fred93 — P2P No Bank

It has now been more than one year since Prosper.com’s ill-fated SEC filing which attempted to create a secondary market, and apparently failed. In the meantime, Lendingclub filed, got approval, and began operating such a market. Prosper at the very …

Lendingclub has been around for more than a year now, so I figured maybe there was finally enough data to allow one to understand the default rate behavior of Lendingclub loans. I have prepared charts of the behavior of Lendingclub loans that are sim…

Here’s the November 1, 2008 update to to my Prosper.com late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The verti…

Continue reading → Prosper.com - 11/01/08 late loan stats update

This just struck me as funny. Every now and then Prosper takes their web site down to update software. During this time, they put up a “site not available” page.For several weeks now I have noticed that google has been indexing this “site not available…

In January of this year, Prosper initiated a test program to bring suit against a small set of nonpaying borrowers. 66 very late loans were selected, and Prosper turned these loans over to the law firm of Hunt & Henriques to go after the nonpayers…

Here’s the october 15th, 2008 update to to my Prosper.com late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The ver…

Continue reading → Prosper.com - 10/15/08 late loan stats update

Be careful what you say to the judge. It can get you into lots of trouble. On July 25, 2007, prosper.com issued a loan to “Oakland Gaerke” for $25,000. (We know this from public bankrutpcy court records.) A couple of payments were made, but …

Be careful what you say to the judge. It can get you into lots of trouble. On July 25, 2007, prosper.com issued a loan to “Oakland Gaerke” for $25,000. (We know this from public bankrutpcy court records.) A couple of payments were made, but the…

In early 2008, $735,000 of late prosper loans disappeared from lender’s statements. On 01/15/08, prosper promised monthly “supplementary statements” to lenders covering these loans. Hasn’t happened. No statements have been produced. By my count…

Supplemental statements tracking $735,000 of loans were promised monthly, and are now 6 months overdue.On 01/15/2008, Prosper.com sent an email message to many lenders, explaining that 68 very late loans were being moved to a new category, a “legal te…

Continue reading → Prosper.com - lender statements 6 months late

Supplemental statements tracking $735,000 of loans were promised monthly, and are now 6 months overdue.On 01/15/2008, Prosper.com sent an email message to many lenders, explaining that 68 very late loans were being moved to a new category, a “legal…

Continue reading → Prosper.com - lender statements 6 months late

Here’s the August 1st update to to my Prosper.com late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis …

Continue reading → Prosper.com - 08/01/08 late loan stats update

Here’s the August 1st update to to my Prosper.com late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical ax…

Continue reading → Prosper.com - 08/01/08 late loan stats update

Collections on late prosper.com loans are getting worse. Prosper simply doesn’t take their responsibility to lenders seriously. Along the way there have been words from Prosper saying they were going to improve this or that, but they’ve all been …

Collections on late prosper.com loans are getting worse. Prosper simply doesn’t take their responsibility to lenders seriously. Along the way there have been words from Prosper saying they were going to improve this or that, but they’ve all been…

Here’s the July 1st update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fracti…

Continue reading → Prosper.com - 07/01/08 late loan stats update

Here’s the July 1st update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the frac…

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Continue reading → Prosper.com - 07/01/08 late loan stats update

A group of prosper.com lenders has retained counsel, and started the process to take legal action against prosper.com, with the letter copied below. While I have not signed on to this letter or this action at this time, I do agree with much of what t…

A group of prosper.com lenders has retained counsel, and started the process to take legal action against prosper.com, with the letter copied below. While I have not signed on to this letter or this action at this time, I do agree with much of what th…

Here’s the mid-June update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction…

Continue reading → Prosper.com - 06/15/08 late loan stats update

Here’s the mid-June update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the frac…

Continue reading → Prosper.com - 06/15/08 late loan stats update

Here’s the June update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction of…

Continue reading → Prosper.com - 06/01/08 late loan stats update

Here’s the June update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction…

Continue reading → Prosper.com - 06/01/08 late loan stats update

Prosper.com is often sloppy when servicing loans. I’m going to show you an example. Its an anecdote to be sure, but there are many such anecdotes in the naked city. Loan #2139 originated July 27, 2006. The one and only payment made by the borrow…

Prosper.com is often sloppy when servicing loans. I’m going to show you an example. Its an anecdote to be sure, but there are many such anecdotes in the naked city. Loan #2139 originated July 27, 2006. The one and only payment made by the borro…

When we invest in prosper.com loans, we make a deal with prosper. The lender buys the loan, and prosper retains the right to service the loan and charge a fee for that service. This would be fine if prosper did a good job of servicing loans, but th…

When we invest in prosper.com loans, we make a deal with prosper. The lender buys the loan, and prosper retains the right to service the loan and charge a fee for that service. This would be fine if prosper did a good job of servicing loans, but they…

Here’s the mid-May update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fract…

Continue reading → Prosper.com - 05/15/08 late loan stats update

Here’s the mid-May update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction …

