Quote Originally Posted by kiwi783 View Post
As an aside, knowing more (at summary level) about how successful Harmoney and its agents push on this part of the process enables us to consider in more detail what is acceptable risk from an investment (and moral) perspective. When I see some of the loans being listed I wonder if the borrowers are either financially naive or are starting to test/believe/figure out that the Platform is a soft touch. And when I see relatively safe risk categories being assigned to these loans I wonder also if the right balance has been struck - and it is only at the very end of the (sometime messy and protracted) process that we know for sure.
I guess there is a tradeoff of how much info can be given, the time it takes to collect it (from the borrower) and its accuracy. If Harmoney added an 'Outgoings' type figure, would that make the difference in the initial decision making? What else could reasonably be provided?

The process of application is outlined at: Application Process which gives an indication of what Harmoney have available to determine their Risk Grading.

The summary level stuff for risk is there - risk grade defaults rates and hazard graph - just how up-to-date these are, and over what period they are compiled from is questionable.

The process up to a charge off is well documented: Collections Process there are some penalties for borrowers at the 60-90 day stage e.g. registered as having defaulted, which in theory makes it much more difficult for the borrower to get a loan again.

Harmoney provides the following meaning of a charge off:

A charged off status indicates that a Borrower has defaulted on their loan, primarily due to bankruptcy, sickness, job loss, death, or other unforeseen circumstances. Typically, this means that we’ve exhausted our collections efforts and there’s a low statistical likelihood that we’ll be able to collect any funds from the Borrower; resulting in a capital loss for Lenders.

Bold added by me and I accept this and factor in that any charge off's are lost (any returns would be a bonus).

I'd like to see a more 'current' and more well defined risk grade defaults rate and hazard graph - which is all you could really base your investment strategy on anyway? The issue with these type of figures is that they are at a summary level - if you selectively pick loans based on 'your own' criteria, these rates may no longer apply (for better or for worse). Also the risk of default today, may be quite different to the risk of default tomorrow.