD explained to IRD what harmoney was, sent them a letter with my tax return

I claimed harmoneys fees as an expense.

[darrenc]

In the absence of tax guidance or a ruling for retail investors "not in business", given the seemingly high proportion of non-deductible charge-offs to gross interest for a moderately risky (b's and c's) portfolio of notes, would it make more sense for those investors to invest in Lending Crowd and Squirrel? In other words is Harmoney best for Big peers in the business of lending and should little peers be best investing in other P2P vehicles?

Even for less risky lower interest earning Harmoney notes (a's and b's) the Harmoney fees are higher than Lending Crowd's - and without the level of security Lending Crowd has.


Have you actually tried investing in Lending Crowd? I only have $25k in there and unless I put $250+ in each loan (only B1 or B2) it's impossible to get it all invested. I had $700 sitting in there for a fortnight and managed to get $300 out yesterday in one loan, but missed the second loan. Loans disappear in a matter of seconds so unless you have your own software that auto invests you're going to be out-of-luck; even the available auto investor doesn't pick them all up because it only checks every couple of minutes.

I'm also claiming my Harmoney fees and write-offs as an expense. I treat it like a job.

[Bjauck]

Have you actually tried investing in Lending Crowd? I only have $25k in there and unless I put $250+ in each loan (only B1 or B2) it's impossible to get it all invested. I had $700 sitting in there for a fortnight and managed to get $300 out yesterday in one loan, but missed the second loan. Loans disappear in a matter of seconds so unless you have your own software that auto invests you're going to be out-of-luck; even the available auto investor doesn't pick them all up because it only checks every couple of minutes. Agree there are pros and cons with all P2P. However at least your LC balance sitting unused can be withdrawn in full and deployed elsewhere should you become impatient or decide not to use an off-site auto-investor.


I'm also claiming my Harmoney fees and write-offs as an expense. I treat it like a job. I think that is how it should be treated however there has not been guidance to that effect from the IRD (or from Harmoney for all retail investors for that matter). Clarity would be great. In fact I have only seen Financial Review articles - sorry no citations - that would cast doubt on that, especially in regards to write-offs. If everyone could claim Lender fees why doesn't Harmoney deduct RWT from gross interest less fees? One could pay a couple of hundred? for an accountant's researched opinion (and for an investor with say $10,000 that would severely diminish their year's interest) first but would the accountant's opinion coincide with the IRD's - whatever that is? Definitely DYOR.

It would be great to have guidance for all investors to the effect that the net blended return (interest-fees-chargeoffs) from P2P is taxable income. Still no sign of that.

[alistar_mid]

. If everyone could claim Lender fees why doesn't Harmoney deduct RWT from gross interest less fees? .

they are claimable, Like I have said, I have checked with the IRD, you guys should check for yourself though.

and I did ask harmoney this, but they just gave some generic stupid answer



You didn't really answer my question.


You are paying my tax based on gross interest.

Tax is normally paid on profit, that being gross interest less harmoney fees.

Is it possible for you guys to do this or do I need to keep doing an adjustment with the IRD?

Thanks heaps!


Hi Alistar - thanks for your reply.

Harmoney allow lenders to set the rate for the RWT deductions based on their personal tax situation and the RWT percentage can be reviewed and updated in the tax section of your lending account:
https://www.harmoney.co.nz/lender/portal/my-account/tax/tax-details

We expect that fees paid by Lenders to Harmoney will be tax deductible and recommend seeking independent tax advice from an accountant or tax specialist when preparing a tax return.

The platform loan volumes over time are now available on our Marketplace Statistics page (currently: $710m for NZ as at 18/02).
https://www.harmoney.co.nz/investors/marketplace-statisticshttps://ssl.gstatic.com/ui/v1/icons/mail/images/cleardot.gif

[alistar_mid]

I'm also claiming my Harmoney fees and write-offs as an expense. I treat it like a job.

Same, didn't have write offs this time last year as was only 6 months in, but have nearly $5k this year, will be claiming them too

[Bjauck]

they are claimable, Like I have said, I have checked with the IRD, you guys should check for yourself though.

and I did ask harmoney this, but they just gave some generic stupid answer...


Thanks for the communication with Harmoney.
I agree that fees should be deductible for all. It would be great for a clear public statement from the IRD and Harmoney on that point.

If lender fees are claimable by all, then Harmoney and IRD should state that fact definitively and arrange for RWT to be deducted on the Gross interest less fees basis. I have seen no reports that either have made definitive statements. As I am a small retail investor, I would be in the category of investor that would be least likely of all investors to be able to claim fees. I feel prudence would suggest not being able to claim even Harmoney fees let alone charge-offs.

I am still awaiting official guidance to the effect that, as there is considerable work (more than with a term deposit for example) involved with a Harmoney investment for even a small retail investor, the net blended return is all that is taxable. That has not been forthcoming, unfortunately.

[777]

Those of you deducting write-offs against interest are setting yourself up for an audit. Be careful. It is capital you have lost , not revenue.

[Bjauck]

Given the fee structure and the fact that harmoney (on behalf of individual retail investors) have not sought a ruling on the deductibility status of fees and charge-offs, I think Harmoney may be content to rely on its business investors. Then is it a true peer-to-peer, when the balance is perhaps tipped to business lenders lending to mostly individuals?

[Investor]

Given the fee structure and the fact that harmoney (on behalf of individual retail investors) have not sought a ruling on the deductibility status of fees and charge-offs, I think Harmoney may be content to rely on its business investors. Then is it a true peer-to-peer, when the balance is perhaps tipped to business lenders lending to mostly individuals?

I don't agree. Your statements don't support your conclusion.

[Bjauck]

I don't agree. Your statements don't support your conclusion.

The conclsion I made was that Harmoney may be content to rely on its business lenders. In what way could my statements not support that concusion?

I posed the question: Then is it a true peer-to-peer, when the balance is perhaps tipped to business lenders lending to mostly individuals?
Do you disagree with that?

[beacon]

Harmoney is now forecasting a 4-5% static loss across the portfolio over the life of the loan. If I remember right, this is 1% higher than previous guidance on what was supposed to be a less risky, better debt selection and approval (which shaved off investor returns six months ago) process. What a shame! First mover advantage, still the best P2P scale, but such lax processes...

Squirrel is still forecasting 1% losses on the platform. No wonder bidders seem to be jumping their queues over there...

If Harmoney was a listed share, I'd be looking to knock 20% off its share price, and expecting some managers to be fired ... :t_down:

[Bjauck]

Harmoney is now forecasting a 4-5% static loss across the portfolio over the life of the loan. ... Ouch! As the average loan seldom runs for the inital 3 or 5 year term, that is quite a hit.

