Harmoney

[Cool Bear]

I just work out that because of early repayments, the fees charged by Harmoney works out to an equivalent 2.15% instead of 1.25%.

Some background:
Invested for about 6 months and now well over 1000 loans (minimal amounts each).

Say my total repayments received up to now - interest and capital (without early repayment) - is $X. The total fees I have paid if expressed as a percentage of that $X works out to be 2.15%.

As a note to the earlier posts on fees being less than 1.25% in total.
If you take your total fees and divide it by the total of "capital repayments" and interest, it will be less than 1.25%.

This is because "capital repayments" not only includes the genuine early repayments (where the 1.25% applies) but also those loans where the borrower changes his/her mind after getting it filled (we do not pay fees on these).

[mjplost]

I just work out that because of early repayments, the fees charged by Harmoney works out to an equivalent 2.15% instead of 1.25%.

Some background:
Invested for about 6 months and now well over 1000 loans (minimal amounts each).

Say my total repayments received up to now - interest and capital (without early repayment) - is $X. The total fees I have paid if expressed as a percentage of that $X works out to be 2.15%.

As a note to the earlier posts on fees being less than 1.25% in total.
If you take your total fees and divide it by the total of "capital repayments" and interest, it will be less than 1.25%.

This is because "capital repayments" not only includes the genuine early repayments (where the 1.25% applies) but also those loans where the borrower changes his/her mind after getting it filled (we do not pay fees on these).

Whats your current default rate on that many loans?

[Cool Bear]

Whats your current default rate on that many loans?

It has only been 6 months and I note that Harmoney only write off a loan after several months of non payment.

I have 3 loans in default and expect many more in the next few months. According to my spreadsheet, my average default rate (based on Harmoney's estimated default rates) for current active loans is 2.74%. As the 3 defaults relates to my earlier two months, it does seems that as a percentage for those months, the default is way way above Harmoney estimates. But then the population size is rather small then. Hopefully over the next 18 to 20 months, it will even out to below their estimates.

[humvee]

Whats your current default rate on that many loans?

I have ~500 Loans The oldest being issued in Feb 2015.

So far ~1% have been written off and ~10% are in arrears

Strangely I had one loan that was written off when the most recent payment was less then 3 weeks ago. I have asked harmoney to explain why this would happen.

[mjplost]

I have ~500 Loans The oldest being issued in Feb 2015.

So far ~1% have been written off and ~10% are in arrears

Strangely I had one loan that was written off when the most recent payment was less then 3 weeks ago. I have asked harmoney to explain why this would happen.

Did you get a reply?

[Soolaimon]

Did you get a reply?

I had the same situation a month or so ago when the last payment to a written off loan was only 3 weeks previous to the write off date. I called Harmoney and they advised that it was a case of the borrower suddenly could not make further payments and all attempts to rectify the situation by Harmoney were to no avail. Not really a satisfactory reply, they should have a system to say why loans are written off.
Another thing. Just lately I have had several loans that have been filled but not issued. This is annoying and time consuming. Occaisionly this happens if the loan you are investing in only has a few notes left when you order, but I have made a point of checking that this is not the case and it still happens.

[Saamee]

Yes here to. Yesterday I invested in 8 notes, on 8 separate occassions, each time I received the indicidual Order confimration # on the screen. I thought it must just be me. Now I see they have a system issue.

[humvee]

Did you get a reply?

I did to reasons for write off's - but not why it would be written off so soon after last payment - reasons given below

LAI-00024948 - Loss of job
LAI-00015523 - Borrower unwilling to pay - legal action being pursued
LAI-00010605 - Borrower unwilling to pay - legal action being pursued
LAI-00013061 - Left country
LAI-00013880 - Borrower unwilling to pay - legal action being pursued


Q:"What is the process if money is recovered from written off loans - Do they get unwritten off? Do investors get money back?
Also Just wondering why LAI-00015523 would be written off when the most recent payment was 15th October - So only ~3w before it was written off.


I would have thought that except in a suituation like Bankruptcy, NAP or maybe death this would be to soon to conclude that it is a write off."

A:" Yes, investors are still paid any funds received from a borrower after it is charged off/written off, although the status doesn't change.


The business hasn't decided whether or not they are going to add a status update for arrears/charge offs, although I don't think it's a bad idea.


I'm not quite sure, this is outside of my daily responsibilities to decide if/when to charge off a loan. We have a collections team dedicated to working on these issues, so they make that determination based on the facts they receive."

[Bjauck]

I have wondered how keen Harmoney would be at pursuing non-payment. After all, it is the investors' money (and not their own money) they would be pursuing. And it would be the investors who would be out of pocket if repayment does not eventuate!

For taxation, are service fees tax-deductible for an individual taxpayer? Likewise, are "charge-offs" (write-offs) tax deductible? I asked this some time ago, but no-one seemed to know the answer. As both service fees and charge-offs seemed to be becoming material amounts, it must be relevant for the return from a Harmoney investment if taxable income allows for them.

[Harvey Specter]

To an extent you are right but they have modelled their default rate and I dont think they would want to adjust those for the worse. So yes, if defaults are low, they are not incentivised to chase but if they are high, then they would - if that makes sense.

My guess is service fees should be deductable. charge-offs a bit more difficult. I have invested through an entity which is in the business of investing so I am more comfortable claiming the deduction than if I had just done a couple of hundred in my own name. The rules around financial arrangements are complicated unfortunately.