Today is my 2-year anniversary since I found Prosper. My last bid was ~5 months ago. I may bid again but the likelyhood is dwindling. In the between time, I’ve done some thinking about this whole person-to-person lending idea.When I first found P…
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Competing with banks is stupid
August 7th, 2008 — , Lenders and lending, Prosper from zcommodore @ Posts from all blogs
$25K, 29%, Paid in Full
July 24th, 2008 — , Lenders and lending, borrowers from zcommodore @ Posts from all blogs
Yes, it happens once in awhile. A borrower comes to Prosper and asks for the maximum at a high rate and actually pays it off.This morning, I had one borrower do just that. About a year and a half ago, in IRC, Bama told me he wouldn’t pay for anothe…
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March 25th, 2008 — , Lenders and lending from zcommodore @ Posts from all blogs
It’s taken 19 months and a few extra payments along the way, but I finally have an unpaid loan that has reached the breakeven point. I’ve had two other loans that were paid off early that I obviously got all my money back on but this is the first one…
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February 22nd, 2008 — Lenders and lending from zcommodore @ Posts from all blogs
A couple of weeks ago, I passed the 18-month mark since I found and joined Prosper. Earlier this week, my first loan reached 18 months old. This morning, I got my 18th payment from that loan. I’ve said it before and I’ll say it again, I probably …
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February 13th, 2008 — Lenders and lending, Prosper from zcommodore @ Posts from all blogs
Yesterday, Fred93 posted again in his blog asking for Prosper to get with the program and switch the collection agencies as they had promised. Today, I see that a bunch of late loans are no longer “in collections” after reading a thread on prospers.o…
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February 10th, 2008 — Lenders and lending, Prosper from zcommodore @ Posts from all blogs
I saw a comment on Bama’s most recent blog post that made me go look at the numbers again. First, let’s look at the performance data for all loans originated on Prosper as of today, Feb. 10. Keep in mind that even though it says there have been 18,6…
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January 18th, 2008 — Lenders and lending from zcommodore @ Posts from all blogs
I was recently looking over my loans on Prosper recently and made a few observations. I’ve made a total of 33 loans so I broke them up in groups and noted the following:4 of my first 5 loans are current4 of my next 16 are current (one paid, the rest…
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January 8th, 2008 — Lenders and lending, Prosper from zcommodore @ Posts from all blogs
I just placed my first bid since before Thanksgiving. Once again, it’s an autofund loan. For some reason I can’t stop bidding on those. However, in this case it’s a friend from IRC who has AA credit but is somewhat rate-capped in Texas at 8.32%.A…
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December 5th, 2007 — Lenders and lending, Prosper from zcommodore @ Posts from all blogs
It looks like the results, for me anyway, are in. Last Friday, I posted that I saw payments pending on 4 of my loans in various stages of lateness. Today, the results of those attempts are…
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What a nice surprise
November 30th, 2007 — Late loans, Lenders and lending from zcommodore @ Posts from all blogs
Most mornings, especially when I’m expecting to receive payments in my account as I was this morning, I check my Prosper account. This morning while I was checking my account, I noticed the amount of payments pending in my account had jumped significantly so I went to investigate. I expected one of my current loans must be making an extra large payment or something to that effect. However, to my surprise, no less than 4 of my 11 loans in various stages of lateness had initiated manual payments.Of the loans making payments, one of them who happens to be in my group had passed 1-month late earlier this week and is listed as in “Bankruptcy”. I’m guessing that if this is really a bankruptcy case, it’s a Ch. 13 since she had been involved in a Ch. 7 only a few years ago. I had hoped this one would recover but since she hasn’t responded to any of my inquiries I figured it was a lost cause. That one will certainly make me happy if it gets caught up.Another of the ones catching up is one that went late on his first payment and is officially “Late”. Previously he had had two payments pending but they both failed. I had contacted him asking why there were two and he said there was a mistake made where Prosper initiated an automatic attempt and he made a manual payment about the same time. Hopefully this one will go through and everything will be fine after this. Yes, I know. I’m just too much of an optimist for my own good.The other two that are catching up are both <15. One just caught up from over 1-month late earlier this week and appears to be catching up the rest of the way. The other has been late at least as often as she’s been on time so seeing her catch up is not really a surprise but still nice to see.I’m still frustrated with how the official forums on Prosper are being run but it’s nice to see something positive to talk about as well.
