SAN FRANCISCO–(BUSINESS WIRE)–Prosper (www.prosper.com), America’s largest people-to-people lending marketplace, today introduced its first monthly People-to-People Lending Market Survey. Prosper’s People-to-People Lending Market Survey will survey the marketplace each month to provide key statistics including: membership and loan volume statistics; marketplace returns; borrower rates; mix of prime, near prime and sub-prime loans; and noteworthy marketplace statistics and trends. In addition, the survey will include a market commentary by Chris Larsen, Chief Executive Officer of Prosper.Going forward Prosper’s People-to-People Lending Market Survey will be released on the second Tuesday of every month. To register to automatically receive the survey, send an email with “SUBSCRIBE” in the subject line to: firstname.lastname@example.org.
August 2007 Prosper People-to-People Lending Market Survey
Membership and Loan Volume Statistics———– ———– ———– ———-2007 Year- SinceAugust 2007 August 2006 to-Date Inception———————– ———– ———– ———– ———-New Members 30,623 12,825 270,866 408,633———————– ———– ———– ———– ———-Funded Loans $6.6 $3.9 $56.6 $85.0million million million million———————– ———– ———– ———– ———-Average Loan Size $6,733 $5,080 $6,969 $6,037———————– ———– ———– ———– ———-Daily Average Number ofBorrower Listings 2,575 1,173 2,202 1,366———————– ———– ———– ———– ———-Estimated Annual Return on Prosper Select Index———————–August 2007——————————- ———————–Prosper Select Index 10.31%——————————- ———————–Prime Select Index 9.41%——————————- ———————–Near Prime Select Index 10.73%——————————- ———————–Sub Prime Select Index 14.95%——————————- ———————–Average Borrower Rates on Prosper Select Loans———- ——– ——— ———- ———-August July August 2007 Year- Since2007 2007 2006 to-Date Inception—————— ———- ——– ——— ———- ———-Prime Select Loans 10.15% 10.29% 11.64% 10.03% 10.14%—————— ———- ——– ——— ———- ———-Near Prime SelectLoans 16.83% 17.08% 16.25% 15.90% 16.06%—————— ———- ——– ——— ———- ———-Sub Prime SelectLoans 25.88% 22.13% 28.72% 23.30% 23.89%—————— ———- ——– ——— ———- ———-Mix of Funded Borrowers———— ———— —————- —————-2007 Year-to-August 2007 August 2006 Date Since Inception———- ———— ———— —————- —————-Prime 32% 26% 30% 28%———- ———— ———— —————- —————-Near Prime 59% 49% 57% 54%———- ———— ———— —————- —————-Sub Prime 9% 25% 14% 18%———- ———— ———— —————- —————-NoteworthyTop Five Prosper Borrower States in August 20071) California2) Georgia3) Illinois4) Ohio5) Florida
Market Commentary by Chris Larsen, Co-Founder and Chief Executive Officer of Prosper
The market turmoil stemming from the ongoing credit crunch, subprime mortgage meltdown and housing value slump naturally begs questions about what impact this market environment is having on the Prosper marketplace. In a nutshell, we would categorize the impact as broadly constructive for Prosper lenders and prime and near prime borrowers.
As consumers are being hit with the evaporation of introductory credit card rate offers and home equity loan options, Prosper is becoming an even more attractive financing alternative, particularly for more creditworthy borrowers.
At the same time, lenders on Prosper are exhibiting rational behavior by steering their bids toward borrowers in the higher credit categories and being far more cautious about chasing higher rates offered by subprime borrowers. Evidence of this flight to safety is seen in Prosper’s mix of funded borrowers. For example, the subprime category accounted for only 9 percent of loans funded in August 2007, a marked decrease from August 2006 and the 2007 year-to-date average of 25 percent and 14 percent, respectively.
What remains to be seen is whether lenders on Prosper will start placing less weight on homeownership as a factor in their bidding strategies. It is possible that we may begin to see evidence of this trend given that in our most recent defaulted loan sale the debt buyer placed zero value on homeownership across all credit categories – a highly unusual shift away from placing value on what is typically considered Americans’ largest asset.
2007 Year-to-Date: January 1, 2007 through August 31, 2007.
Since Inception: November 1, 2005 through August 31, 2007. 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.
Prosper Select Index: The Prosper Select Index return is the estimated average annual return on invested 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 August 31, 2007. 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. Rates shown are interest rates, not annual percentage rates.
Mix of Funded Borrowers: Prime includes AA and A credit grade loans (credit scores of 720+). Near Prime includes B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime includes E and HR credit grade loans (credit scores below 600).
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 400,000 people from across the country. Since launching in February 2006, over $85 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 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 and group affiliations. Groups on Prosper are instrumental in bringing people together for the common goal of borrowing at better rates. 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. Then the auction begins as Prosper lenders bid down the interest rate. 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.