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Prosper Default Debt Sale

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?

Past Default Sales
Date /
Loans sold		 Pricing (% 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
May 2007
294 loans sold
  • 16 - 19%: Homeowners
  • 2.4 - 3.3%: Non-homeowners

Here is the link: Default Sale History


July 26, 2007 | Filed Under Features, Prosper.com, Statistics 

Useful Info:
Related Articles
Another Default Debt Sale
Debt Sale Accounting via Quicken
Prosper Debt Sale Offer Roughly 0.93%-4.83%
Prosper Delinquent Debt Sale In Progress
RateLadder and LazyMan Default Debt Sale Results

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comments

2 Responses to “Prosper Default Debt Sale”

  1. Lazy Man and Money on July 26th, 2007

    This is exactly why I like to loan to homeowners. There’s a big difference there. Getting 16-19% of my money on bad loans is significant vs. 3%

  2. Kevin on July 26th, 2007

    I couldn’t agree more… One of my tenants.

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