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November 15th, 2007 — Lenders and lending, Prosper from zcommodore @ Posts from all blogs
Just over two weeks ago, Prosper’s update included guidance to lenders based on actual Prosper data. I normally collect monthly loan statistics at the end of each month but I decided to do some early checking and found some interesting information I couldn’t wait to post so here it is.Below is a graph I’ve posted before showing the relative percentages each month based on credit grade for the numbers of loans originated in the month. Here is the graph again but with November’s numbers based on only the first half of the month.Notice how the lines for AA-B grades of borrowers are going up while all other grades are going down. Prosper’s lender guidance, limited though it is, indicates most lower grades to barely be worth the risk for lenders even though the rates they tend to offer are much higher on average. As far as I’m concerned this was the best change for lenders yet.Here’s another look at the numbers but with the credit grades grouped together similar to the way Prosper groups them in it’s monthly newsletter.For the first time AA-A grade borrowers are getting a decent share of the loans on Prosper. Once again, you can see the other grades are going down.Keep in mind that the November numbers aren’t even all in since we’re only half-way through the month. Also, since the new information happened very late last month, there were some loans that were funded prior to the change or shortly afterwards so those loans are probably still reflected in the new information. Additionally, many lenders who use standing orders only may not have noticed all the recent changes if they don’t do manual bidding since the information isn’t readily available unless you manually click the bid button. Regardless, the information is rather dramatic in my opinion.I hope we see a corresponding decrease in numbers of defaults over the next few months with the new information. Also, and better yet, I hope we start seeing a lot more prime grade borrowers showing up now that it looks more likely that they can get funded here.
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November 7th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
Prosper had another site update early last week. Lenders seem to be reacting to the news but it doesn’t look good already. Loan counts are going down from day to day on average. Check out this graph: Notice how the 10-day average is dropping very rapidly. Of interest to me is that a similar thing happened after the last update in mid-September but it recovered by the en dof the month and was fairly flat after that.I wonder how much of the change is due to Prosper showing lenders how much they could lose on borrowers who don’t meet certain minimum criteria so lenders just stopped lending altogether and how much is a backlash from the removal of past listings and/or in reaction to some of the recent turmoil in the forums.This is going to be interesting to watch.
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October 31st, 2007 — Lenders and lending, Prosper from zcommodore @ Posts from all blogs
Prosper now has 54 segments (see graph at bottom of the linked page) that they’ve subdivided their credit grades into. Based on the way they’ve divided it, it appears that autofund loans followed by high numbers of inquiries and then currently delinquent accounts are the biggest red flags for lenders to avoid or, at least, take into account when bidding. I thought this was interesting since most discussions I see about red flags for lenders to avoid start with current and past delinquent accounts and public records. Autofund loans usually get mentioned as well but inquiries seem to not be understood or are rarely taken into account. Often, it seems that DTI is considered higher as well although it does appear to be a factor in some of the higher credit grades as a differentiator.Prosper did say that over time they may change the segments and/or add to them once more data is available. I wonder if/when public records, past delinquencies, size of credit balances or utilization percentage will come into play.
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Continue reading → Autofund, inquiries the biggest red flags
It’s been more than a month…
October 18th, 2007 — Groups and Group Leaders, Lenders and lending, Prosper from zcommodore @ Posts from all blogs
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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October 7th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
The last couple of months, I’ve posted the following graph showing how lenders have changed their bidding patterns over the past few months, especially since the new extended data came out in February.
