Good to have this type of discussion for us newish investors :)
I've just run some stats on default. And looking at the posted stats on this board, I am genuinely surprised the Interest / Charge Off Stat are so Good!
Running comparatives off Lending Club, shows
delinq/iss* chg/iss chg/int lending club 2017 Q1 & Q2 1.3% 0.1% 3% lending club 2016 Q3 & Q4 4.8% 2.1% 23% lending club 2016 Q1 & Q2 7.7% 5.5% 44% lending club 2015 Q3 & Q4 9.3% 7.6% 50% lending club 2015 Q1 & Q2 10.3% 9.3% 52% lending club 2014 Q3 & Q4 10.2% 9.7% 48% lending club 2014 Q1 & Q2 9.9% 9.6% 43% lending club Q3 2015 to Q2 2017 6.0% 4.1% 39% harmony All 6.5% 2.8% 21%
* Delinq = in arrears + charge off*
** HM “late” definition slightly wider, LC removes 1-15 day
Harmoney is roughly tracking Lending Club on delinquency, so Charge/Issue should project to 10%.
A couple of observations.
- Harmoney’s Late / Charge off is HUGE. Is sitting at 132% compared LC 46% (Q3 2015+)
- Delaying moving arrears to charge off artificially inflates platform RAR. By approx 2% if 50% delayed
- There is a MASSIVE difference between retail and wholesale, 2.5%. If mix on grading is equal, wholesale defaults calculate out as 3 times greater then retail!
RAR prop % charge i nt issue days chg/iss Overall 11.5% 15542 72,795 558,230 325 2.78% Retail 13.2% 30% 2100 21,839 167,469 1.25% Wholesale 10.8% 70% 13442 50,957 390,761 3.44%