2008 March | | P2P Lending, Peer to Peer Lending, People to People Lending P2P Lending News, Information, Borrowing and Lending Strategy

My second lending club late has infected my account. It was a small loan to a super clean borrower… These loan are not the one that typically go late. I have high hopes that it will cure…

Chech out these stats.

FICO Range:714+Earliest Credit Line11/2000Open Credit Lines6Total Credit Lines7Revolving Credit Balance$4,500.00Revolving Line Utilization13.00%Inquiries in the Last 6 Months0Accounts Now Delinquent0Delinquent Amount$0.00Delinquencies (Last 2 yrs)0Months Since Last Delinquency0Public Records On File0Months Since Last Record0

Clean as a whitsle…

Much has been made of the Prosper collections (or lack thereof until the hiring of Doug Fuller). I wonder… will Lending Club’s collections be any better? I hope so, but only time will tell. I will be sure to keep my readers informed.

Update… I just logged into my LC account and this loan is back to current…

If you would like to try Lending Club I suggest you sign up with a referral link. You will receive $25 signup bonus ($50 if you deposit $1000 or more), which covers your 1st (or first 2) defaulted borrowers. Here is a referral link to sign up and receive the $25 bonus: Signup via this link and receive a $25 startup bonus.

Cheers.

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Prosper Lending review has an excellent new article. It combines 11 responses (including both Lending Club, Prosper, and yours truly) to a reader’s question. It is well done on all front’s. Here is the question asked:

Here is my response:

My response to your question sounds like I am talking you out of investing in p2p lending. Nothing could be farther from the truth, but within the framework of your question p2p lending is an unknown and your question does not support investing in an unknown. The returns may materialize and they may not.

As much as I believe that p2p lending will change the world it is an entirely new asset class. You cannot assume the published rates of return will be the actual rates of return. It is different than credit cards it is different from secure debt. I would not recommend putting more than 5% of your overall portfolio in P2P lending. If your 5% of your overall portfolio is less than $2,000 I would not invest in p2p. The tax treatment of a p2p lending portfolio is harsh.

If you are still reading my answer then you may like the rest of my response…P2P lending in fun. It is a wonderful feeling to both help someone and generate a return on your money. It is financial voyeurism…once you start you cannot stop. It is highly addictive and enjoyable to invest in p2p lending, but guaranteed results (or even significant past results) are lacking… Proceed with caution, fully diversify (I think at least 50 loans), and have fun, but don’t bet the farm.

To read the other 10 responses please read the post: 11 perspectives on p2p lending

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  • Prosper RiskRGF in the Prosper forums just made the best post I have seen as an introduction to risk on Prosper. I am reprinting the entire post. Here is a link. I’ve seen a lot of comments about the high risk associated with lending on prosper and “only lend what you……
  • Prime Borrowing on Prosper Hits Record Levels — Febuary Marketplace SurveySAN FRANCISCO–(BUSINESS WIRE)–March 11, 2008–Spurred by the credit crunch, attractive rates, and lender demand for conservative assets, Prosper (www.prosper.com), America’s largest people-to-people lending marketplace with over 600,000 members and $120 million in funded loans, reported that the number of prime borrowers (720+ credit scores) creating listings and obtaining loans continues……
  • Prosper People-to-People Lending Market SurveySan Francisco – October 9, 2007 – Prosper (www.prosper.com), America’s largest people-to-people lending marketplace, today released its September People-to-People Lending Market Survey. Prosper’s People-to-People Lending Market Survey provides key statistics and a market commentary by Chris Larsen, Chief Executive Officer and Co-Founder of Prosper.  Prosper’s People-to-People Lending Market Survey……
  • Why Prosper.com is a great 3 year Rate Ladder.OK so first of all… Everyone has heard of a a CD Ladder, right? This is where you buy your CDs so that expire at intervals. This ensures an average interest rate and continually available funds. Typical CD Ladders are 1,2, or 5 years long. Don’t ask me why but……
  • Interview of FANAFI FoundationThe following is an interview of Jeff and Heather aka FANAFI Foundation. This interview was conducted Thursday February 14th 2008 in the wake of the recent drama surrounding their blog (starting point for initial back story here). These are my questions and their unedited words. (I did add a few……

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I hope that my readers find my new site design more pleasing. You might also notice, I updated P2P No Bank as well.

I intend to have a graphic made in the place of the current green one… Here is the green logo for posterity…

cool.gif

The benefit of this theme over my old theme is that I now have 2 sets (above the fold and below the fold) of the 4 standard ad sizes (728×90, 120×600, 160×600, and 300×250)… I could also add a 468×60 as that is the width of the content column…

I started with the Whitespace theme and modified it to suit my tastes and ad space requirements.

What do you think?