[BJ1]

Sorry people but it isn't Harmoney's role or responsibility to provide tax advice. Accountant's may do that but their advice is nearly always tinged with disclaimers so that is hardly a safe source. The tax act does entitle costs incurred in deriving income to be deducted so the remaining question is if bad debts are deductible - and there is guidance in the Act that can lead to a justifiable decision that they are. If the IRD disagrees and you have justifiable reason to have determined what you did then the normal worst is you pay the tax only. But don't take this as advice from me. It's just my opinion.

[777]

Sorry people but it isn't Harmoney's role or responsibility to provide tax advice. Accountant's may do that but their advice is nearly always tinged with disclaimers so that is hardly a safe source. The tax act does entitle costs incurred in deriving income to be deducted so the remaining question is if bad debts are deductible - and there is guidance in the Act that can lead to a justifiable decision that they are. If the IRD disagrees and you have justifiable reason to have determined what you did then the normal worst is you pay the tax only. But don't take this as advice from me. It's just my opinion.

And very well thought out opinion.

[Vagabond47]

Harmoney is now forecasting a 4-5% static loss across the portfolio over the life of the loan.

Surely 80% of that %5 is concentrated in the E & F grades? so if you avoid those can we reasonably expect <2% loss in the better grades (A-C).

[myles]

$100,000 invested after 12 months:

Keeping the calculation very simple:

Gross Interest: $18,417.15
Fees: $2,985.84
Charge Offs: $1,588.42

Using XIRR only to adjust for the 3 months taken to invest the $100,000 and ignoring the benefit of Payment Protect.

My Return: 15.85% (excluding tax).

I guess I'm one of the very happy Harmoney investors! :)

I'm travelling at the moment but will post a bit more details if I get a bit more time. If anyone wants to know specific details, ask and I'll try to find time to post.

[RAR: 16.41%]

[beacon]

Gross Interest: $18,417.15, Charge Offs: $1,588.42
8.6% total loss/gross intt after a year, and a solid RoI. Well done myles
After 3+ years, Harmoney's got that ratio at 23% ish.

[beacon]

Surely 80% of that %5 is concentrated in the E & F grades? so if you avoid those can we reasonably expect <2% loss in the better grades (A-C).
<2% loss sounds Reasonable if you stay A-C, and Harmoney don't let the quality drop, and you keep having the Goldilocks economy continue etc... :)

Myles has shown he can buy better overall RoI with greater risk tolerance. He's definitely into Ds and some Es, probably like cool bear

[alistar_mid]

<2% loss sounds Reasonable if you stay A-C, and Harmoney don't let the quality drop, and you keep having the Goldilocks economy continue etc... :)

Myles has shown he can buy better overall RoI with greater risk tolerance. He's definitely into Ds and some Es, probably like cool bear

I kinda have the same portfolio as myles, dropped 50k in Aug - sep 2016, then another 50k dec - jan 16/17.

I don't have my aug 2017 stats, but July 17 had 9k gross interest, $819 of write offs.

Oct 17 had $14k gross interest, $2,425 write offs

As of right now, $20,818 gross interest, $4,732 write offs.

^^^ an indicator of as your portfolio gets past one year, the writes offs start to come in thick and fast (at least in my experience)


I would say miles write offs will increase at a faster rate as his portfolio matures.

Ofc his was/is not exactly the same as mine in terms of mix.

[myles]

9573
Investment spread.

[Vagabond47]

<2% loss sounds Reasonable if you stay A-C, and Harmoney don't let the quality drop, and you keep having the Goldilocks economy continue etc... :)

Myles has shown he can buy better overall RoI with greater risk tolerance. He's definitely into Ds and some Es, probably like cool bear


Yes, it appears I have been a little risk averse, I won't bother with anymore A's, and will try to grab the C&Ds. Not going to touch the F range.

[Bjauck]

Sorry people but it isn't Harmoney's role or responsibility to provide tax advice. Accountant's may do that but their advice is nearly always tinged with disclaimers so that is hardly a safe source. The tax act does entitle costs incurred in deriving income to be deducted so the remaining question is if bad debts are deductible... It's not Harmoney's responsibility but they could apply and pay for a ruling on behalf of their "not in business"investors...

Where is the guidance that bad debts are deductible for retail investors? The retail investors in collapsed finance companies were informed that their bad debts were not deductible. Are investments in P2P vehicles different? That is the crux...and is a grey area, pending guidance.

[beacon]

Paid Off Status with balance still outstanding. I hope Harmoney know what they are doing, cos I don't! Be interesting to see if these get rectified post-audit.
9577

[beacon]

And more...

9578

[beacon]

Even more bizarre...

9579

[beacon]

Obviously, these oddities don't correct even though Harmoney takes 2-3 weeks before the previous month's statements are made available. This one from last month etc...

9580

[permutation]

I've heard of deferred payment, but this is ridiculous!!

9581

[beacon]

Indeed. In the four examples I've uploaded above, I've tried to show a loan of each type of protect component. The oddities exist even when there is no PP (1st example above)

[Wsp]

I've heard of deferred payment, but this is ridiculous!!

9581

i have this too. It occurs when a 36 month loan clocks over to 37 months or more.

[BJ1]

Where is the guidance that bad debts are deductible for retail investors? The retail investors in collapsed finance companies were informed that their bad debts were not deductible. Are investments in P2P vehicles different? That is the crux...and is a grey area, pending guidance.

Firstly, we are not investors; we are directly lending to borrowers. The Tax Act distinguishes between passive and active behaviour. It has been determined unequivocally that subscribing to fixed interest issues by finance companies is a passive investment, which is why losses in those have not been deductible for the past 40 or so years. But active lending direct to borrowers is different. That begs the question as to whether autolend is an active management practice. I've taken the view it isn't so don't use autolend. I also carefully select my loans based on parameters I have set for my risk profile. I am confident I qualify for write-off deductions. I can't speak for others.

[Art]

Obviously, these oddities don't correct even though Harmoney takes 2-3 weeks before the previous month's statements are made available. This one from last month etc...

9580

I have a lot of these also. 35 "Paid Off" loans with positive balances and 42 with negative balances. Most are very small balances (1 cent to $2) but two are bigger $50 and $22. The $50 has had no repayments at all yet is marked 'paid off'. Have been in discussions with Harmoney for some time now trying to get sorted, but must say not much progress being made. Most of my loans are for just one note so even the balances of say $1 are significant over the whole loan.

[Investor]

Could someone jog my memory - is it correct that if loans are repaid early and the borrower selected payment protect, we lose money (the PP fee)?

[Bjauck]

Firstly, we are not investors; we are directly lending to borrowers. The Tax Act distinguishes between passive and active behaviour..... P2P is a disruptive investment vehicle needing clarity. What is the extent and effect of the role of Harmoney, which has the dealings with the borrowers? Do depositor/investors regard their capital invested on the harmoney platform as a blended inestment with an averaged return?

