I said this earlier in the thread, but it didnt look like anybody read it. The issue is that LS is SEVERELY understating the expected losses from late loans; especially 2, 3, and 4+ month late loans. LS seems to be assuming that you will get back ~60% of your principle on loans that are 4+ months late! It even estimates that I will get back over 63% of the outstanding principle on my E Bankruptcy (not defaulted yet...) that hasnt made a payment in over 14 months.
I read it; I just had to think about it for a while.
It looks to me as if LS is incorporating payments already made, both principal and interest, into its estimated late loss amount. So when its assuming that Pensioner is going to have a loss of only $4,797.65 out of $13,569.56 on listing 28155, thats because LS shows that over $9700 of payments have been made on the original loan amount of $17000. So Pensioners gotten back over $7700, leaving roughly $5900 "loss" if nothing is gained at the debt sale; apparently LS is presuming the loan will sell for about $1400 total, which is not completely unreasonable.
As another for example, larrybird is in for $1000 of $8500 on loan listing 156, which after 24 payments is now 1 month late. LS gives larrybird an estimated loss of only $100 on that loan. According to LS, the loan made $7400 in payments before going late, so larrys received $870, and LS seems to think hell get another $30 for the sale.
Ah, and even a better example:
http://www.lendingstats.com/lenders/kokua/audit?pageNum=-1&sort=lateLossAmount&sortDirection=ASCLoan listing 2372 is 1 month late and shows an estimate late loss amount of NEGATIVE $41.14. Because of the 40% interest rate and LS showing this loan making 23 payments before going late, it had actually paid back 10% more than the original principal, so the "loss" is now a negative number.
In the case of your E bankruptcy, LS seems to believe that 14 payments were made, for a total of $2400, and thats why its pegging you for only a $300 loss on your $900. It thinks youve already gotten back $450 or so of those $900. Why it thinks that is another question, I guess, since from ericsccs status tracker, it appears to me that only four or five payments were made, and that you got something close to $150 from those.
In short, it looks like LS is using original principal loaned as its "basis" for determining loss amount, while its more intuitive for lenders to think about either "current loan value" (original principle plus interest to date) or "full loan value" (original principle plus 36 months of interest) as appropriate benchmarks.
Whether this is a good way of doing things depends, I guess, on how the "estimated late loss amount" values feed into the estimated ROI calculation, if they do at all (they may just be there for show and tell purposes).
