Since group leader fees disappeared in mid-September, I had posted a couple of times about how the number of borrowers with listings in groups had gone down quite a bit.  Well, with the recent change that allows borrowers to get second loans that trend has changed dramatically.  I had noticed that no-group listings had increased up to ~87% of all listings on Prosper.  I just checked a few minutes ago and noticed that no-group listings were down to ~76% due to all the 2nd loan requests, even from otherwise closed and/or inactive groups.I think one of my earlier posts had a comment from someone who pointed me to a graph on wiseclerk.com that shows a graph of this activity.  You can see how in-group listings dropped dramatically in September and now are on the rise on this page.I’ve noticed a lot of the requests for 2nd loans don’t seem to be going anywhere.  Many of the borrowers are people who only received their first loan due to “pump & dump” support from their group leaders.  Now they may be current on their existing loan and want to come back for more but can’t seem to get funded since group leaders have no incentive to pump & dump anymore.  I wonder if many of these borrowers even understand what is going on such that they are having trouble getting funded.One more thing: keep an eye on this blog because I intend to post some interesting information I’ve noticed recently about lender activity later this week.

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Continue reading → A lot of in-group listings

It’s been more than a month since Prosper decided to eliminate group leader fees and it looks like Prosper is doing just fine.  One group leader started a thread presumably to document the slow death spiral that Prosper was entering into by removing these fees.  His methodology seemed a bit off since he was checking daily how many listings were fully funded compared to how many were available and how many groups there were.  At any rate, this would completely miss all autofund loans that filled and many listings that only filled in the last few hours.I decided to do some checking of my own by seeing how many loans originated each day and used the performance tab to go back a few months to get some historical data as well.  Here is what I came up with: The graph was a bit noisy looking at each day so I added the 10-day average line to smooth things out a bit.  Note that the average is over 10 business days which usually corresponds to two weeks except when a holiday occurs.The change happened on the night of September 11 so all loans from listings that started on September 12 or later were without group leader fees if the borrower was in a group (unless the group leader had a listing under review that was approved and funded from prior to the changeover.)Looking at the graph, it looks like there was a temporary low right after the change but since that time, the number of loans approved has been on a slight upward trend.  Obviously it’s still a relatively short period of time but in my opinion it is anything but a death spiral for Prosper.

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Continue reading → It’s been more than a month…

There are literally thousands of groups on Prosper, most of which are 0-0-0 (0 members, 0 listings, 0 loans).  In a post by LoanChimp a short while ago, he indicated he got a notice that Prosper is closing his inactive group.  He started it to bring a couple of friends to Prosper but they didn’t need to go that route so they never showed up.I guess this is just the next step for Prosper to make as they move away from the group model.

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Continue reading → Prosper removing inactive groups

A couple of weeks ago, Prosper made a bunch of changes related to groups so that “groups” would be more likely to just be people with outside connections rather than simply random people who were “harvested” from those already on the site.  The number of listings, percentagewise, that are now not in a group has increased significantly since then.  When the change was first implemented, roughly 70% of all listings were “no group”.  This morning, I checked again and it had risen to 82%.Last month, a lot fewer loans were created as well.  I’m not sure how much of this was due to the recent change.  There were a number of factors at play.  I’m going to do some more research and will probably blog about it further soon so watch this blog for some more graphs related to that.

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Continue reading → 82% no group

I think there may be several group leaders who post information about the late borrowers in their group at least somewhere but since I have a late loan with this group, I thought I’d blog about it.Lend2 is one of the largest lenders on Prosper.  He started a group at one point and one of the things he mentioned on his group page was, “I said I wouldn’t do it but I started a group anyway.” or something to that extent.  Later, he closed his group for personal reasons although I’m thinking he may have seen the hand writing on the wall–that his group wasn’t performing up to his expectations.Anyway, he still maintains contact with the members of his group who are late, or at least attempts to.  He has this website that he updates with information he has received from the borrowers who are late.My late borrower, missouri_veteran, says among other things that she was hoping to make a payment by the end of the month (in August) but she’s now a month late and rapidly headed towards 2 months (payment due on the 12th).It is nice to know some information but frankly, unless a payment is attached, I don’t hold out much hope anymore for borrowers who are more than a month late.I know, because I have several borrowers like that in my own group.

