As loans become seriously delinquent on Prosper (4+ months late) they are sold to debt buyers. These debt buyers pay pennies on the dollar and then attempt to collect on the debt.
I have often wondered exactly what pennies on the dollar meant. I gathered anecdotal evidence from some of my larger lender friends. The number appeared to depend on whether or not the person was a homeowner (20%) or not (5%).
Eureka! I found a page in the Prosper Help showing the default sale history… and Homeowners does indeed make a big difference. Also interesting how the prices have gone down in the most recent sale. Is that related to the sub-prime meltdown or a lack of quality from the first sale?
Loans soldPricing (% of principal balance)Dec 2006
51 loans sold
- 27 – 30%: Homeowners with any credit grade
- 15 – 18%: Non-homeowners with a credit grade of D and above
- 3.0 – 3.7%: Non-homeowners with a credit grade of E and HR
294 loans sold
- 16 – 19%: Homeowners
- 2.4 – 3.3%: Non-homeowners
Here is the link: Default Sale History
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