As you can see, HR borrowers fell to their lowest percentage of all loans funded in the month of September at approximately 7% of all loans funded for the month. This is really a very low number considering the fact that September had the fewest number of loans in quite a few months.After looking at this graph, I decided it was too busy and needed to be condensed to be more meaningful. After reading a few of Prosper’s press releases I noticed they grouped the credit grades more as follows: AA-A, B-D, E-HR. I decided to do the same thing and came up with the following:
Note that in this graph, all months up to and including Feb-07 include NC grade borrowers in the E-HR category. Prosper eliminated NC in February so it is not included in later months and I chose not to include it in the key names.When I first posted the previous graph, I got a note from Islandmele in Hawaii saying she would like to use an updated version in a presentation at her Meet & Greet she was planning. Last week, I forwarded these two graphs to her and I believe she used at least one of them in her presentation earlier today. She asked me what I would say if I were presenting these graphs so I wrote the following few paragraphs, mostly referring to the second graph since it is easier to read. A knowlege of Prosper’s history is useful when looking at these graphs. There is a dip in the high-risk categories in April/May ‘06 and I believe it coincided with a significant reduction in the top borrower rates available on Prosper.Later, a lot of publicity brought in a lot of new members to Prosper later in ‘06. In addition, groups started getting rated in October. Once there was a rating system, it added incentive for group leaders to get lots of loans funded so they could reach the top of the list. This lead to “pump & dump” and lots of high risk borrowers were funded due to newbie lenders chasing high rates and group leaders taking advantage of this fact.By February, when the lates started rolling in and Prosper added the new extended credit data, lenders figured out that high rates don’t always mean high returns. The highest risk borrowers stopped getting funded since lenders saw the risk just wasn’t worth it and focused more on the better mid-credit grades where the perceived risk was lower and the returns were more consistent.It will be interesting to see how things change going forward, especially since there is very little incentive for groups to “pump & dump” now that there are no longer group leader fees associated with loans in their group. Ultimately, I think it will be good for Prosper even though the volume of loans has continued to drop. The ones getting funded now, for the most part, are better quality overall so that should help default rates even with new lenders arriving who don’t understand the risk.One other thing to note that I’ve hinted at before and that is November-January is when the groups Financial Assistance Network, Two Millionaires, and to a lesser extent, Fairplay and Life Changing Loans, were operating at their peak. These groups seemed to feed off of the highest risk borrowers and encouraged a lot of inexperienced lenders by their pumping and dumping to bid on these high risk borrowers. At least one large lender, reguyincali, also was bidding on a lot of these high risk borrowers and large lenders can affect the market quite a bit since the marketplace is still relatively small.I am glad to see the better borrower grades getting a larger piece of the Prosper pie and I hope that will help default rates to go down and encourage more lenders to participate and help Prosper grow.
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September 19th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
Since I spend time here complaining about lates and defaults, I thought I’d mention that I’ve had two lates catch up the last 2 days.Yesterday, I received payment for this A grade loan which you can see from the loan history has been late more than it hasn’t. I don’t complain about lates as long as they eventually pay. With this one in particular, I’m getting late fees on a fairly regular basis as well. The late fees, in addition to the 21% interest rate make this an attractive investment so far. The only question now is if the borrower will continue to pay for 2.5 more years.Today, I got my 12th payment from my first loan on Prosper. The borrower has been late a few times before but has caught up each time. His next payment was due on the 18th and is in process as well. I hope it clears and I think it will. Once, when he had been late and then caught up, I sent a PM thanking him. He replied that his finances had gotten a bit tight when his son was starting his college semester and since school started again this fall, I figure that may be why he was late with the recent payment as well.I have one more late borrower who is <15 late that may catch up next week. There is a dagger next to the loan so I hope it will clear. He was late once before as well so that gives me hope this one will be good as well.