[leesal]

Could someone jog my memory - is it correct that if loans are repaid early and the borrower selected payment protect, we lose money (the PP fee)?

the unused portion of PP fee is returned. However worse then that, harmoney takes its PP fee, which is taken off investors returned principal so the net result in some cases can be negative

[humvee]

I know somewhere within the last 200+ pages there was some links to apps that could import the harmoney export and analise them - but I cannot for the life on me find them, let alone the latest one - could someone point me in the right direction.

[Investor]

I know somewhere within the last 200+ pages there was some links to apps that could import the harmoney export and analise them - but I cannot for the life on me find them, let alone the latest one - could someone point me in the right direction.

Looks like the site isn't working. Details below


Hi guys. I've been tinkering over the last week with a website that helps show your Harmoney loan information in a unique way.

It's a simple matter of Exporting your loan information from Harmoney (Dashboard -> Reports -> Export) and uploading the loans.csv file provided by Harmoney.

Note: There is no lender information in the exported loan report. It does contain the loan Id, but these are readily accessible by any member of the site.

The graph shows your loans along a LoanId timeline, with the Y axis representing Outstanding Principal. You can show all, or filter by Status; Current, Charged Off, Arrears, Paid Off and Cancelled.

The site is reasonably functional now so you're welcome to use it at the following url; http://precis.azurewebsites.net/

8003

(I have a neat new feature that I'll be working on over the weekend.)

[joker]

Looks like the site isn't working. Details below

Hi PP, I amy be doing something wrong but the link takes me to MS Azure but doesn't bring up Precis - just the page in the screenshot attached and the links in it don't seem to lead me to your app...
9603

[Vagabond47]

How much further is the platform RAR going to drop? Just noticed its down to 10.0% now, it was at 10.8ish when i started this little game.. Any idea when/where it is going to stabilise?

[Investor]

How much further is the platform RAR going to drop? Just noticed its down to 10.0% now, it was at 10.8ish when i started this little game.. Any idea when/where it is going to stabilise?

Time will tell

[alistar_mid]

How much further is the platform RAR going to drop? Just noticed its down to 10.0% now, it was at 10.8ish when i started this little game.. Any idea when/where it is going to stabilise?

mines doing this

looks like it might be somewhat stabilizing, but its only been ~4 months

9607

[Investor]

9608
My RAR graph

[joker]

9608
My RAR graph

And here's my RAR graph - seems to have peaked and I am being more picky in my investments
9609

[Investor]

And here's my RAR graph - seems to have peaked and I am being more picky in my investments
9609

I started off with only A/B, have invested in c/d along the way gradually. Now at about 65% C so my RAR is going to slightly increase to maybe 13.5% in the long-run (investing only in C now)

[Bjauck]

How much further is the platform RAR going to drop? Just noticed its down to 10.0% now, it was at 10.8ish when i started this little game.. Any idea when/where it is going to stabilise? I imagine the platform RAR could drop further as the lower interest rate regime works through the system and more of the higher interest rate regime notes get repaid or charged-off.

As average charge-off rate was disclosed at about 22% of gross interest (presumably under the old higher-interest rate regime) then a further deterioration of RAR may be possible depending on how effective the new system is at assessing credit worthiness of borrowers.

This is a pre-tax RAR (net of charge-offs and fees) and it is up to you and your other independent advisors to determine if you are able to deduct charge-offs and/or lender fees for that matter. The RWT is levied on the gross interest.

[RMJH]

How much further is the platform RAR going to drop? Just noticed its down to 10.0% now, it was at 10.8ish when i started this little game.. Any idea when/where it is going to stabilise?
Multiple factors are in play, not least fee changes and rate changes which take time (up to 5 years!) to fully work through. I also think we may have had a period of unexpectedly low write downs and are now returning more typical levels. Mix of loans and mix of lenders would also impact the platform RAR and I think payment protect will be added at some point to complicate the historical pattern further. It would be quite a bit of work to unpick all of that!

[darrenc]

RAR now in single digits (showing 9.96% for me). I'm at 14.67% and reasonably stable since October 2017 through being a picky b'stard.

[beacon]

RAR now in single digits (showing 9.96% for me). I'm at 14.67% and reasonably stable since October 2017 through being a picky b'stard.

Great pickings darrenc. For many retail investors though, who rely less on their loan picking skills and more on Harmoney grading (since loan detail is usually sketchy and sometimes dubious), competition gets more lucrative now every time Harmoney loses a pip in its RAR ...

Many will still compare it with Bank Interest and plod on...

[Soolaimon]

Great pickings darrenc. For many retail investors though, who rely less on their loan picking skills and more on Harmoney grading (since loan detail is usually sketchy and sometimes dubious), competition gets more lucrative now every time Harmoney loses a pip in its RAR ...

Many will still compare it with Bank Interest and plod on...

Correct, my RAR has been around 12.8% now for a year or more. Bank term deposits averaging 3.55% so all is well..so far.

[icyfire]

Can anyone make sense of this borrower's comment?
9615

[Investor]

Can anyone make sense of this borrower's comment?
9615

Funny, I was just reading this myself scratching my head. Seems like "i've had a bad run with my finances but will enjoy getting this loan".

[Bjauck]

Correct, my RAR has been around 12.8% now for a year or more. Bank term deposits averaging 3.55% so all is well..so far.

I imagine, that Not everyone can be so confident There is greater risk surrounding that before tax unsecured RAR. Also, unless you can be certain that you can deduct both charge-offs and lender fees, then you effective tax rate could be much greater than 33%. Plus how much do you have sitting in the Harmoney platform non-interesting bearing account waiting for loans or waiting for loan notes to be taken up by borrowers?

Charge offs comprise 22% of gross interest is and that is in a fairly benign economy.

[joker]

I imagine, that Not everyone can be so confident There is greater risk surrounding that before tax unsecured RAR. Also, unless you can be certain that you can deduct both charge-offs and lender fees, then you effective tax rate could be much greater than 33%. Plus how much do you have sitting in the Harmoney platform non-interesting bearing account waiting for loans or waiting for loan notes to be taken up by borrowers?

Charge offs comprise 22% of gross interest is and that is in a fairly benign economy.

Somewhat subjective Bj - charge off rates vary and can be affected by the number of loans and range of loan grades. 22% is an industry quoted figure for unsecured personal loans but will vary significantly from lender to lender. E.g.- a lender with just one loan written off after one payment = 6,000%. In my case, 8 months in with 2,100 loans, RAR = 12.68%, gross interest = $3,950, charge offs = $224 = 5.67%. Smarter lending decisions will reduce bad debts - ask any banker. Agree absolutely that the economy is benign atm and that a tightening could change everything but generally, a recession will cause charge offs to increase by half - certainly a steep decrease in returns but not an absolute catastrophy and certainly not back to current bank deposit rates. Most asset classes will not escape unscathed from a recession (bar bank deposits).

