Current Policy on Lending Club’s Data Export – What is its True Meaning?

When I initially designed the database that would house all of Lending Club’s data on Nickel Steamroller I had assumed the current policy flag on the loan export data meant the loan did not meet the current underwriting practices. As a result, I had taken the position that since this type of loan could never be purchased with today’s standards they shouldn’t influence ROI calculations. This was always clearly indicated on the site, and people who have visited for some time will recall the blue box that states this.

Unfortunately, that assumption is wrong. It is simply not the case. The current policy flag on Lending Club is to show that the underwriting policy has changed while that loan was being issued. This makes more sense since the last loan that was issued with current policy set to no was on December, 31st of 2010, not even one year ago! See loan 642818

What does this mean? It means 2,749 loans with current policy set to no were not being factored into the ROI calculations, charts, overviews and categories. I have since changed this to include these loans. This caused in general a drop of ROI on Nickel Steamroller of about 0.7% for the total of loans to 6.14% and an over all default rate of 4.53% (as of today). This doesn’t mean that determinations made from the site will be wrong, per se, but I would strongly recommend revisiting the ROI filters and verifying your results.

LendStats.com makes the same assumption on this flag. When you check to include “non-current policy” loans, it does cause a drop as well to 5.91% from 6.56%. By default both platforms were ignoring almost 8% of all the of the loan history.

I apologize for this mistake, and it has been corrected throughout the entire system. Every loan issued on Lending Club is now included in every calculation and chart.

Michael

6 thoughts on “Current Policy on Lending Club’s Data Export – What is its True Meaning?

  1. If I remember right, they tightened their standards earlier in 2010. Are you saying that they have been continually tweaking/tightening their standards up to Dec 2010? or were they issuing loans that didn’t meet their credit criteria?

    1. Lou,
      I’m saying they were tweaking their policy.

      The original thought was they were underwriting loans that didn’t meet their current policies. Not the case. All loans with current policy set to no mean that they policy changed while the loan was being funded/issued. Hope that helps.

      1. WOW – When I opened the data, I also assumed that the loans marked “Does not meet the current credit policy” would not be have passed the review process and be offered for sale today, under their current credit policies.

        If that label really means that the underwriting policy changed while the loan was being processed, that raises some interesting questions like:
        a) why do we care? (unless these loans actually wouldn’t be available for purchase today)
        b) why couldn’t they come up with a better name for that label? 🙂

Leave a Reply