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  • Prosper Relases site Redesign and Other Features — One Bug Found So Far.Here is the official announcement (here is a link to it on the forum: http://forums.prosper.com/index.php?showtopic=22667) Hi everyone, Tonight we released another update to the site. Without further ado… Site redesign The overall visual design of the site has been overhauled. The main pages have also been reconfigured to simplify the……
  • My New Site DesignI wonder… Does everyone find the site with the new Prosper Banner instead of random CJ affiliate ads more appealing? I like it better than the old random CJ affiliate ads. There are still some CJ ads, but with Prosper’s clean white banner taking the main banner position on all pages I think……
  • Group Leader ToolsAs I am new to being a Group Leader I have only just begun considering the possibilities for improving and enhancing the experience, adding value to both lenders and borrowers. One of my main value add points to my group’s borrowers is my ability to market their listings. Most of……
  • Prosper Goes CrunchieProsper was nominated for a Crunchie in the category of Best Business Model. You can vote once a day. The Cruchies is a collaboration between GigaOm, Read/WriteWeb, VentureBeat, and TechCrunch. TechCrunch: The Crunchies: Finalists Are Up, Vote For the Winners VentureBeat: Voting begins for the Crunchies. Awards, party Jan. 18 Here……
  • RateLadder Included at PersonalFinance AllTopWe are pleased to announce that AllTop has selected RateLadder for inclusion in the Personal Finance section of AllTop. We are honored and thank Alltop for the recognition… If you are not yet aware, Alltop is aggregating the very best blogs in multiple niches into a blog portal of sorts. ……

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SAN FRANCISCO–(BUSINESS WIRE)–March 11, 2008–Spurred by the credit crunch, attractive rates, and lender demand for conservative assets, Prosper (www.prosper.com), America’s largest people-to-people lending marketplace with over 600,000 members and $120 million in funded loans, reported that the number of prime borrowers (720+ credit scores) creating listings and obtaining loans continues to hit record levels.

February 2008 Prosper People-to-People Lending Market Survey

Prosper’s People-to-People Lending Market Survey results are released the second Tuesday of every month. To register to automatically receive the survey, send an email with “SUBSCRIBE” in the subject line to: p2plendingmarketsurvey@prosper.com.

Market Commentary By Prosper Co-founder and Chief Executive Officer, Chris Larsen

In February 2008, the percentage of prime loans funded on Prosper once again hit record levels, accounting for 43% of originations. At the same time, the percentage of prime listings on Prosper hit an all time high of just over 18% — a big jump from 9% in February 2007 and the previous high of 12% in December 2007 — while the percentage of sub prime listings hit an all time low of 33% and accounted for a mere 6% of funded loans.

Some other key metrics we watch closely include the type of listings that are created and funded in the Prosper marketplace. Very broadly, we look at listings that, based on historical Prosper loan performance data, can be made at an attractive risk-return tradeoff and those that can only be made at an unattractive risk-return
tradeoff. By providing more robust information to lenders on the expected returns of listings, we have seen an increase in originations from attractive risk-return listings of over 200% and a decrease in originations from unattractive risk-return listings of 80% over the course of the last year.

As we discussed at our Prosper Days community conference, these dramatic and constructive shifts in the marketplace have been driven by three key factors: the pervasive credit crunch and sub prime mortgage meltdown; recently introduced performance data-driven tools and features; and, increasing mainstream acceptance of Prosper as an attractive funding source and asset class.

Mix of Funded Borrowers

———————————————————————-
February February Year-to-Date Year-to-Date Since
2008 2007 2008 2007 Inception
———————————————————————-
Prime 43% 25% 41% 24% 31%
———————————————————————-
Near Prime 51% 57% 53% 55% 55%
———————————————————————-
Sub Prime 6% 18% 6% 21% 14%
———————————————————————-

Membership and Loan Volume Statistics

———————————————————————-
February February Year-to-Date Year-to-Date Since
2008 2007 2008 2007 Inception
———————————————————————-
New Members 30,373 45,092 67,494 64,767 605,622
———————————————————————-
Funded Loans $6.0 $5.6 $13.1 $11.8 $122.2
million million million million million
———————————————————————-
Average Loan
Size $6,591 $6,165 $6,730 $6,158 $6,317
———————————————————————-
Daily Average
Number of
Borrower
Listings 1,898 2,062 2,151 1,806 1,604
———————————————————————-

Estimated Annual Return on Prosper Select Index

———————————————————-
February 2008
———————————————————-
Prosper Select Index 8.00%
———————————————————-
Prime Select Index 8.63%
———————————————————-
Near Prime Select Index 7.54%
———————————————————-
Sub Prime Select Index 5.75%
———————————————————-

Average Borrower Rates on Prosper Select Loans

———————————————————————-
February January February Year-to-Date Year-to-Date Since
2008 2008 2007 2008 2007 Inception
———————————————————————-
Prime
Select
Loans 10.32% 9.91% 9.23% 10.10% 9.10% 10.08%
———————————————————————-
Near
Prime
Select
Loans 17.10% 16.80% 14.44% 16.92% 14.51% 16.24%
———————————————————————-
Sub
Prime
Select
Loans N/A 28.39% 20.87% 28.39% 21.31% 24.07%
———————————————————————-

Definitions

Since Inception: November 1, 2005 through February 29, 2008.
Prosper’s by invitation only “friends and family” launch began on November 1, 2005 and Prosper launched to the general public on February 13, 2006.

