With the relaunch of our Facebook application and more alumni associations and other communities joining the Lending Club network, the number of active loan listings on LendingClub.com has jumped from 60 a couple of weeks ago to 115 this morning, totaling more than $1.35 million. Lending Club borrowers with loan requests on the site enjoy an average FICO score of about 700 and a 12% debt-to-income (DTI) ratio, excluding mortgage.

Lending Club maintains very high standards to list a loan, with a minimum FICO of 640 and a maximum DTI of 30% required. This means that a large number of loan applications (over 80%) do not meet our criteria and are not able to be listed. To put this into a financial perspective, the $1.35 million of loan listings on the site is the result of about $6.5 million in loan applications over the last 13 days. The good news for approved borrowers is that over 90% of our loan listings are funded. And, to assist Lending Club members whose loan applications were declined, we now offer tools and tips to help them build up their credit.

The average return of all Lending Club lenders after 6 months now stands at 12.2% after fees and losses, while the lowest performing loan portfolio currently earns a respectable 6.8%. The average return will continue to fluctuate over time with interest rates, average credit grades assigned to the loan listings and the number of delinquent loans (currently well under 1%).

We made summary statistics available a few weeks ago, and we will continue to make good on our promise to keep exposing more data and providing more transparency. For starters, we will make all loan data (excluding personally identifiable information) since inception available on LendingClub.com later this week.

Better rates and better returns. Together.

We would like to extend a very warm welcome to Zopa, which launched in the US this past week. The Zopa team did a great job with the new US site, which looks great and contains lots of informative content. Borrowers can apply for a loan at interest rates ranging from 8.75% to 16.99% and lenders can invest in a CD and earn up to 5.1%. A feature we really like is the ability for lenders to waive part of their interest to help lower the borrowers’ payments, a great way to help friends and family. We believe the launch of Zopa in the US and the upcoming launch of 2 new players (GlobeFunder and Loanio) in the next few weeks will continue to establish person-to-person lending as a mainstream alternative to banks and credit cards.

Welcome, and congratulations!

When a group of major social networks - pretty much all those that matter other than Facebook - announces the adoption of open standards, that is effectively good news for all parties involved: good news for users, for developers and for the networks themselves.

We can debate how “open” the standard really is in this case, and how deeply the OpenSocial APIs will let application developers reach into the social graph, as compared to the Facebook API. Looking beyond the initial uncertainties, however, it is fair to say that open standards are generally good news, and the quasi-anonymous support for OpenSocial will help social networking sites and application developers offer applications that are not only easier to develop, but truly more useful for their members.

Take Lending Club for example: OpenSocial offers the ability to retrieve information about a user, and get distribution, across many social networks. What it means is that Lending Club borrowers will be able to leverage their network of connections more broadly, that lenders will be presented with better opportunities to invest in people they trust and feel more comfortable with (such as friends of friends), and that a broader distribution will help find better matches between lenders and borrowers.

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The user profiles of both lenders and borrowers will also be more complete and accurate: there is a lot of information in my Linkedin profile for example (such as my work history) that is not in my MySpace profile.

We believe person-to-person lending will grow faster and become a credible alternative to banks more surely in an environment where people feel connected to each other. That was the main reason for launching Lending Club on Facebook last May, and another good reason to announce our extension to universities and alumni associations last week.

This morning we announced our commitment to build a person-to-person lending application that leverages the OpenSocial APIs. By doing so, we are hoping to contribute to making social networks more useful, by helping users leverage their existing social-network relationships at the time they need them the most: to cover medical expenses, finance a new business venture or take advantage of an investment opportunity.

Not as entertaining as sharing pictures, but possibly more useful.

“It's only when the tide goes out that you discover who's been swimming naked.”

-- Warren Buffett

Disciplined lending is about adopting credit standards and enforcing them with very little or no exceptions. Disciplined lending is hard. Lenders are businesses, and businesses need to grow. There is often pressure, and temptation, on lenders to make all kinds of exceptions and lower credit standards, particularly at times when the economy is doing well and defaults are generally below historical average levels. Lack of discipline is one of many factors (including the housing slow down) that contributed to the situation that the subprime mortgage industry is facing today.

The temptation to approve a loan application or issue a loan could be even higher in the case of person-to-person lending, where the originator (such as Lending Club) is financially rewarded for every loan that is being issued but does not bear the credit risk.

At Lending Club, we strive to maintain a solid credit standard that reduces the credit risk for our lenders. This means adhering to our promise of accepting only prime borrowers, verifying income when such a verification is necessary, reducing the amount of a loan listing when credit utilization is too high, and cancelling a loan listing when income cannot be verified or high credit utilization puts repayment at risk. All of these additional precautions are taken to protect lending members from risky loans and to keep our borrowing members from being associated with bad loans, as well as to keep defaults low and interest rates attractive to the borrowers.

Our vigilance sometimes results in loan listings being delayed or canceled when borrowers are unable to provide us with the requested information. In such cases, the loan listings go from an “In Review” status to a “Removed” or “Expired” status. It might be frustrating for lenders when their money is not put to work and instead comes back into their accounts for reinvestment in other loans. We believe, however, that this frustration is a small price to pay in exchange for the removal of loans listed by borrowers who might have trouble making payments and could eventually default.

This discipline is all the more important as the Lending Club community is growing fast. Our coverage on National Public Radio yesterday helped us pass the bar of 6,000 unique daily visitors for the first time! Going forward, lenders should remain confident that our credit team is diligently working to protect their interests and to keep the community a safe place to transact.

Better Rates. Together.

As announced yesterday, we will be performing routine maintenance and upgrade on the secure site http://secure.lendingclub.com tonight at 8pm Pacific time. The site will be available again by 9pm Pacific.