Wow... This is probably the worst thing I can imagine someone doing. Let me step back a few yards and explain what this basically means. So here we are online in cyber space lending money to strangers who may or may not exist. We leave the fraud part to Prosper.com and we get to read a little about the borrower before we lend. Now we can just toss money in blindly and walk away and act like its some sort of retirement plan? Call me crazy but Id like to know where my money is going and to who.
At second look it gets a little better. This will give new lenders a learning curve and alow them to find a strategy that works for them before they pick the bad loans on their own. At least they will be able to blame the portfolio picker for some time.
There are 4 basic portfolio types that have been selected by prosper.com
Conservative: This type of portfolio bids primarily on very low risk loans ( AA or A) credit ratings and offers a 8% + ROI
Balanced : Has a mix of A and B credit grades offering 9% +
Moderate : Has a mix of A, B and C credit grades with a slightly higher risk your return will be only .86% higher
Aggressive : Now this is where it gets interesting. Here we are bidding on B, C, and D credit grades and which could have some current delinquency's. There is a much larger risk here and your ROI only goes up to a estimated 10.93% currently 10/31/07
Prosper also allows for fully customized portfolio planners for your specific risk tolerance. If you have a stomach for some serious risk prosper has the borrowers offering up to 36% depending on the state in which the borrower resides.
This is a all new plan for prosper. I see great upsides for new lenders but I suggest finding your own lending style. Formulas don't look at a listing and see a picture of someone with a Halloween costume on that is trying to fund the next widget start up company. It also doesn't ask the borrowers questions like we are currently able to do.
Happy Lending
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