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Thread: Harmoney

  1. #2391
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    Been looking at charge-offs on my loans over 12m old (close to 3000 loans so good sample size). Average recovery of principal on charged-off loans was 11% so those that went bad did so quickly which supports the 80% within 18 months rule of thumb. If anything they go bad sooner. Not sure if these will show but also attached a couple of graphs of charge-offs by grade on my book. Pretty much within expected levels I would say.
    Attached Files Attached Files

  2. #2392
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    Should point out that 60% of the loans got repaid early so charge-off % of the remainder was much higher.

  3. #2393
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    Quote Originally Posted by myles View Post
    Just out of interest, when were most of these defaulted loans taken out?

    There is a fair amount of support out there that suggests that loans taken out in the lead up to Christmas have an increased chance of defaulting - just how much is hard to get a meaningful figure on. From this, I'd make a suggestion that if someone got into Harmoney in a big way at that time of year they may not do as well (due to higher defaults) as someone who got in at a different time. It might also suggest that in the lead up to Christmas it would be a good idea to pick 'safer' loans.

    Just a theory :P
    27/09/2016
    23/11/2016
    25/11/2016
    28/11/2016
    29/11/2016
    2/12/2016
    8/12/2016
    9/12/2016

    pretty much all of them lol

    great observation!

  4. #2394
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    Quote Originally Posted by myles View Post
    Just out of interest, when were most of these defaulted loans taken out?

    There is a fair amount of support out there that suggests that loans taken out in the lead up to Christmas have an increased chance of defaulting - just how much is hard to get a meaningful figure on. From this, I'd make a suggestion that if someone got into Harmoney in a big way at that time of year they may not do as well (due to higher defaults) as someone who got in at a different time. It might also suggest that in the lead up to Christmas it would be a good idea to pick 'safer' loans.

    Just a theory :P
    October and November loans do seem to carry more risk of charge-off based on my portfolio.

  5. #2395
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    Checked in which months my 18 defaults were originally funded.


    2015: March 2, April 2, June 2, July 1, August 3, October 2, November 3,


    2016: May 2, December 1 loan.


    So any theory about Christmas loans is not quite conclusive for me!
    Last edited by permutation; 10-07-2017 at 06:18 PM. Reason: display

  6. #2396
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    Might not be conclusive for you, but your highest two consecutive months are October/November. Too small of a sample size to make much of a judgement - which is a good thing...

  7. #2397
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    permutation, I had thought you were hit hard by defaults, but looking at your numbers you are actually well below what Harmoney Forecast? < 0.68% pa (18/1230/(26/12)) which is at the B4/B5 level. Unless you had some biggish loans in some of them, I can't see that you should have done poorly out of your higher risk loans with that default rate?

  8. #2398
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    Quote Originally Posted by myles View Post
    permutation, I had thought you were hit hard by defaults, but looking at your numbers you are actually well below what Harmoney Forecast? < 0.68% pa (18/1230/(26/12)) which is at the B4/B5 level. Unless you had some biggish loans in some of them, I can't see that you should have done poorly out of your higher risk loans with that default rate?
    Collating my E,F grades since inception in March 2015. Scaling the loans to 1 unit of $25.
    Total loans invested 96@25= $2400; P&I received to date $2247(including payments from 13 defaults)
    Balance -$153 less charge offs -$300 = -$453 to date.

    Now have only 30 loans remaining with 6 in arrears with 3 of them 91+ days.
    Principal outstanding $461, loans terminating within 15 months.

    Some of the remaining loans will also default, I doubt if the rest will generate enough interest to recover the loss.

    So I feel that my return will most probably end up being zip%, or am I missing something?
    Last edited by permutation; 11-07-2017 at 11:11 AM.

  9. #2399
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    Quote Originally Posted by permutation View Post
    Collating my E,F grades since inception in March 2015. Scaling the loans to 1 unit of $25.
    Total loans invested 96@25= $2400; P&I received to date $2247(including payments from 13 defaults)
    Balance -$153 less charge offs -$300 = -$453 to date.

    Now have only 30 loans remaining with 6 in arrears with 3 of them 91+ days.
    Principal outstanding $461, loans terminating within 15 months.

    Some of the remaining loans will also default, I doubt if the rest will generate enough interest to recover the loss.

    So I feel that my return will most probably end up being zip%, or am I missing something?
    I believe you are.

    First you shouldn't deduct the charge offs (-$300) as this is already taken into account in your outstanding principal.

    The biggest thing I believe you are overlooking is that you are calculating a return on your initial investment over the total time of your longest loan when much of your capital is returned well before that or not invested until well after the start of the first investment. You have to make the calculation only when the money is actually invested. Once you've received the money back (i.e. Interest, Principal), you have to remove it - or re-invest it, which would lead to additional returns.

    I'm not sure if you know about XIRR, but it is the only way to really calculate a return based on what you've given. So here goes:

    Notes: I've weighted your purchase of new loans based on the dates you've previously given for when defaults started.
    I've distributed your returns based on various assumptions i.e. early paybacks, interest etc. I'd suggest you plug in the real values if you have them and see what difference it makes. $2400 dollars go in, $2240 come out with $461 remaining.

    XIRR.png

    The 18.5% does not reflect losses due to fee's and taxes, which would reduce it significantly.
    Small changes to when you received returns and purchased new loans could make significant differences.
    I'm only working with what I can get from the info you've supplied, so I'd suggest you use 'real' values to get an accurate figure. Hopefully I've not overlooked anything, but I may have?

  10. #2400
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    Quote Originally Posted by myles View Post


    Notes: I've weighted your purchase of new loans based on the dates you've previously given for when defaults started.
    I've distributed your returns based on various assumptions i.e. early paybacks, interest etc. I'd suggest you plug in the real values if you have them and see what difference it makes. $2400 dollars go in, $2240 come out with $461 remaining.

    XIRR.png

    The 18.5% does not reflect losses due to fee's and taxes, which would reduce it significantly.
    Small changes to when you received returns and purchased new loans could make significant differences.
    I'm only working with what I can get from the info you've supplied, so I'd suggest you use 'real' values to get an accurate figure. Hopefully I've not overlooked anything, but I may have?
    Thanks for your input myles, I think I will stick to lesser risk loans because I don't want to see a lot of red ink on my loan book.

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