Back on Prosper.com June 2012

Im back lending on Prosper.com and its changed over time. The eBay like style has gone away. Once the loan is funded the bidding stops. I do miss the auction style format but with the new instant fund stlye my money can start working faster. Also they have a progress bar with each listing telling the lender (note buyer) how far along the borrower is with submitting his or her paperwork. I find this to be a useful tip in deciding to lend to someone or not. If they are puctual with their paperwork hopefully they are with payments to.

As of today Prosper.com has

1,350,000members

$348,000,000 in personal loans funded

 

Thats a long way from where it all started in 2006. The person to person lending has been a positive experience for me. I have maintained a positive return even when not reinvesting my payments for over a year.

 

The types of loans offered has also changed since I have been away. Loans are now available in 1, 3, and 5 year options. See below chart for the new loan products.

 

Prosper Rating	<=$4000	$4,001 - $7,500	$7,501 - $10,000	$10,001 - $15,000	>$15,000
•AA	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr
•A	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr
•B	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr
•C	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr
•D	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr	1yr, 3yr, 5yr
•E	1yr, 3yr, 5yr
•HR	3yr

Based on the historical data you can expect to see defaults and will be similiar to the chart below.

Prosper Rating	Estimated Avg. Annual Loss Rate**
•AA	0.00-1.99%
•A	2.00–3.99%
•B	4.00–5.99%
•C	6.00–8.99%
•D	9.00–11.99%
•E	12.00–14.99%
•HR	≥ 15.00%

So defaults are coming down and rate arent getting bid down. Theres still alot of money being loaned so I think this was a good move for Prosper.com and their model. I hope they are around for a while I really enjoy lending on the site.

Buying CD's at ING

I have recently started putting new funds in ING Cd's this will continue until December 31st. I have chosen 6 month Cd's for a single reason. I can buy Cd's for $30 everyday and after 6 months have one mature everyday. This is going to become part of my safety net. Should something happen to my job or another major event in my life take place this would be enough to take care of my current bills. Of course there is always the savings account if things get hairy but I prefer to not leave that alone. The Cd's are only paying 3% but most of my investments aren't even doing that so for six months I will try a more predictable savings vehicle.

Prosper.com too many new lenders

There was a time when you could log into the prosper.com forums and see familiar faces and know their portfolio very well without looking it up to see if they know if the person making a statement actually has money invested in Prosper and how much they have at stake. This is not the case over the last few month. The forum moderation has somehow driven out the old timers and brought a new breed of people that just love automated lending and are not afraid to tell you they are new and have 500 to 1k a month to lend blind. There aren't many that will be able to give you a educated answer or even offer experience when a difficult question is asked. Many of the questions that used to pop up no longer get seen by the public.

There were many critics of the Prosper.com policies and many people found accounting issues and other legal issues within prosper and forced them to speak publicly about these issues because it was a live unmoderated forum. The forums today are the "perfect world" there aren't any issues with the prosper model and everyone seems to be making money by the truckload. Well of course the posts that don't get through are those that have been here long past the honeymoon period and have started to build a collection of defaults that we cant even find a debt buyer that is interested in due to it being such a new market.

I have once again stopped all new money into Prosper.com until I see some real improvements in both the lenders and the borrowers. I have begun buying small Cd's weekly until I find other investment vehicles that interest me.

2008 Stimulus Check $600

Well for some the stimulus check is going to buy that new plasma tv or pay down those credit card bills. I have a week or so before mine hits my bank account and have been trying to find a place to put it. I will be investing it somewhere other than Prosper. I have reached a personal milestone on Prosper.com and will stop all additional fund transfers to the online lending platform. I am now receiving over $100 a month from my loans and its become self sufficient as far as funds go. I will still log in weekly to check balances and make new bids with available funds from interest and principle payments. So what to do with my new $600 windfall. I have recently started to pump up my TDAmeritrade for a stock purchase. I have thought about using the $600 to buy a few more shares but with the market the way it is... I have been buying shares of MVIS steadily for the past year. The price has been somewhat of a roller coaster. The company is developing a small pico projector that will be installed in cell phones and will allow beam of light to project whatever is on your cell phone screen to a wall or any other solid surface. This is a good idea for people that have trouble seeing the screen. They make the screens so small these days. The shares run between $2-4 depending on the month. They are a well known company in the military field and offer many other applications for their technology's. I feel they have a great future and will offer a great return on my $600!

Recent Site update at Prosper.com

Nationwide lending at 36% interest rate capAfter a couple years of turning away Nevadans completely and forcing Pennsylvanians to set their interest rates below 6%, prosper.com is opening up the marketplace to borrowers in almost every state of the union, with a marketplace-wide rate cap of 36%

Minimum instant transfer amount lowered to $50For lenders who install Prosper’s Facebook application, prosper lowered the minimum transfer requirement from $500 to $50. Additionally, the maximum instant transfer amount has been raised to 50% of your active loan value.What this means is that with as little as $100 in active loans, you can instant transfer $50 to Prosper for that “must have” loan that you just came across. Prosper’s Facebook application keeps your Facebook friends updated on your Prosper lending activity, and is a great way to share Prosper with your friends and family.