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August 28th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
Apparently Prosper wasn’t finished entering in defaulted loans Friday because I got another one yesterday afternoon. I had wondered why it wasn’t included since I hadn’t received any payment since December so it was well within the window for eligible defaults.Anyway, here’s the link to the loan. I got $2.89 out of a principal balance of $47.43 that was owed. When I add up all the payments I received including interest and the debt sale, I got a total of $9.10 which included 3 payments made from my $50 bid. Once again, my pie-in-the-sky 29% interest turned into a 82% loss. Thats the risk I took and I guess I lost this one.The really frustrating thing about this one is not so much the fact that I lost money on it though. She was vetted. She was very chatty on the Prosper forums. She interracted with everyone and made posts that seemed to indicate she was really turning her financial life around and indicated that this loan would help her get over that hump. After I bid, I even got a thank-you note from her.Once her loan originated, she posted a big thank-you where she said “I will not let you down”. The first few months afterwards, she stayed active off and on with updates why she was late on the first payment. She gave advice to new borrowers and seemed to blend well into the community. Unfortunately, things changed towards the end.Right before her December payment was due, she came on saying her mom had posted a loan request. The strange thing was that she used JennyLynn’s forum login to post on the forums instead of getting her own. The explanation was that her mom just didn’t know enough about computers so Jenny was helping her. Fair enough. Her mom’s loan funded so quickly that it didn’t really matter one way or another. I think only one forum regular even bid on her mom.A couple of days after her mom’s loan was funded, JennyLynn went late but eventually caught up for the last time. I got a message from her mom indicating Jenny had gone in to the hospital at some point. I had contacted her mom to see if she knew the status shortly after Jenny went late in January. I thought at the time she might still catch up after she got well but frankly I’m not sure if that wasn’t just a ploy to garner sympathy. It was shortly after the time when a bunch of regulars had gathered money to help another forum favorite who had gone into the hospital make some payments. I don’t know and probably will never find out.I post all this more as a warning to new lenders to watch out for even chatty forum members. Even those who seem to fit in to the community don’t always come through for their lenders. I have no idea if this was just a scam from the beginning or if bad things just conspired against Jenny. Ultimately, the fact that she was HR, I knew from the beginning it could turn out bad. I didn’t understand the risks much then but I had hoped it would be OK.One more thing before I close. I do have a few HRs in my portfolio who were chatty forum members and are paying like clockwork. I wish I could predict better which ones would be good and which ones wouldn’t. Unfortunately the bad ones tend to get all the publicity and ruin it for everyone.
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August 27th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
After participating on Prosper for just over a year now, I’ve got my first defaulted loan. I have several that are likely to be headed that way at some point probably but for now it’s just one.I bid on this loan for a number of reasons.The group leader knew the borrower personally and brought him to Prosper so I felt like it met the “group standard” that was Prosper’s ideal.The reason, to expand his business, made a lot of sense and the product was one in demand.The group leader worked for the customer of the borrower so I figured he should know the market and that it would be consistent.I ignored some of the red flags like the high DTI, current delinquent accounts, and asking for a high dollar amount.In the end, for my $50 bid, I got one on-time payment that netted $1.91 plus the default sale price of $4.05. My pie-in-the-sky return of 23% on investment turned into a 88% loss.I had communicated extensively with the group leader both during the bidding phase of this loan about the borrower’s situation, about how to get a loan, and after the loan originated. He communicated to me the borrower’s situation, that he had gone out of business, shortly after the loan first went late. In my mind, I had already written it off back in January so really, to get the $4.05 back, I’m pretty happy.I had hoped I would get more on the debt sale since the borrower is a homeowner and homeowner loans were going for higher prices than non-homeowners. Unfortunately, the junk debt buyer (JDB) apparently decided to pay more for higher credit grades rather than focusing on homeownership this time so the $10 I had hoped to get (~20%) turned into $4 or ~8%. I guess I will get a little writeoff on my taxes though so that should help a bit as well.
