In a major development in the P2P Lending space, one that has implications for the entire P2P Lending model as it currently exists, it appears that LendingClub.com has partially ceased operations. A notification is up on their site that they are no longer accepting new P2P lender registrations and that no further loans may be made by P2P lenders, though they do apparently plan to continue issuing loans to new borrowers, however, the loans will not, strictly, be “peer-to-peer“.

The stated reason for the shut-down is that they have begun a process of registering the loans as securities (presumably with the SEC) and so must enter a “quiet period”. As well, LendingClub claims that existing loans will continue to be serviced and that lenders will still receive payments. Curiously, they also say that borrowers may still register and seek loans though those loans will be funded and owned by LendingClub.

There has been a large amount of speculation recently in many corners that the P2P Lending models might be subject to some legal uncertainty regarding whether the loans should be classified as securities (and would therefore need to be registered with the SEC). The speculation has primarily been concerned with who, in fact, owns the loans (notes), and how exactly that ownership (or various ownership interests) are transferred between the originator of the loan (the P2P Lending company) and the individual “P2P Lender” (more info here).

It is unclear whether LendingClub has ceased operations as a result of an SEC action or whether LendingClub has chosen to bite the bullet and submit to regulation voluntarily. This event could have major repercussions for other P2P Lenders in the US with similar business models.

I received the following email which contains slightly more information than what was available in the onsite notification:

—

Dear (Peer-Lend),

Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.

The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club.

Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.

Q&A:

Q1. What about money I have begun moving, but is still in transit to Lending Club?
A1.1. If you are in the process of verifying your bank account, you will be able to complete that verification but will not be able to add new funds
A1.2 If you have initiated a transfer, the funds will be displayed in your Lending Club account balance as soon as those funds are available.
A1.3 If you have uncommitted funds, you may request that Lending Club return those funds via the same method used to load the funds. For example,
• If you have initiated an ACH to add funds, these funds will be transferred into your Lending Club account but you will not be able to lend these funds out. You can go into your Lending Club account once the ACH transfer has been completed and withdraw funds back into your linked bank account..
• If you’ve wired funds into your Lending Club account and have not yet committed these funds into loans, you can send a request to support@lendingclub.com for us to wire these funds back to you at no charge.
• If you’ve sent funds by check, and have not yet committed these funds into loans, you can send a request to support@lendingclub.com for us to send you a check by mail for the same amount at no charge.

Q2. What about referrals?
A2.1 The current referral program is terminated. If you have referred someone who has already signed up as a lender or a borrower, or if you have been referred by someone and have already signed up as a lender or a borrower, you will be receiving your referral payment within the next few days.

Sincerely,

Patrick Gannon
Senior Vice President
Lending Club
440 N Wolfe Road
Sunnyvale CA 94085
www.lendingclub.com

Last week, peer-to-peer lending provider Lending Club began offering data exports containing a variety of information from their peer-to-peer lending platform/marketplace, including: data for loans that have funded to date, loans whose listings are currently active, and loans which were rejected for not meeting Lending Club’s strict credit qualifications (minimum 640 FICO, with no current delinquencies). On the heels of this release, the first independent third-party statistics site was launched to report and analyze Lending Club’s listing and loan data.

LendingClubStats.com features easy to read charts and analyses of LC’s loan data exports and also includes functionality that offers the ability to more quickly browse through active loans, as well as to sort loans by minimum interest rate and by loan amount. The site is administered by the developer of Eric’s Credit Community, one of the first statistics sites devoted to another P2P lending site, Prosper.com, which launched in early 2006. (For those who wish to slice and dice the loan data on their own, the exports are directly available from Lending Club in both CSV (comma delimited) and XML formats.)

Lending Club’s provision of marketplace data marks an important milestone in their development as a transparent peer to peer lending & loan platform. Lending Club’s main competitor, Prosper.com, the first-mover in the US P2P lending space, has offered comprehensive data downloads of all of its marketplace activity since mid-2006. A budding ecosystem of third-party statistics and analysis sites (as well as other clever uses of the data, such as “fantasy” market simulations) have grown up around Prosper’s efforts at P2P marketplace transparency, and, hopefully, this will be the beginning of a similar process around Lending Club’s efforts at same.

A collection of peer-to-peer lending tools, including links to the Lending Club statistics mentioned in this article (as well as links to the entire Prosper.com third-party ecosystem) are available on Peer-Lend’s P2P Lending Tools page.