Everyday People — Shining Example of Prosper Group

Here is a current listing from EveryDay People. This listing has an excellent chance of funding. In addition, Everyday People’s Group Leader StaciM has also endorsed AND BID on the listing. (Personally I think an endorsement without a bid is meaningless… kudos StaciM). The reason StaciM can bid with confidence is that she really gets to know the people in her group — she independently verifies many of the facts in the individuals story.

The only thing I would have done differently is to put a higher starting rate. In the case of D, E, and HR I believe in starting at the maximum (in this case 24% — state cap and GL fee) and allowing the market to fully fund and then bid down a quality listing. That being said the 23% is not out of line with the marketplace. (Edit: StaciM has informed me that, “he is at the max rate, less the GL reward. Remember Prosper always holds back 1%”… in which case I think this listing is very well done indeed.)

This is about as clean a D as you will find and the reason for the credit score is clearly laid out in the listing and verified by the GL. What more could you want?

$25 Bonus For New Lenders
How to Use Prosper Listing Widget for MySpace, Blog, Website, or Other

Here is the Description…

Purpose of loan:
I would like to pay off all my high interest credit card debt. In this case it is all the debt I have.

My financial situation:
I currently gross 53,503.00 a year. Monthly is 4458.58. About 5 1/2 year ago I got out of the military and fought for 2 years trying to keep up with all my payments but was unsuccessful considering I was not making what I made in the military and had to file for bankruptcy. The last 3 1/2 years (since the bankruptcy) I have never been late on any payments and have had perfect credit since. Unfortunately the bankruptcy is keeping my credit score down in the low 600’s which is why I’m rated as a D on this site. I am a safe bet with a great interest rate for you investors.

I recently divorced and would like to consolidate all my bills into one payment and to save some money from the credit card interest rates. My current debt is from a home remodel which upon selling they were going to get paid off but the home did not sell for what was expected and it had to sell quickly. I am not one to just run up credit cards because I want a new toy. I am very careful with my money, I just made a bad call on an investment. I currently make plenty of money for this loan and my other payments listed below. My debt to income ratio is a little high do to the other auto loan my ex-wife and I have. She has this vehicle and it is written in the divorce decree that she is responsible for this loan and it’s debt. She has already been removed from all other accounts with my name on it.

Although I just started my current job a couple of months ago I have been in the same field of work for 7 years and love what I do. I have had a great professional relationship with my current jobs CEO and executives for the last 3 years which is why they asked me to come join their team. My job is very stable and I don’t plan on going anywhere. Thanks again for your time.

Monthly net income: $
3,300.00

Monthly expenses: $
Housing: $ 905.00
Insurance: $ 135.00
Car expenses: $ 769.00 Gas 200.00
Utilities: $ 120.00
Phone, cable, internet: $ 99.00
Food, entertainment: $ 200.00
Clothing, household expenses $ 50.00
Credit cards and other loans: $ 386.00 monthly, total 9375.00 This will be paid off with this loan.
Other expenses: $

Here is StaciM endorsement… and did I mention she bid on the lisitng as well:

I’ve verified income, rental amount, and car payment. DTI high in part for consolidation, but also due to vehicle that is his former spouse’s responsibility.

Here is another random listing from EveryDay People.

No Comments | June 30, 2007 | Filed Under Groups, Loan Review, Prosper.com | Leave a Comment

Cutting Out the Banks

Recently I was interviewed and featured heavily in an online magazine initial publication: NuWire Investor. NuWire focuses on alternative investments. This interview happened during a very brief manual bidding experiment (less than 2 weeks). I am back to nothing but standing orders.

Here are some of my favorite parts of the article:

Many investors were intrigued by the idea of replacing banks in the lending equation. “It was a very interesting idea to me,” Kevin Gillett, a Prosper lender and the author of www.rateladder.com, said. “I love the idea of cutting the banks out of the picture.”

Prosper has the advantage of independence from the stock market, “so even if it can’t blow the doors off returns that you might see hyped up about it, if it can return 10–12 percent and be orthogonal to the stock market, I think that alone is enough of a reason to invest in it,” Gillett said. Prosper is creating a “completely different asset class,” he said.

Gillett carefully analyzes that information and frequently adjusts his lending strategy accordingly. “I’m trying to be cautious and follow what’s going on and track how I’m doing and understand the marketplace,” he said.

The time remaining criteria would allow my standing order to basically act as I’m acting in a manual bid, which is to say, watching the interest rates, watching the loans, and then when the loan gets within 30 minutes of the end of its auction, then to have the standing order fire,” Gillett said. Such a system “is absolutely necessary if you’re going to be a standing order bidder these days,” he said.

Here is a link to the article: Prosper: Peer-to-Peer Lending

Here is a link to the publication: NuWire Investor

4 Comments | June 28, 2007 | Filed Under News, Prosper.com | 4 Comments

Prosper in USA Today Weekend

Found this little tidbit on Prosper in USA Today Weekend…

You can borrow money online, but is it safe?

No Comments | June 27, 2007 | Filed Under News, Prosper.com | Leave a Comment

L5 (6th Largest Prosper Lender) Post Debt Sale Portfolio Analysis

L5 is the 6th largest lender (pick your favorite stats site to verify) and he was on the large lender panel at Prosper Days. I asked him for insights in the aftermath of the latest debt sale that his portfolio might have uncovered. As a smaller lender I don’t necessarily have enough vision to be able to draw the most complete conclusions. He has been forthcoming and generous. Enjoy.

My conclusions:

1. Prosper’s current borrower agreement and collection methods lack teeth in subprime. I knew HR’s would be garbage, but E’s have disappointed, too. I suspect some of this is just macro: subprime is overextended and melting down across the board. Thus, E’s and HR’s are best avoided except in rare circumstances.

2. The higher credit grades are now performing better than mid-credit / near-prime (we already have ruled out subprime).

3. For new investments, AA and A seem best poised for solid (if uninspiring returns); B, C, D would be opportunistically and selectively attractive.

4. Homeowners seem to net $.15/dollar while non-homeowners net $.05/dollar or less. Debt sale amounts have been disappointing to say the least. I think a lot of this has to do with how the Prosper borrower contracts are written and structured — I’ve told Prosper they should have stronger default clauses. For instance, > 3 months late and the whole loan should be callable. This would increase aftermarket bad debt sales amounts, I believe. Ditto there should be more / escalating deadbeat fees.

5. I have been impressed that Prosper has stood behind any loans with bad data and bought them back, I’ve had a few of these. So kudos to Prosper for living up to its identity theft guarantee. This frankly reinforces the higher grade credits where this was one of my bigger concerns — seems Prosper will buy them back in ID theft cases ( i.e., they take full responsibility for ID vetting).

Net for me: I’m going to give it more time to see how my portfolio matures. I expect I will get a high single digit positive return from my portfolio when all is said and done. This is OK (I think I will make money), but probably for me at least not enough of a return to warrant the work that’s involved.

If Prosper changes some of its borrow agreement terms to give them more teeth, I think that would change the game and potentially lure me back in. They just aren’t set up to be bad ass enough to deal with subprime deadbeats at present.

(To be clear, I’ve had some really GOOD subprime borrowers, it’s just that the deadbeat loans are defaulting with a higher % and lower collection figure than I had projected, which washes out a lot of the D and all the E returns I had been modeling.)

Well, live and learn — the community is evolving and I think getting better, net. I just need it to improve a bit more before I’d jump back in.

- L5