2008 Year-to-Date: January 1, 2008 through February 29, 2008.

2007 Year-to-Date: January 1, 2007 through February 28, 2007.

Prosper Select Index: The Prosper Select Index return is the estimated average annual return on principal, based on actual delinquency performance to date. The Prosper Select Index includes AA – E credit grade loans for borrowers whose credit reports at the time of application indicated zero current delinquencies, three or fewer
credit inquiries, and a debt-to-income ratio of 40 percent or less. The annual return period reflects loans originated in the twelve month period ending one month prior to the observation date of February 29,
2008. Prime Select includes AA and A credit grade loans (credit scores of 720+). Near Prime Select includes B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime Select includes E credit grade loans (credit scores between 560 and 599).

Average Borrower Rates: Average Borrower Rates are the weighted average borrower rates on Prosper Select Index loans with loan amounts between $5,000 and $10,000. Rates shown are interest rates, not annual percentage rates.

Mix of Funded Borrowers: Prime includes all AA and A credit grade loans (credit scores of 720+). Near Prime includes all B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime includes all E and HR credit grade loans (credit scores below 600). N/A: = Not available; no loans met these criteria.

About Prosper

Prosper (www.prosper.com), America’s largest people-to-people lending marketplace, was created to make consumer lending more financially and socially rewarding for everyone. Prosper’s membership consists of over 600,000 people from across the country. Since launching in February 2006, over $120 million in loans have been
funded in the marketplace.

The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper’s online auction platform. People who want to borrow on Prosper create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. People who register as Prosper lenders set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. In addition to criteria commonly used by institutional lenders, such as credit scores and histories, Prosper lenders can consider borrowers’ personal stories, endorsements from friends, and group affiliations.

Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan to the borrower. Prosper handles all on-going loan administration tasks including loan repayment and collections on behalf of the matched borrowers and lenders.

Prosper was co-founded by Chris Larsen, co-founder of E-LOAN, and John Witchel, technology entrepreneur. Backed by Accel Partners, Benchmark Capital, DAG Ventures, Fidelity Ventures, Meritech Capital, and Omidyar Network, Prosper has raised approximately $40 million.

Prosper’s marketplace platform is patent pending.

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  • November Prosper Marketplace Survey ReleasedProsper released the November marketplace survey and coresponding comentary from Chris Larsen… I particularly like the insight in the last paragraph… Of great interest is the anecdotal evidence of prime and near prime borrowers turning to Prosper for loans that would have historically been steered toward mortgage, auto, and home……
  • New Loan Funded — Relocating, Need Quick Cash to Payoff Home Equity Loan — $25,000 at 22% — C Credit — DTI 28%A new loan funded (Relocating, Need Quick Cash to Payoff Home Equity Loan – $25,000 at 22%). I participated via a manual bid the loan was Autofunding. The borrower had C credit, 28% DTI. and is a homeowner. As a reminder my standing orders (and manual bids) only find loans with 0 current delinquencies,……
  • New Loan Funded — payoff current loan and new invest on business — $25,000 at 29.00% — E Credit — DTI 37%My very first E credit loan… A new loan funded (payoff current loan and new invest on business — $25,000 at 29.00%). I participated via a manual bid (lured by the excellent extended credit and interest rate?). The borrow had E credit and 37% DTI. As a reminder my standing orders only……
  • New Loan Funded — Blessings are coming — $10,000 at 26% — D Credit — DTI 84%A new loan funded (Blessings are coming – $10,000 at 26%). I participated via a manual bid the loan was Autofunding. The borrower had D credit and 84% DTI and is a homeowner. As a reminder my standing orders (and manual bids) only find loans with 0 current delinquencies, 10 or less delinquencies in……
  • November 2007 Prosper Marketplace Survey with Commentary from Kirk Inglis CFONovember 2007 Prosper People-to-People Lending Market Survey Membership and Loan Volume Statistics ——————————————— 2007 2006 November November Year-to- Year-to- Since 2007 2006 Date Date Inception ———————————————————————- New Members 33,917 19,062 368,741 119,294 506,508 ———————————————————————- Funded Loans $6.4 $3.3 $74.9 $23.9 $103.3 million million million million million ———————————————————————- Average Loan Size……

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A new book on Prosper.com goes on sale today — The Complete Guide To Prosper.comblog traffic exchange. I meet the author at Prosper Days and he gave me an advanced copy… I have read it and here are my thoughts… Books are a tough medium for an up and coming ever evolving startup… However, this book had some solid advice for prospective borrowers…

As far as I can tell everything is accurate at the time of the release of the book (which is no small feat given the pace of change). If you ever wanted to “just read a book” on Prosper to figure out how it works and what is going on now is the time.

One nice thing about a book is that there are no advertisements… One bad thing is that you have to pay up front.

If you choose not to purchase the book, I assure you that if you continue to read RateLadder.com I will do my best to keep you informed as to all the twists and turn in the p2p lending landscape.

Have any of my readers read the book? Please leave a comment telling me what you think.

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