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Continue reading → Another website about late borrowers

A few weeks ago, I laid the blame for a lot of the performance problems with collections on Prosper on a few group leaders and large lenders.  Here is another look that also makes my point. This graph shows how loans 1+ month late and defaulted loans increase over time for the time period shown.  I believe the outliers on these graphs make my point.Honestly, I don’t have a good explanation for why May 2006 loans are going bad at a much lower rate overall.  I believe it corresponded to a time on Prosper when the maximum interest rate was around 23% so that may have had something to do with it but I think April 2006 was also in that category and it doesn’t have a similar graph.My main point centers around the months of August 2006 and October 2006 through February 2007.First, August 2006 happens to correspond to the time pensioner was at his peak in bidding according to Lendingstats.  I will let the readers verify this for themselves.  Notice how it seems that August 2006 loans are going bad at a much higher rate than similar months around it.  A large lender can get loans funded that many small lenders may not be interested in, particularly if they are autofund loans.  This tells me that a single person with a lot of cash might make decisions that many smaller lenders might not as a whole.October 2006 is similar to August in that a large lender was bidding a lot of cash on loans many smaller lenders wouldn’t have otherwise been interested in.  In this case, it was MuleShoes.  Notice how the loans in October 2006 are continuing to go bad at a much higher rate than others from months before.Finally, November 2006 to February 2007 are the months when two of the most disliked groups on prosper were at their peak.  FinancialAssistanceNetwork and mayans (also known as TwoMillionaires or First Choice) were bidding on a lot of high risk borrowers during this time and doing what many refer to as “pump and dump” where they bid a lot near the beginning at the maximum rate available and then lenders who didn’t know what was going on followed their bids such that the group leaders were mostly knocked out of these loans.  One could blame the lemnders (lemming lenders) for making bad decisions but ultimately I believe the blame lies with the group leaders who gave a false impression of the borrowers by suggesting with their bids that these borrowers were better than others not in their groups.Prosper changed a lot of bidding patterns in mid-February 2007 when they gave lenders more credit information on borrowers.  Even though several “pump and dump” groups remained near the top of the lists it seems that many of them were not as effective with their tactics since lenders were starting to get smart by this time.  The new expanded credit data has been shown to have helped lenders make better bidding decisions.  Also, there are a lot more experienced lenders on the site now compared to the newbies than there were at the beginning.  It seems the newbie lenders are the ones most likely to get suckered into a bad loan by a sleazy group leader.  Now that rewards have been removed from groups, even the sleazy ones are less likely to be so active.

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Continue reading → Results of bad groups/bad lending