[Soolaimon]

I imagine, that Not everyone can be so confident There is greater risk surrounding that before tax unsecured RAR. Also, unless you can be certain that you can deduct both charge-offs and lender fees, then you effective tax rate could be much greater than 33%. Plus how much do you have sitting in the Harmoney platform non-interesting bearing account waiting for loans or waiting for loan notes to be taken up by borrowers?

Charge offs comprise 22% of gross interest is and that is in a fairly benign economy.

My charge offs are just under 10% of gross interest. Been in since the start and I did cop a few larger charge offs when I was buying up to 8 notes per loan. In the last 18 months have limited buying to 1-2 notes and a few at 3. Perhaps it was just bad luck earlier but the charge off's now I feel are at an acceptable level. B and C loans with the occasional D grade.

[myles]

Milestone reached for me today - just over 12 months of investing.

9618

A few other numbers of interest:

1941 loans in total
596 loans paid off
22 loans charged off
22.03% average weighted loan interest rate

Harmoney average suggested default rate for my loans = 1.33%
My loans actual default rate = 1.13%

Charge offs (I have a split something like 10% B, 40% C, 35% D, 15% E):
1 x B (1:194)
7 x C (1:111)
6 x D (1:113)
8 x E (1:36)

The default ratio shown in brackets (i.e. 1 loan in 194 defaults for B's) is interesting - shows very little difference in my loan set for C and D loans?

[Bjauck]

Somewhat subjective Bj - charge off rates vary and can be affected by the number of loans and range of loan grades. 22% is an industry quoted figure for unsecured personal loans but will vary significantly from lender to lender. E.g.- a lender with just one loan written off after one payment = 6,000%. I think that the 22% of gross interest was the platform wide figure revealed by Harmoney. However I cannot find a citation for this.



In my case, 8 months in with 2,100 loans, RAR = 12.68%, gross interest = $3,950, charge offs = $224 = 5.67%. Smarter lending decisions will reduce bad debts - ask any banker. Agree absolutely that the economy is benign atm and that a tightening could change everything but generally, a recession will cause charge offs to increase by half - certainly a steep decrease in returns but not an absolute catastrophy and certainly not back to current bank deposit rates. Most asset classes will not escape unscathed from a recession (bar bank deposits). I think eight months in is about the time when you may start to hit the charge-off bulge.


I agree that Harmoney may produce after tax returns eceeding TDs for most, however P2P is a young industry and I think it comes with considerably greater associated future risk especially during the next downturn.



My charge offs are just under 10% of gross interest. Been in since the start and I did cop a few larger charge offs when I was buying up to 8 notes per loan. In the last 18 months have limited buying to 1-2 notes and a few at 3. Perhaps it was just bad luck earlier but the charge off's now I feel are at an acceptable level. B and C loans with the occasional D grade. Your charge rate is lower than platform (if the platform rate is at 22% of gross interest). Maybe your portfolio and results would be in the goldilocks range for those P2P lenders who may not be able to claim charge-offs for tax purposes...maximising interest yield, whilst keeping charge-ofs at a moderate level.

[beacon]

22.03% average weighted loan interest rate


The default ratio shown in brackets (i.e. 1 loan in 194 defaults for B's) is interesting - shows very little difference in my loan set for C and D loans?

Congratulations myles on the 20k gross, absolutely enviable results and well deserved, as you backed your calculations and convictions and ventured into the risky frontier, despite recent risk averse chatter a year ago.

Interesting C-D ratios indeed. Would be interesting to see if your loan picking filters will eventually beat Harmoney's grading system ...

[joker]

Earns $26,000 monthly after tax, needs to borrow $3,000, willing to pay $500 for the re-write to get the loan increase. One has to seriously doubt the veracity of the information that Harmoney provides us with to base our investment decisions upon. There is obviously little checking of the data supplied by borrowers and no red flags are being raised in unusual/unbelievable circumstances.
9623

[RMJH]

Earns $26,000 monthly after tax, needs to borrow $3,000, willing to pay $500 for the re-write to get the loan increase. One has to seriously doubt the veracity of the information that Harmoney provides us with to base our investment decisions upon. There is obviously little checking of the data supplied by borrowers and no red flags are being raised in unusual/unbelievable circumstances.
9623
Looks like a business loan too but filter would not have caught it. If they are orchardists it could be they have very seasonal cash flow but no way I would touch it!

[SteveG]

After some write offs I asked Harmoney how they confirmed the income and they said they review bank statements. I bet the $26k monthly income is top line revenue for a crop sale and not net income. If it was its hard to imagine they would need this expensive loan.

[beacon]

There are no fee charged if loan returned in full in cooling-off period. This loan was issued and paid-off on the same date. No service fee charged, but is Payment Protect Fees still charged? :confused:

9624

[beacon]

At sub 10% returns, Harmoney no longer holds the yield advantage over competition, especially for smaller portfolios, and it looks like the sub 10% returns are here to stay due to the high Harmoney fees and feeble investor returns from its Payment Protect option. It still remains strong in the investment mix for the 'real' peers despite its poor track record in communications and lender satisfaction, because the competition has comparatively poor volume. At this stage...

[myles]

Err, the retail RAR is 12.4'ish...

Why do people constantly compare themselves to the platform RAR when it should be the retail RAR? If your RAR, as a retail investor, is below 12.4, you're below the average of your 'peers'...

[beacon]

Err, the retail RAR is 12.4'ish...

Why do people constantly compare themselves to the platform RAR when it should be the retail RAR? If your RAR, as a retail investor, is below 12.4, you're below the average of your 'peers'...

Individual performance is as much a matter of luck as it is of an individual's loan picking nous, especially if loan numbers are small in the portfolio, which they are for most retail customers. But of course, it is a valid way to segment, and benchmark.

Benchmarking to the platform RAR seems more appropriate to me for my purposes, and hence I have talked about it more, as it measures HM loan vetting performance, which I (and the institutional lenders - 75%+ of the HM Loan book) am forced to predominantly rely on. But, to each their own. :)

[beacon]

Also, even at (the still declining) 12.4% retail RAR of the pick n choose segment, HM offering is only second best now, since it reduced the reward for carrying unsecured loans 2 years ago (by raising its fees to 20%, 17.5% etc.) and the non tax-deductibility of its (comparatively much higher) defaults for the 'real/retail' peer. Watching this space with interest.

