Delinquencies are a natural component of investing in Notes. When borrowers are delinquent, Lending Club makes significant efforts to contact the delinquent borrowers, collect outstanding payments, and bring the loans back to current status. Lending Club has a robust internal servicing team and works with several external collection agencies on a regular basis. We use a statistical risk model to identify which loans to outsource to external collection agencies with the goal of maximizing the returns to our investors. These third party agencies have extensive experience and sophisticated tools to track borrowers who have changed locations.
Once loans become delinquent, we attempt to contact borrowers via email, phone, and letter to collect any past due payments. We often review recent credit reports to understand the current credit status of the delinquent borrowers. Depending on the circumstances, we may work with the borrowers to arrange for payment to be made immediately, structure a new payment plan, or take other appropriate action, all in an attempt to prevent the loan status from deteriorating further. For example, we waive late payment fees at our discretion when it increases the chance of receiving the loan payment due from a borrower or if the borrower promises to return a delinquent loan to current status and fulfills that promise. As our investor, you are regularly updated with any servicing and collection activity related to your Notes via the loan performance page in your account. To see the loan performance page, go to My Notes and click on the status of a particular Note.
The collections process in general is highly regulated. Our internal servicing team and professional third-party debt collection agencies collect payments from delinquent borrowers in compliance with the extensive consumer protection laws related to servicing and collections activities. Under no circumstances will an investor be permitted to contact borrowers directly. Learn more about the regulatory environment related to servicing and collections.
In addition to the servicing and collections efforts, Lending Club reports delinquent borrowers to credit bureaus every month. This information can adversely impact credit score and the ability to obtain credit in the future, which can often incentivize borrowers to bring their loans current.
Delinquencies are a natural component of investing in Notes, and diversification can help to lower your exposure to any individual loan loss and to reduce the volatility of your portfolio’s returns.* Learn more about diversifying your investment.
Learn more about historic loan performance on the Lending Club platform.
* Lending Club does not provide investment advice and this information is not intended to be investment advice. Please consult your financial advisor if you have questions or need additional information.