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Post by graemec23 on Dec 9, 2016 10:43:27 GMT
Why during a loan auction does anyone bid for loans parts right at the bottom of the range. Is it just so they can guarantee themselves a loan part? Just seems to me that people are doing them self out of better rates. Or this a case of people buying loan parts at prices they think is fair?
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kaya
Member of DD Central
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Post by kaya on Dec 9, 2016 13:04:45 GMT
This phenomena has been a prominent feature on nearly every loan (or every loan?) since LC began. There has been much speculation on the forum re this, if you care to look back through other threads. These bidders (or usernames) have changed over time to some extent, and have been crucial to the sucessful completion of most auctions. They have a marked effect on the average rate, and sometimes late bids often knock out many higher bids, thus annoying many 'ordinary' bidders. LC have always denied any direct connection or control over such bidders, though logic would suggest some kind of at least indirect connection or arrangement. A lot of this bid take-up immediately appears on the secondary market, but you might then ask, would do such a thing with no premiums possible and selling fees to pay!
So what do you make of it?!!
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ablender
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Post by ablender on Dec 9, 2016 14:24:51 GMT
It is one of the main reasons I am getting out of this platform. The other one is their "Excellent" SM.
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TheDriver
Member of DD Central
Slightly bonkers
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Post by TheDriver on Dec 15, 2016 7:58:36 GMT
I assumed the OP was referring to the small retail bidders who come in at or very near the bottom of the rate-range - one (g*j*) particularly comes to mind. My thought was that they just don't understand the system, as I wrote previously maybe they think everyone gets the average rate and just want to be sure of a slice!
The way the loans are marketed gives undue prominence to that "average" rate, which is actually meaningless to bidders during an auction (although obviously relevant to borrower, and subsequently influences SM rates).
As for evaluating a fair rate, that is virtually impossible without an inordinate amount of personal DD because of the often incomplete and erroneous details contained in the Offer particulars. All things being equal I could live with the turgid SM as I'd generally be happy to hold loans to completion, but negligent DD combined with abysmal reporting and handling of defaults are my main reasons for planning an exit from what I thought was a platform with great potential.
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