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.

The second Carnival of Peer-to-Peer Lending installment was hosted by BripBlap & included the following articles:

RateLadder dispenses some Not So Obvious Tips to Maximize Your Chance of Funding for Prosper borrowers (including neat graphical analysis of factors like listing time, duration, and description length), and also presents updated Prosper vintage curves (late rates, as of 1/1/08).

Pinyo at Moolanomy funds his Second P2P Loan on Prosper and muses about the relative benefits of Prosper’s portfolio plans – plus fends off a comment derailment concerning the ethics of lending & borrowing money (online or off) from someone trying to (wait for it!..) sell a book about the evils of lending & borrowing money (online or off).

Tom of Prosper Lending Review scores an Interview with Chirag Chaman of Fynanz, a new Peer-to-Peer (P2P) Lending startup that aims to take a bite out of the traditional student loan market. Very interesting to see P2P expanding in this direction, but no word on the most important question that will undoubtedly affect the dynamics of this market and whether it will go beyond just “friends and family”: Will these P2P Student Loans be just like any other unsecured debt and dischargeable in bankruptcy, or can (a much larger market of) lenders expect (and price for) these loans to be federally certified and therefore non-dischargeable?

WiseClerk channels Nostradamus and makes some predictions about the P2P Lending space in 2008. No quatrains, sadly, but still some interesting ideas regarding possible insurance products and Peer-to-Peer market expansions.

Brett at PersonalLoanPortfolio wonders Why Lending Club Denies Most Loans. This is a very interesting question, and one that I’ve asked Lending Club about in the recent past. Rob from Lending Club stops by to assure lenders that loans which are not old enough to have a payment due will no longer be included in performance calculations, as well as to explain why Lending Club has only accepted about 11% of borrower applications thus far, citing a committment to marketplace safety – though I do have to wonder if the extremity of that figure doesn’t have more to do with Lending Club’s palpable lack of guidance in the borrowing process.

DoughRoller Overcomes His Fear and Lends on Prosper.com through a process of reasoned analysis and a commitment to go slowly, and decides that Portfolio Plans will make his investing much less emotion-based. We’ll check back with him after his Portfolio Plan bids with no compunction on a listing whose text includes the word “desperate” (grossly misspelled).

Hey Prosper Lenders! Question from a Borrower.. from Amanda @ Me vs Debt, wonders aloud how lenders feel about the availability of additional loans within the Prosper marketplace. (My advice is to disclose it in your listing – since Prosper discloses it anyway! – and let the bids fall where they may.)

Rounding out the pack, MoneySmartLife offers an Overview of P2P Lending.

That wraps up the 2nd Carnival of Peer-to-Peer (P2P) Lending – anyone want to try to knock over some bowling pins? Just $1 a ball!

Lending Club, the peer-to-peer lending site, is offering a 5% cash-back bonus to lenders who lend $5,000 or more by February 3rd, 2008.

OK, that sounds neat, but what if you have access to a fair amount of capital -and- a fair number of friends with good credit who you’d trust to loan a large amount of money to for a short term? If you think like me, that slight “wait a minute!” w/accompanying head tilt = Game On!

Time for big math: For every $25,000 you lend out, you’ll get $1250 credited to your account on February 15th, 2008. Why, that’s free money!

This is an incredible deal for the properly positioned, but first the details: You must lend $5,000 to qualify for the 5% bonus. Once you hit the $5,000 mark, the 5% bonus applies to the initial $5,000 as well. You must lend this money out by February 3rd, 2008. The loans do not have to be issued by that date, but your portfolio plan (essentially, your “bid” or “bids”) must be placed by that date. Lending Club will credit your account with the 5% bonus as CASH BACK (whether you choose to lend this money out, or transfer it back to your checking account is up to you!) on Friday, February 15th, 2008.

That’s the promotion in a nutshell, but there are some important details that will affect your 5% bonus:

Depending on the credit grade of the borrower, Lending Club takes an origination fee from the principal amount of the loan (deducted from the amount the borrower receives). They also take a 1.00% payment servicing fee on all incoming payments, so that’s another 1.00% off your 5% bonus. But, here’s the sweet part: There are NO early payment or pre-payment penalties!

Here’s a table that lays out the fees (and expected return) on any monies lent to borrowers of a particular credit grade:

You can also make an additional $25 by signing up for your Lending Club account through my referral link below (I’ll get $25, too). If you sign up using the referral link and make an initial deposit of at least $1,000, then you’ll get a $50 bonus instead! And, if you have your borrower (ie, Mom) sign up through this link, she’ll make an additional $25 as well. Sweet, huh?

Click here: LendingClub $25/$50 Bonus Referral Link for Lenders & Borrowers

Once you click the referral link, your referral will be tracked only for that session. So you must not close your browser or navigate away from the LendingClub web site before signing up for an account. If you do, the referral will not track (bye bye bonus!), so you must come back and click this link again and sign up in the same session to qualify. Sign up quickly! The promotion ends on February 3rd, and it takes about a week to verify your lending account and move funds in to lend!

One last note, LendingClub.com has capped this promotion at $20,000 per lender, so you can only lend out (and make the 5% bonus on) a maximum of $400,000. Sucks, huh? You know, unless Mom wants to lend, too… Let the games begin!

Promotion details available at: http://blog.lendingclub.com/thank-you and http://blog.lendingclub.com/2008/01/17/update-on-the-thank-you-program

(Note: These are not referral links, and if you sign up through these links, no sweet free money for you – or me either!)