Second loan criteria updatedThe requirements for borrowers who wish to take a second loan on Prosper have changed. The new rules for whether a borrower is eligible for a second loan are dependent on the borrower’s credit grade, and the factors taken into consideration include time since last loan originated, consecutive months of on-time payments, and whether the borrower’s credit grade has dropped or not.See the full list of eligibility requirements.

Lender servicing fee for AA changed to 1% per annum. The lender annual servicing fee for AA borrowers has changed to 1%. Listings created on or after April 15 will be subject to this new servicing fee. Learn more about fees and charges.

Listing durations standardized at 7 daysAlong with some other changes to the listing creation process, prosper has fixed the duration of all new listings to 7 days. This change is part of a larger effort to simplify the listing creating process, and help more borrowers create fundable listings.

Your tax forms are right here. If you are a lender who owned loans in 2007 or earlier, and are eligible to receive a Consolidated Form 1099 from Prosper, your 1099 is available from the “My Account > Statements” page. Learn more about tax reporting. There are many other changes under the covers, and some not so under the covers.

Please leave a comment.

Blind Lending

Recently I created a portfolio plan of my own. I set the limit at $500 and $50 per loan. So I set the specs on credit history that were important to me and felt gavce me a edge. To my surprise its been over a month and I still have to find one more loan that meets the criteria. Now keep in mind Prosper.com actually does the looking for me. Once a loan that meets my criteria is posted on the website prosper on my behalf places a bid at the rate I have predetermined for that credit grade the loan falls in. So far I have been happy with the loans it has chosen but its been a slow process since there arent many that meet the criteria that I have set. I have targetted mostly the C and D credit grades becuase the life long default rate on prosper.com seems to be about the same as AA and A credit crades but offer more percentage points in return. When this plan is complete I am placing another $500 on AA and A only just to keep a more stable portfolio just in case the numbers are off. I currently have 1 four month past due loan and 3 one month past due loans in my portfolio. They are all in the hands of Amsher who is the collection agency that took penncos spot. They inherited penncos' loans so their histoy doesnt look great just yet but the other agencys collection rate is horrible. Two of my late loans are AA and homeowners. How hard could it be to collect here... Theres alot of new lenders and more arrive everyday with dreams of 20%+ returns only to get burned. I am currently in the top 7000 lenders and one of only a few htat migrated from the original forums. The forums have been so moderated lately that its hard to keep up, posts get buried before they are read because every post is now moderated. Great stuff if its not the weekend apparently Prosper.com doesnt think we will use the forums on Sundays...lol

Elite Capital

New lates after the Holiday season

Well I knew it was coming but how long will it stay. I have now 1 loan that is 2+ months late and I have given up all hope on since the collection companies now have control of the notes. The first of the two new late loans has yet to make a payment and is a A credit grade. This has happened to my portfolio once before and it turned out to be fraud and Prosper.com repurchased the loan. This loan was to a male who claimed he wanted to be debt free and had a great plan. I just didn't realize that part of him being debt free was to use the Prosper.com community as a charity. Propser.com has been taking more legal action agaist non payers and I hope that the do in this case.

if we cant rely on A borrowers to be the base of our Prosper.com portfolio I would say that we are in serious trouble and maybe CD's are the way to go. I always kept a good share of A borrowers in my portfolio just in case one of the more high risk loans that I took in good faith went south. I do have faith in the Prosper.com community as a whole its just the few dirt bags that leave a sour taste around the place that makes it so difficult to transfer more money into Prosper.com

I am changing investment vehicles for the time being. Prosper.com has become more or a liability than a asset. I cant be sure that it actually ever was a asset but rather some blind hope that I was helping someone out that really wanted to be helped and just needed opther good hearted people to lend them some cash in a time of need. I will still reinvest interest and principle loan payments back into Prosper.com but only to the members of my group as they are vetted and I feel more comfortable having a human check the paper trails rather than some computer asking questions and then trusting the answer given by the user. In some cases the user is not telling the truth and Propser.com has gone out of its way to block lenders from gaining more information about the borrowers.

I plan to place a large percentage in some speculative stocks that I have been watching for the last 6 months. Primarily MVIS and SANM. These companies are undervalued at the current price so now is the time to get in and hope the so called recession never really takes hold. The remaining percentage will be stored as cash in a non interest bearing account right here in my home safe in the form of gold and silver. I have lost faith in the US dollar for the time being and gold and silver may be the only form of "currency" accepted in the future. Since currency is not just the green stuff we so commonly think of I would suggest to anyone reading this to maintain a "currency" that you are comfortable with.