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July 29th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
I was just scanning through my past blog posts and I see I haven’t mentioned my 29% loans yet. I’ve commented about them in various forums now and then so I guess I’ll post about them here now.When I first found Prosper, I saw rates in the teens and thought, “wow, that would be great!” Later, after money transferred into my account, I had found 29% AF loans and went nuts. Eventually, of my first 6 originated loans, 5 of them were 29% AF loans as far as borrower rates go. One had a 0.5% group leader fee.Later, I scaled down on those high risk loans but then from April to June, I added 6 more 29% borrower rate loans. In total, of my 24 $50 loans, half of them were at the Prosper maximum for borrowers of 29%.So, how am I doing? Of those 12, 3 are in some stage of late. One is 4+ months late after making 3 payments. One is 2 months late and never made one payment. One is 1 month late after making 9 straight on-time payments. Of the ones that are current, 3 have made one payment (one of those is pending but will be credited to my account early tomorrow morning.) 2 of the current loans have been late at least once and caught up. All but one of the 29% loans were autofund loans. The credit grades range from C to HR. One of the C loans has made a couple of extra payments as well.Why have I bid on these? I did some math once and figured that for one loan at 29%, if they make their payments on time over the life of the loan and don’t pay off early, I will earn ~$25 for each $50 bid. In other words, if I have 3 29% loans and one never makes a payment but the other two pay out over 3 years, I break even. Anything after that is gravy.Is it possible to find 2 good 29% loans for each one that goes bad? I don’t know if that is true or not. So far, I have 3 good ones for each bad one but that only assumes the good ones don’t pay off early and don’t go bad as well. I’m probably going to scale back for awhile on 29% AF loans due to more loans coming up in my group and the fact that the end results don’t appear to add up to what I had hoped they would. It has been a fun experiment though.As far as my loans that aren’t at a 29% borrower rate, the results aren’t even as good with those. Of the 12 loans at lower rates, one is 4+ months late, 2 are “Late”, 1 is <15 late, and 2 haven’t had payments due. Those loans aren’t paying enough interest to make up for bad loans as fast as the 29% loans do. Ultimately, I’d be way behind here with Prosper if I weren’t getting some group leader fees and referral rewards. Somehow, I think that is the case with a lot of people on Prosper who have been around awhile.
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July 26th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
That was fast. I bid on this loan request as a friend (long story) right after it went live. It closed less than an hour ago and it became a loan within minutes. That was the shortest time I’ve ever had a listing that I bid on become a loan.I asked the borrower what kind of verification they did and she told me she got the postcard for address verification in only 2 days all the way from California to Maryland. I guess the Post Office was helping things along a bit as well.
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July 18th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
I was just looking over my list of loans. I have 8 loans that originated before the 15th of the month and 13 that originated the last half. Of the 8 in the first half, I have one paid off and one current. The rest are in some stage of late including two that are 4+ months late. Of the 13 originated in the last half of the month, 2 haven’t had payments due yet and 1 is Late.For awhile I was hoping to get more loans in the first half of the month so I could be getting payments throughout the monthly cycle. Now I’m not so sure.Note to those wondering why I haven’t blogged in awhile. I’ve been doing a lot more GL stuff the last week so I haven’t had as much time. I don’t know how much I’ll be posting here in the future but I’m not planning on going away.
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July 12th, 2007 — Lenders and lending from zcommodore @ Posts from all blogs
It looks like I’m getting my first loan payoff when the funds clear into my account tomorrow morning. I logged in to Prosper one Saturday night and saw this listing and couldn’t pass it up. A B grade borrower paying a 28% lender rate with very clean numbers except for the DTI in addition to a previously fully paid loan.I had seen at least one of his previous listings and they looked attractive to me but the $25K size disuaded me from bidding. This one, I couldn’t pass up so I bid.Now, a little over 3 months later, I will have made $3.60 interest less fees on my $50 bid and I’m getting my principal back. Not too bad. I wouldn’t have minded getting 28% interest on it for awhile longer but it certainly beats the alternative of defaulting.
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