Continue reading → Prosper.com - 05/15/08 late loan stats update

Grant Wanapat, Jerald Teixeira, Holly Brown, Valentino Raboteaux, Ricardo Barboza, Crystal Moffett, Shi Li Park, Louis Collet, Robert Riviera, Christopher Carr, Chinyere Woke, Carlos Delgado, Diana Davis, Victoria Crawford, Mario Villanueva, Brandi Fit…

Grant Wanapat, Jerald Teixeira, Holly Brown, Valentino Raboteaux, Ricardo Barboza, Crystal Moffett, Shi Li Park, Louis Collet, Robert Riviera, Christopher Carr, Chinyere Woke, Carlos Delgado, Diana Davis, Victoria Crawford, Mario Villanueva, Brandi…

Prosper’s biggest hangnail is the fact that its loans perform so poorly. One aspect of this is collections. Once a Prosper loan goes 1 month late, the loan is sent to collections, and it almost always defaults. If you can’t collect, then Pr…

Prosper’s biggest hangnail is the fact that its loans perform so poorly. One aspect of this is collections. Once a Prosper loan goes 1 month late, the loan is sent to collections, and it almost always defaults. If you can’t collect, then Pros…

Here’s the mid-April update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fra…

Continue reading → Prosper.com - 4/15/08 late loan stats update

Here’s the mid-April update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fractio…

Continue reading → Prosper.com - 4/15/08 late loan stats update

Here’s the April update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction o…

Continue reading → Prosper.com - 4/1/08 late loan stats update

Here’s the April update to to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fractio…

Continue reading → Prosper.com - 4/1/08 late loan stats update

Here’s the 03/01/08 update to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction o…

Continue reading → Prosper.com - late loan stats update

Here’s the 03/01/08 update to my late loan statistics charts.These charts show statistics for the performance of all prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fractio…

Continue reading → Prosper.com - late loan stats update

Here’s the 02/15/08 update to my late loan statistics charts.These charts show statistics for the performance of ALL prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction of…

Continue reading → Prosper.com - late loan stats update

Here’s the 02/15/08 update to my late loan statistics charts.These charts show statistics for the performance of ALL prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fractio…

Continue reading → Prosper.com - late loan stats update

In one of my favorite scenes in The Wizard of Oz, the little dog Toto pulls back a curtain, exposing the fact that the great wizard of Oz is really just an ordinary old guy putting on a show. This teaches kids to question authority, look behind the f…

In one of my favorite scenes in The Wizard of Oz, the little dog Toto pulls back a curtain, exposing the fact that the great wizard of Oz is really just an ordinary old guy putting on a show. This teaches kids to question authority, look behind th…

As I explained last time, Prosper said it would move our late loans from the poor-performing Penncro agency to Amsher. Yet, there seems to be no action. Here’s an update on what has happened since I last wrote about this.02/13/08 - no action. The…

As I explained last time, Prosper said it would move our late loans from the poor-performing Penncro agency to Amsher. Yet, there seems to be no action. Here’s an update on what has happened since I last wrote about this.02/13/08 - no action. Th…

Just about a year after I began speaking up about how poor the Prosper collections agents handled late loans, Prosper announced that they were taking action. Prosper recently (Jan 28 2008) sent a letter to many (but not all) lenders, explaining that …

Just about a year after I began speaking up about how poor the Prosper collections agents handled late loans, Prosper announced that they were taking action. Prosper recently (Jan 28 2008) sent a letter to many (but not all) lenders, explaining th…

Here’s the 02/01/08 update to my late loan statistics charts.These charts show statistics for the performance of ALL prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction of…

Continue reading → Fred’s Blog Loan Stats

Here’s the 02/01/08 update to my late loan statistics charts.These charts show statistics for the performance of ALL prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fractio…

Continue reading → Prosper.com - late loan stats update

Here’s the 01/15/08 update to my late loan statistics charts.On these charts, each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction of those loans that have “gone bad”, in other words are 1 …

Continue reading → Prosper.com - Late Loan Stats Update

Here’s the 01/15/08 update to my late loan statistics charts.These charts show statistics for the performance of ALL prosper.com loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fract…

Continue reading → Prosper.com - late loan stats update

Prosper.com hired Doug Fuller to lead “operations” some time around mid September. He’s been there 90 days, so we’re gonna take a look at how one of Prosper’s biggest problems - collections - is doing under Doug’s rule. Summary: Improving, but sl…

A message from Patrick Gannon of Lendingclub …Date: 12/24/2007From: Patrick Gannon …Subj: Re: Lendingclub - bad mathThank you for your analysis of our ROI calculations. We are taking down the ROI section of the statistics page for now while we rev…

Lendingclub now provides an estimated “Lender ROI” calculation on their web site. Unfortunately, their mathemematics is incompetent, and the resulting numbers are meaningless. You might say “Gee, why is he so hard on them?” The answer is simple.?…

If I could wish for just one thing this holiday season when it comes to Prosper.com it would be redacting any changes that lead to the appearance of censorship.It is my opinion that the appearance of censorship on the part of Prosper.com and its manage…