[leesal]

Also, even at (the still declining) 12.4% retail RAR of the pick n choose segment, HM offering is only second best now, since it reduced the reward for carrying unsecured loans 2 years ago (by raising its fees to 20%, 17.5% etc.) and the non tax-deductibility of its (comparatively much higher) defaults for the 'real/retail' peer. Watching this space with interest.

No doubt its going to get lower. However I feel the autofilter is worth a good 2%

And what is the alternative - lendme lacks the volume to make it viable for most investors. Haven't looked at Squirrel.

[myles]

Individual performance is as much a matter of luck as it is of an individual's loan picking nous, especially if loan numbers are small in the portfolio, which they are for most retail customers.
I don't see the correlation with luck. Is it luck when you pick shares from one company over another? There is known risk of failure, that's not luck in my thinking.

If you go back away in this thread you'll find a list of loan types to select and avoid based on info from overseas - I can only say that it significantly improves my return by taking those into consideration at both a filter level and at an individual loan level.

[beacon]

I don't see the correlation with luck. Is it luck when you pick shares from one company over another? There is known risk of failure, that's not luck in my thinking.


If you go back away in this thread you'll find a list of loan types to select and avoid based on info from overseas - I can only say that it significantly improves my return by taking those into consideration at both a filter level and at an individual loan level.


And good on you myles - for doing that.


I have been slowly reading through this thread when I get the time, but 213 pages is still a lot to go through. Still, it has been time well spent generally, and I have learnt a few things here from posters' (including you) insights as well as from their experiences. Thank you all.


In business, including stockpicking and loan selection, you can reduce risk by thoughtful action, but never eliminate it fully. The 'known risk of failure' is a probability generated from history, but it is best used with the knowledge that it cannot guarantee any future outcome. We need back view mirrors in cars, but we drive looking out through the windshield. Humans have limited vision. The rest is luck, in my book, as it can not be pre-quantified. So, there is an element of luck when you pick shares from one company over another (without discounting that you may have picked based on your research, but research itself is limited in the number of variables that can be researched etc...)

[Bjauck]

Also, even at (the still declining) 12.4% retail RAR of the pick n choose segment, HM offering is only second best now, since it reduced the reward for carrying unsecured loans 2 years ago (by raising its fees to 20%, 17.5% etc.) and the non tax-deductibility of its (comparatively much higher) defaults for the 'real/retail' peer. Watching this space with interest. Harmoney has said that charge-offs are running at about 22% of gross interest.

The 12.4% retail RAR is net of the 20% fee, for a smaller retail investor, and charge-offs.

So that must mean the average investor must earn approx 21% gross interest with tax at 33% comprising 6.6%.

Approximate figures for retail investors paying the maximum fee rate:
Gross interest = 21%
less:
Charge-offs =4.4%
Fees=4.2%
RWT @33% of gross interest= 6.9

So 5.4% is my back of the envelope guestimate of the after tax return for an average smaller investor who can tax deduct neither fees nor charge-offs and 6.7% for someone who can tax deduct the lender fee.

Harmoney has not definitively stated that fees are tax-deductible for everyone. Harmoney points out, each taxpayer should seek advice on the status of fees and charge-offs. So small investors should also factor in the cost of that independent researched advice on the deductibility of both fees and charge-offs. Does Harmoney anticipate that fees cannot be deducted by some of its lenders/investors? If that is the case, I think it is most likely to be small retail investors who would not be able to make the tax deductions. If everyone could deduct fees, why doesn't RWT take into account the fees that are automatically levied by Harmoney on gross interest? Definitely DYOR.

[777]

Going over repeated ground, it is not Harmoney's responsibility to sort out individuals tax liability.

RWT has to be deducted by law. That is the end of their involvement.

Fees you pay are deductible as a cost of earning that interest.

If you lend money on mortgage through a lawyers firm the deduct from the interest a handling fee. This is also deductible. The same as any interest earned on money held in trust by lawyers that pays out interest.

Go back over earlier pages in this thread. It has been discussed to death.

Tax is taxpayer's responsibility.

[Ellipsis]

If everyone could deduct fees, why doesn't RWT take into account the fees that are automatically levied by Harmoney on gross interest? Definitely DYOR.

Posting so you can put this behind you :)

Section RE 12 (Income Tax Act 2007) Interest

When this section applies

(1) This section applies when a person makes a payment of resident passive income that consists of interest.

Calculation of amount of tax

(2) The amount of tax for the payment that the person must withhold and pay to the Commissioner is calculated using the formula—

(tax rate × (interest paid + foreign withholding tax)) − foreign withholding tax.


Definition of items in formula

(3) In the formula,—
(a) tax rate is the basic rate set out in schedule 1, part D, clause 3 (http://www.legislation.govt.nz/act/public/2007/0097/latest/link.aspx?id=DLM1523221#DLM1523221) or 4 (http://www.legislation.govt.nz/act/public/2007/0097/latest/link.aspx?id=DLM1523224#DLM1523224) (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits):

(b) interest paid is the interest paid before the amount of tax is determined:

(c) foreign withholding tax is the amount of foreign withholding tax paid or payable on the interest paid.


You can find the tax rates here: http://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1523192.html#DLM1523221

As you can see from the RWT formula, Harmoney is not allowed to taken fees into account when deducting RWT. If you feel strongly about this, you can contact the policy division at the IRD to recommend changes to the legislation.

[Bjauck]

Posting so you can put this behind you :)

Section RE 12 (Income Tax Act 2007) Interest

When this section applies

(1) This section applies when a person makes a payment of resident passive income that consists of interest..... So Squirrel P2P can deduct RWT on the net interest (after deducting its fees) paid to lenders who lend to borrowers on the Squirrel platform because it is more like a traditional finance company and the income its lenders earn is even more passive than the interest earned by those who lend via Harmoney?

[Gill]

It is always good to read the blog here as I always learn a thing or two. People have been saying if you pick your loans right you can do alright on Harmoney, I have been trying to pick loans with an aim that the borrower doesn't default. What are your criteria to pick a loan? I myself look at these points:

- House owner or renting ( I give preference to homeowners)
- Time at the employer (the longer the better)
- Compare the monthly loan payment to their monthly income to judge if they can afford it.

Here are some of the loans which are in arrears, would you have picked these loans or not? As they looked very good to me however they are in arrears



9643


9644

9645

[myles]

Here are some of the loans which are in arrears, would you have picked these loans or not? As they looked very good to me however they are in arrears

Gill, if you search back through this thread you'll find some guidance on which loans are likely better than others.

Of the loans you've listed - my quick comments:

99244 - I would not have picked this loan as the repayment amount is more than 15% of the borrowers income (just, but that's my cutoff). I always see having made previous payments as a significant positive - the worst charge offs are from those who make no payments at all. Everything else looks okay, but the language used might be enough to put me off. 31-60 days in arrears is not really anything to worry about - many loans get into this range and then come good.