I got the following message today from Prosper:Dear [zcommodore], Happy anniversary and congratulations on your 1st year with Prosper! Thank you for being a valued member of our community and for helping to make consumer lending more financially and socially rewarding for everyone. If Prosper has been helpful to you, please send us your story at stories@prosper.com and we’ll include it on our success stories page. We trust you’ve enjoyed a rewarding relationship with Prosper and look forward to helping you get the great rates you deserve for years to come. Best regards, Your friends at Prosper P.S. If you have family or friends who also want to take advantage of our great rates, refer them now and earn money if they borrow or lend!They asked for my story but I don’t think they’d really be interested in it so I thought I’d publish it here.I first found out about Prosper from reading this article by my favorite financial columnist.  I saw the interest rates being offered and was immediately interested.  (How many times have I seen that since then?)I started with 5 loans in the month of August, 4 of them are current and the one that is late made 9 on-time payments before going AWOL.  The first of those 5 went late a few times but has been on-time since late February.The last time all my loans were “Current” was in early January–somewhere around January 9th.  The first of my 4+ month lates first went late then and I haven’t seen a payment since then and I don’t expect to.  The borrower made only one payment but is a homeowner so maybe when it is sold, I will get a little more on the default sale.I’ve made a total of 24 loans, one is paid and seven are in some stage of late.  Three loans haven’t even had a payment due so in reality, more than one-third of my loans look like they may be going bad.  I still have hope for a few of them to come current though so all may not be lost on them yet.I started a group a few weeks after I joined Prosper but I didn’t really do much with it until late October.  The first loan in my group originated Nov. 6th and by the end of the year I had helped 5 HR borrowers get funded.  My philosophy was that I could sift and sort through the lower credit grades and find a few diamonds in the rough and that by believing in them, there would be extra incentive for them to stay current due to the peer pressure aspect that Prosper advertises so much.What I didn’t fully understand or consider was that peer pressure only works if there is money to pay and a desire to do so.  The last time all the loans in my group were “Current” was around May 8th.  Since that time my group has had between 1 and 4 loans in some stage of lateness.  My group lost it’s first stars on June 5th and was reduced to a 1-star group on August 6th.The problems the borrowers in my group are varied.  One borrower just decided he didn’t want to pay his loan.  One borrower is just in way over his head with financial problems.  And two borrowers are going through divorce.I have hope that at least a few of the lates in my group will get straightened out.  The prospects don’t look great but I’ve been communicating with the late borrowers in my group off and on since they initially went late.  I have a desire to get back to having a 5-star group but if it ever happens, Prosper will probably have changed the ranking system a time or two by then so who knows how it would rank.When I found Prosper, as I said earlier, I was attracted by the high interest rates.  I’ve learned that those rates are made of a lot of fools-gold.  I haven’t given up on Prosper yet.  I keep trying to convince myself that I will do better the next time.  We’ll see though.

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Continue reading → My Prosper Story

Earlier today, I caught some heat from other members of Prosper about my group and the fact that 4 of the 9 loans are late and 4 of 7 are late that have had payments due. Now, this evening, I get this message from Prosper.

Group Building 101: Effective Group LeadershipLearn the ins and outs of effective group leadership. The next class is
tomorrow, Tuesday, July 31 at 4 pm Pacfic time. Enroll now.The seminar includes:Creating your group identitySetting your group’s membership criteriaGroup rewardsRegistration for this seminar is free but space is limited.
Please select the session that works best for you and register today!
How to build a 5-star group on Prosper

I guess maybe I should enroll and see what I’ve been doing wrong.

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Continue reading → Oh the irony

Most who read this blog know that I am the group leader of this group on Prosper.  I only point it out for those reading this from other sources.  I’ve had my ups and downs as it relates to being a group leader–ups from helping difficult HR borrowers get funded to downs when I couldn’t get others funded, to say nothing of the frustration when one of the borrowers in my group stopped paying his loan.  I read a lot in the forums and see what lenders say about groups and their frustration with group leaders who are in it only for the rewards.  I see a lot of calls for Prosper to abandon groups entirely.Today, after reading this thread on the Prosper forums, I am ready to agree with the other lenders who see nothing but scam artists being attracted to acting as group leaders on Prosper.  The rewards Prosper gives group leaders are nice but where there’s money to be made, there will always be some scam artist looking for a way to make a quick buck.I like the idea of person-to-person lending–helping people who need money to get money at a reduced rate while at the same time making a little myself.  If there were no rewards associated with being a group leader, I might not have started my group.  I started my group since I was already helping borrowers get funded by giving advice in the forums.  I figured I might as well get a small bit of compensation for my time so I started my group.  I do like helping people and this was just the next step for me.Looking back over the time I’ve spent on Prosper which is rapidly approaching a year now, I remember some of my initial thoughts when I first came across the site.  I saw interest rates in the teens and thought, wow!  I can get a lot more than 5% on my money there rather than here in a savings account in addition to helping people by saving them money as well.  After reading up on the GL rewards/fees I remember thinking this is one way for scam artists to take advantage of people.  But I started a group anyway.If anyone from Prosper reads this, go ahead and close down the group system.  There are only a handful of group leaders who lenders respect and they will understand I’m sure.

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Continue reading → Groups on Prosper