Here’s my 12/15/07 update to the prosper.com late loan statistics, with some notes on default rates. You’ve heard me say it before. The default rate of prosper.com loans is repeatedly misrepresented in the press. This trend continues.First, today’s…

Here’s my 12/15/07 update to the prosper.com late loan stattistics, with some notes on default rates. You’ve heard me say it before. The default rate of prosper.com loans is repeatedly misrepresented in the press. This trend continues.First, today’…

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I just wanted to mention that one of the best Prosper-related web sites has returned from the dead. www.wallofsham.com This ingenious site profiles Prosper deadbeats - borrowers who have defaulted on Prosper loans. The stories of these individua…

Prosper no longer allows me to publish this material in the prosper.com discussion forum, so I will now publish it here on prospers.org .Here’s the 12/01/2007 update of the late loan chart. A larger version of this graph is available: here The following chart presents the same data, except that the curves have been slid to a common starting point. The horizontal axis now shows days since loan origination month. The first three months Mar’06, Apr’06, May’06 have been left off of this chart, because the curves for those months (Prosper’s early days) have a different shape. With those curves left out you can easily see how similar the remaining curves are.Look about 1 year out. You see about 20% of the loans have gone bad at that point. Individual months vary, but are quite similar.Notes on methodology:Each curve contains data on all the loans that originated in a particular month, as identified in the legend. All data comes from Prosper’s performance web page. Data points are computed from data observed the 1st and 15th of each month.Each data point is a ratio. The numerator is the number of loans that have 1 month late or worse. The denominator is the number of loans originated. Thus this ratio is the fraction of loans that have “gone bad”.More specifically, the numberator is the sum of loans in the following states: defaulted + “1-3 months late” + “4+ months late” + repurchased. The first three numbers are read directly from Prosper’s performance web page. Prosper does not explicitly display the number of loans repurchased. I calculate the # loans repurchased by tracking changes in the number prosper shows as “loans originated”.The denominator is the number of loans originally shown by prosper as having originated in the designated month. When prosper repurchases a loan found to have been fraudulent, they “unoriginate” the loan, in other words they subsequently show that a lower number of loans have originated. I use the original (higher) number in the denominator of my ratio. For example, in May of 2006, 458 loans originated, although they now show the number of originations as 446, after having repurchased 12 fraudulent loans.Excluding the early few months of Prosper, these curves look very similar to one another. Separating loans by age allows us to see the time evolution of delinquency. Delinquency grows over time. We can also see the rate at which it grows. For the first year each group of loans shown here has gone bad at more than 20% per year. Because almost all Prosper loans that go more than 1 month late go on to default, we can also see that the default rate on the all-prosper portfolio is approximately 20%/year. Given that this is so clear from Prosper’s own data, it is sad to see the quality of Prosper loans misrepresented in the press over and over. The most recent example is a November 27, 2007 Associated Press article http://www.msnbc.msn.com/id/21993720/ wherein Chris Larsen is quoted as saying:Prosper’s default rate hovers at about 2.7 percent, Larsen said, but that figure is expected to rise as more loans mature.Its not difficult to figure out how he comes up with 2.7%. If you take the total $ worth of loans that prosper has declared defaulted so far, and divide it by the total $ worth of loans that Prosper has originated so far, you get approximately 2.7%. That ratio, however, is not meaningful to lenders. One problem with the 2.7% number is found in the choice of numerator. The numerator in this fraction includes only loans that have been declared “default” by Prosper. Prosper ages highly delinquent loans quite some time before declaring them “default”. Loans are subject to default at 4 months late, but Prosper holds such loans until a quarterly disposal, and only declares them default once they have passed the quarterly event. Loans >4 months late would be in the default state except for the fact that they are waiting for the quarterly auction. Today Prosper shows $2,864,899 of loans in the “default” state, and $3,694,261 in the “4+ months late” state. More loans are in this suspended waiting-for-the-auction state than have so far completed the process and been declared “default”! If the quarterly auction had been held yesterday, the calculation of Larsen’s ratio would have come out 6.4% instead of 2.7%.The denominator is also a bad choice. Itcontains many loans so young that they could not possibly have defaulted yet. (Loans must be 5 months old before they can default.) The denominator also contains many loans old enough to default, but still low on the curve. This methodology is simply defective.Only when lenders understand the rate at which Prosper loans go bad will they have a chance to understand how selective they must be to succeed. Prosper loans have been going bad on average at about 20% per year.There was one small surprise in this update. The Aug’07 curve took a jump. This occured because the # of originated loans in Aug’07 dropped. Was 979 originally, and was still 979 at my 11/15/07 reading. As of 12/01/07 Prosper shows only 940 loans originated. This (probably) means that some time during the last two weeks Prosper repurchased 39 loans from Aug’07. Must have discovered a big batch of fraudulent loans. If this theory is correct, it would be the largest batch of fraudulent loans ever detected. Haven’t heard anything about this event, but then it seems like it may have occurred at about the same time the Prosper forums were shut down, and there has been less sharing of information in the Prosper community since that time. We should soon hear confirming information from lenders who were part of this repurchase, or else learn that it was a data glitch.

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