99236 - Not showing the borrower detail...

30346 - I don't typically take 'Clear Overdraft' loans, time at residence of 0 is something to consider. The wording again would likely put me off - when someone suggests they are closing off all their debts by taking out another debt kind of makes me think they don't quite get it, but it could just be poor wording.

Note that I don't take any A grade loans so I don't even see these loans as they are filtered out - that's just my approach to get a better return.

[beacon]

I have been trying to pick loans with an aim that the borrower doesn't default... Here are some of the loans which are in arrears ... they looked very good to me however they are in arrears

Your picks seem consistent with your aim. I can't fault either. The fact that they are in arrears, is just noise. While the aged loans are more likely to default, any loan can default at any time. You think your criteria is reducing risk, and the historical probabilities seem to agree with you...


would you have picked these loans or not? What are your criteria to pick a loan?

I rely predominantly on HM grading, as I feel the risk is already priced in the return.

[beacon]

So Squirrel P2P can deduct RWT on the net interest (after deducting its fees) paid to lenders who lend to borrowers on the Squirrel platform because it is more like a traditional finance company and the income its lenders earn is even more passive than the interest earned by those who lend via Harmoney?

Well compared and argued, Bj. I think deducting RWT on Gross Interest is outrageous, especially as fee is calculated and deducted inhouse by P2P providers simultaneously and it is a pre-quantified number, which has nothing to do with their client's tax rates or position. In my book, they do it for OPM, because they can.

Lending Crowd isn't guileless either, as it currently does not support RWT exemptions, even though it has the ability to apply variable rates for deducting client's RWT. Still a lot of wild west stuff that needs to be sorted if P2P industry wants some respectability...

[beacon]

I think deducting RWT on Gross Interest is outrageous.

After so many years in business, it is hard for these P2P providers to argue that they are still confused about the tax deductibility or tax treatment of their fees. There is no case-by-case element in fees. Fees paid are a tax-deductible cost of earning P2P interest.

[RMJH]

It is always good to read the blog here as I always learn a thing or two. People have been saying if you pick your loans right you can do alright on Harmoney, I have been trying to pick loans with an aim that the borrower doesn't default.
I do use filters but more important is to have sufficient numbers to benefit from diversification. Harmoney have more information than we get to see so are better placed to grade loans so I doubt picking actual delivers much of a premium on a like for like grade and age weighted portfolio. A higher return doesn't necessarily mean a better return.

[Ellipsis]

So Squirrel P2P can deduct RWT on the net interest (after deducting its fees) paid to lenders who lend to borrowers on the Squirrel platform because it is more like a traditional finance company and the income its lenders earn is even more passive than the interest earned by those who lend via Harmoney?

There is no gross/net concept for lenders on Squirrel. If they bid for 9% then that’s what they get pre-tax, Squirrel then levies their fees on top on the borrowers’ side. Which btw means there is nothing to deduct for tax from a lender’s perspective, rather than having Squirrel automatically deducting it for lenders.

Not debating the merits of either model, that’s up to the individual investors. Just wanted to point out that Harmoney cannot deduct RWT off “net interest” after fees. And this should have no relevance to whether or not Harmoney’s fees are deductible for tax.

I agree with all the posters who have commented, on multiple occasions, that Harmoney’s fees are deductible given the fees are incurred in the course of deriving taxable income and are not limited by the general limitations.

[Bjauck]

...I agree with all the posters who have commented, on multiple occasions, that Harmoney’s fees are deductible given the fees are incurred in the course of deriving taxable income and are not limited by the general limitations.

From 2016:
Peer-to-peer investors should seek advice on their tax obligations before they start investing, Inland Revenue says.

https://www.mortgagerates.co.nz/article/976503820/p2p-investors-told-to-get-tax-advice.html
"“Generally, for the lender to be able to claim expenses relating to their lending, such as commissions and other fees, they would need to be in the business of lending. As for defaults – generally if a loan is not repaid there is no deduction for the loss of capital,” a spokesperson said."

So following this advice, regardless of the advice received, a small retail investor has to pay for professional advice which would eat into thier returns from their P2P for a start.

With regards to deductibility, P2P needs clarity in the form of official guidance. I think other jurisdictions have provided that

[Stevecp]

The deduction of service fees for tax purposes is a given.

Under certain circumstances you can also claim charge offs.

[Bjauck]

The deduction of service fees for tax purposes is a given.

Under certain circumstances you can also claim charge offs. Who has made that a given?

Retail investors are advised to pay for professional advice on their individual circumstances.

Even Harmoney only states that they should be deductible.
"The Service Fee or Lender Fee is deducted from repayments into the lender account and should be tax deductible."

For it to be a given for all lenders, I would have expected wording such as "The lender fee is tax deductible."

The IRD spokesman in the article referenced previously said that generally the test for fee deductibility is whether there is a business of lending.

[777]

Straight out of the IR3 guide

If you were charged commission on any of your interest, claim this at Question 26.

Pretty straight forward I would think.

[leesal]

Borrower interest rates: As Harmoney continues to innovate and improve its credit algorithm and scorecard, the business will continue to review and price risk accordingly. Review the interest rate updates here (http://go2.harmoney.com/a0300Z0GkL0300dXoS4kcKQ).

https://www.harmoney.co.nz/how-it-works/interest-rates-and-fees#rates

excellent news!

I started when platform 1.5 was introduced, so RAR has struggled to get above 14% without any defaults. Roll on the new and improved platform :)

[Investor]

Borrower interest rates: As Harmoney continues to innovate and improve its credit algorithm and scorecard, the business will continue to review and price risk accordingly. Review the interest rate updates here (http://go2.harmoney.com/a0300Z0GkL0300dXoS4kcKQ).

https://www.harmoney.co.nz/how-it-works/interest-rates-and-fees#rates

excellent news!

I started when platform 1.5 was introduced, so RAR has struggled to get above 14% without any defaults. Roll on the new and improved platform :)

They're also reducing the application fee to $450.

Is it safe to assume that expected default rates remain unchanged? It doesn't seem there way any communication of change in that area.

[myles]

Good news maybe. Roller-coaster interest rates say something about poor forecasting or errors to me.

Let's hope this now becomes more stable.

[Investor]

Good news maybe. Roller-coaster interest rates say something about poor forecasting or errors to me.

Let's hope this now becomes more stable.

Perhaps they weren't happy with the previous potential rates of return. This latest update will take my expected return after tax up approx 2.5% p.a., according to rough excel modelling.

[Vagabond47]

The Investor Agreement (http://go2.harmoney.com/NS00pLaQ000GskX0b4e0q3Z) and Disclosure Statement (http://go2.harmoney.com/P00040QLZS0sqe0k0qcXGa3) have been updated to reflect a new funding structure that allows Harmoney to invest in loans as another wholesale lender, putting its capital at risk just like you.

Hmmm, are we about to get (even more of) the good loans cherry picked from under us?

[Investor]

Hmmm, are we about to get (even more of) the good loans cherry picked from under us?

Clever move on Harmoney's part.. Very interesting.

Edit: That should complicate things r.e. their battle with the commerce commission about the fees they are charging.

[RMJH]

Should be worth about 3% gross to me but I wonder if available volumes will decline. I was this very day mulling upping my exposure to P2P.

[myles]

Re Cherry picking: it should be fairly obvious from the retail vs wholesale RAR graph that cherry picking doesn't actually happen the way some suggest...

[Investor]

Harmoney stated in their announcement that they would be lending under the same conditions as other wholesale lenders (directly implying that they aren't going to 'cherry pick').

[joker]

Looks like an admission by Harmoney that interest rate reductions called scorecard 1.5 were too low (as evidenced by a severe drop in the RAR graph since).

[permutation]

Looks like an admission by Harmoney that interest rate reductions called scorecard 1.5 were too low (as evidenced by a severe drop in the RAR graph since).
Oh!, does that mean I should stop withdrawing my available cash balance everyday because of the recent decline in return??

[Vagabond47]

Re Cherry picking: it should be fairly obvious from the retail vs wholesale RAR graph that cherry picking doesn't actually happen the way some suggest...

Depends whether you are picking for sweetness or shelflife. Will be interesting to see if the lines cross in an economic downturn.

[myles]

Depends whether you are picking for sweetness or shelflife.
Hmm, maybe - I personally don't think so. A low RAR doesn't necessarily indicate good "shelflife", e.g. F Grade (high interest) loans with high default rates will give you a similar RAR to A Grade (low interest) loans with low default rates. If there is a shift downward the F Grade loans return will no doubt fall and I suspect this would be reflected in the wholesale RAR more than the retail RAR.

[leesal]

Looks like an admission by Harmoney that interest rate reductions called scorecard 1.5 were too low (as evidenced by a severe drop in the RAR graph since).

10% wouldn't provide institutional investors with adequate return relative to the risk.

9656

Since HM success is through ticket clips, I'd say the institutions are behind this (us as lendors are simply a marketing angle). HM "investing" would better align their interests with institutional investors

Either way, am happy to have an extra 2-3%

[myles]

Just for comparative and historic record:

9657

Those high end B Grade loans are looking good again. I do wonder if the grading process Harmoney uses will change i.e. will a new B5 borrower be the same as an old B5 borrower, or is this a way to 'shift' investors who continue to select the same grade/rate loans???

9658

As a chart - smoothed as it looks better... Interesting that the lower-mid grade loans now have a higher interest rate then they did pre August 2017.

I'll include default rates if a new set is published...

[RMJH]

I do wonder if the grading process Harmoney uses will change i.e. will a new B5 borrower be the same as an old B5 borrower, or is this a way to 'shift' investors who continue to select the same grade/rate loans???
Would be good if the grade related to an explicit expected default rate band but I think the expected default moved with 1.5 and as you say we don't have new forecasts for the current re-pricing.

[RMJH]

Grade
Forecast default rate p.a.


Scorecard 1.0
Scorecard 1.5


A1
0.08%
0.05%


A2
0.13%
0.10%


A3
0.16%
0.11%


A4
0.21%
0.12%


A5
0.27%
0.14%





Grade
Forecast default rate p.a.


Scorecard 1.0
Scorecard 1.5


B1
0.32%
0.16%


B2
0.42%
0.18%


B3
0.54%
0.21%


B4
0.63%
0.25%


B5
0.74%
0.30%





Grade
Forecast default rate p.a.


Scorecard 1.0
Scorecard 1.5


C1
0.86%
0.37%


C2
1.04%
0.46%


C3
1.19%
0.56%


C4
1.39%
0.70%


C5
1.51%
0.89%






Grade
Forecast default rate p.a.


Scorecard 1.0
Scorecard 1.5


D1
1.53%
1.13%


D2
1.79%
1.42%


D3
1.95%
1.78%


D4
2.21%
2.18%


D5
2.50%
2.60%





Grade
Forecast default rate p.a.


Scorecard 1.0
Scorecard 1.5


E1
2.78%
3.14%


E2
3.52%
3.70%


E3
4.11%
4.38%


E4
4.95%
5.12%


E5
6.05%
5.84%





Grade
Forecast default rate p.a.


Scorecard 1.0
Scorecard 1.5


F1
6.96%
6.62%


F2
8.36%
7.34%


F3
9.79%
8.09%


F4
12.63%
8.78%


F5
15.38%
9.49%

[RMJH]

Sorry headings are not aligned.

[beacon]

Sorry headings are not aligned.



Will be interesting to see how the default rates may have changed, if at all. I think the interest rate changes (at least for the less risky grades) finally reflect the risk more accurately now.

By the way, all such changes (better or worse) render historical comparisons less useful.

[beacon]

Grades with a changed default rate:

C4
D1-D5
E1-E5
F2,F4,F5

These may not be the latest release. Harmoney has had these differing default rates on 2 separate pages online for months now.

[Investor]

These may not be the latest release. Harmoney has had these differing default rates on 2 separate pages online for months now.

I had the original scorecard 1.5 default rates saved on excel and compared them to the current ones on their website. Not sure when it was updated since 1.5 (if not in the last few days).

[beacon]

I had the original scorecard 1.5 default rates saved on excel and compared them to the current ones on their website. Not sure when it was updated since 1.5 (if not in the last few days).

Use the rates here: harmoney.co.nz/investors/investment-risks
as they seem to match the info in loans more, although I haven't checked this in the last 5 months

[beacon]

The other page was here: https://www.harmoney.co.nz/how-it-works/scorecard-1-5
Default rates on these two pages match now, so they must have corrected the differing page in Dec/Jan

[myles]

Any chance you can go back and delete those default rates as they are very confusing? As I said I'm happy to put them up when/if Harmoney publish them. Thanks.

[beacon]

Any chance you can go back and delete those default rates as they are very confusing? As I said I'm happy to put them up when/if Harmoney publish them. Thanks.

Don't know who you are referring to myles, but happy to oblige

[leesal]

9667

First charge month after 9 months. Went straight from current last week to charged.

E grade not looking too flash hot. 10% of loans outstanding are in arrears. As for installments, 324 have been paid (14 arrears + 56 charged). Currently its projecting a 3.5% return on that grade.

[Bjauck]

9667

First charge month after 9 months. Went straight from current last week to charged.

E grade not looking too flash hot. 10% of loans outstanding are in arrears. As for installments, 324 have been paid (14 arrears + 56 charged). Currently its projecting a 3.5% return on that grade.Yikes. Is that a pre-tax return?

[leesal]

Yikes. Is that a pre-tax return?

For grade E yes thats my pretax. (based on writing down arrears >60 days)

Overall its 12.3%. RAR 14.4%.

[myles]

Best review your selection criteria/process...:eek2:

[leesal]

I'd say so.

For starters will get E down from 15% to 10% or less of book (was 20% at one point). Can afford to be much pickier!

That said Harmoney have some as current that I've written down. Eg this one being 4 payments behind. Could be hardship criteria, so maybe there is some upside.

9668

[777]

I wish that Harmoney were a bit more efficient in getting the Tax Certificates available to download.

[myles]

I'm guessing, but it looks like you may have bought into E's fairly heavily in the lead up to Christmas :scared: In my opinion this is not the best approach. If you go back a little way in this thread I highlighted that there is some thinking that P2P lending tends to follow a similar 'default cycle' as credit cards. Credit card repayments/defaults take a significant hit from purchases made in the lead up to Christmas...

I back right off taking loans during the lead up to Christmas, selecting only 'good' loans to try to counteract this. The issue I've had is that there are not enough 'good' loans at that time of year, so available funds increase. These available funds sit uninvested with zero return. I struggle with this one to know what is the best approach - invest in loans that you know have a higher rate of default, but at least have the money invested and make a return (or not?), or hold back the funds and invest when the 'danger' period has passed.

Won't know the answer for a couple of years...

It maybe a good approach to invest in loans with lower interest rates (and lower default rates) in this period than you would normally take - to keep available funds to a minimum?

[leesal]

Very slack on the tax cert.

You have a conundrum there. Might be too much bother to withdraw funds, and whack it into the bank at 3%. Alternatively just spread some additional investment through the year, so you are overweight at the leadup, and can scale back easier.

As for my own results definately something in that effect! December I invested $1000 invested. Est chargeoff $24, post tax return 10.5%

However next year I'll ease off earlier, my November numbers are shocking! $1750 invested, interest earned $159, projected charge off $131. Post tax return -0.6%.

Compare Jan18 $2500 invested, no est chargeoff, 17.5%. February to now similar (8.7k invested and 16% return)

[Saamee]

I wish that Harmoney were a bit more efficient in getting the Tax Certificates available to download.

Agreed as the other P2P Lenders had them available within days of the end of the Tax year!

They WILL be available by 20th of May as that is the law :) Not long to wait now - Check every day....

2016 HM RWT's were available on 13th May & 2017 HM RWT's were available on 19 May

[beacon]

Looks like Harmony has started investing with a bang. Log out P2P investors, and by the time they log back in, 20-30 loans with little fills - all gone

[joker]

Looks like Harmony has started investing with a bang. Log out P2P investors, and by the time they log back in, 20-30 loans with little fills - all gone

Yes, I'm finding that while my investment is being processed, the loan suddenly becomes 100% taken!

[icyfire]

Harmoney will eventually become an online bank lending their own money.

[Investor]

Harmoney will eventually become an online bank lending their own money.

They won't pass on the opportunity of clipping the ticket on investor's funds (which I am very happy with, given what the platform offers).

[icyfire]

That's a good point and it makes you wonder why HM is now lending their own money at all if they can make more money by clipping the ticket

[Investor]

That's a good point and it makes you wonder why HM is now lending their own money at all if they can make more money by clipping the ticket

Well.. any funds which aren't required can earn Harmoney interest at the institutional rate, a pretty compelling investment for any business given the effort required.

[icyfire]

Hopefully they're not using any of my funds available!

[darrenc]

Looks like Harmony has started investing with a bang. Log out P2P investors, and by the time they log back in, 20-30 loans with little fills - all gone

This is not new. I have the site on most of the day with an auto-refresh. Loans will sit there a while and then all mysteriously disappear at once. This has been happening at least 6 months, if not more.

[beacon]

This is not new. I have the site on most of the day with an auto-refresh. Loans will sit there a while and then all mysteriously disappear at once. This has been happening at least 6 months, if not more.

What seemed new was that they released the bulk (approx 75%) of all today's loans (4 PM now), in one go around 10 AM today. One moment there were over 20, barely filled. And by the time my first order was placed (which returned an error, by the way), all had gone. Don't know if anyone else had the same experience today, but I have seen speed fills before but never seen such a short exposure of so many loans before. Someone seemed to have had a lion's share of loans today, without letting the cubs have a bite ... :D

[777]

When do they hit the auto loan button? My guess is 10.01am.

[beacon]

When do they hit the auto loan button? My guess is 10.01am.

Auto lend happens before loans hit the retail marketplace, I presume you mean the wholesale fills :)

[777]

No I did mean the auto lend. It was only a guess for a reason.

[joker]

What seemed new was that they released the bulk (approx 75%) of all today's loans (4 PM now), in one go around 10 AM today. One moment there were over 20, barely filled. And by the time my first order was placed (which returned an error, by the way), all had gone. Don't know if anyone else had the same experience today, but I have seen speed fills before but never seen such a short exposure of so many loans before. Someone seemed to have had a lion's share of loans today, without letting the cubs have a bite ... :D
Yes, I had exactly the same experience this morning. I thought it must be an IT glitch and expected the loans to reappear but they never did.

[Investor]

Yes, I had exactly the same experience this morning. I thought it must be an IT glitch and expected the loans to reappear but they never did.

They were probably just funded quickly. It happens.

[joker]

They were probably just funded quickly. It happens.

Nah... same thing happened today. 10 loans available at 9.05am only 30% filled then they all disappeared. Harmoney under orders not to let the cubs feed?

[777]

Nah... same thing happened today. 10 loans available at 9.05am only 30% filled then they all disappeared. Harmoney under orders not to let the cubs feed?


One of the reasons I don't reinvest. Cubs only get the scraps.

[darrenc]

Harmoney seems to be playing around with different layouts for different people.
On the lend page in one account I see:
ActivityLAST 24 HRS 20NEW LOANS $360,075FULLY FUNDED LOAN AMOUNT
I don't see that in my second account.

I haven't added any funds or invested with the first account for a while, so it might be trying to encourage me to get involved again. Does anyone else see this 'Activity' bar?

[Soolaimon]

Yes, pretty much all the time

[RMJH]

Harmoney seems to be playing around with different layouts for different people.
On the lend page in one account I see:
ActivityLAST 24 HRS20NEW LOANS $360,075FULLY FUNDED LOAN AMOUNT
I don't see that in my second account.

I haven't added any funds or invested with the first account for a while, so it might be trying to encourage me to get involved again. Does anyone else see this 'Activity' bar?
Yes, I see it on the "Lend" tab on a very active account.