On Prosper the borrower’s income matters, even if it is only stated income… 

Prosperous Land did a very interesting analysis on borrower income: It’s All About the Income…

His conclusion (only being able to use 6 months of data as that is all that exists), when income is not stated or less than 25K that is equivlanet to increasing the credit grade by an entire grade.

While this isn’t enough information to predict default rates, it’s a clear indicator that a verified income is equivalent to elevating the borrower by one credit grade for all but the best borrowers (or, conversely, not having verified income is equivalent to a drop of one credit grade).

Very Interesting, I look forward to following this analysis as more data is available.

• State Rate Caps Force Borrower (Blogger) To Take Action

• Prosper Update Enhances the Legal Enforceability of Promissory Notes

• Prosper Group Match Rewards Cancelled in Favor of Referral Program

• Pensioner Debt Sale Results for August 07 Sale

• New Loan Funded #5989 — $2850 in 45 loans

• Land Real Estate Opportunities

This is an update to my original 1 month late or worse curves.

I believe we are starting to see the continued flattening of the curves.  Time will tell.

I have pulled the public data on the performance tab by hand in order to produce a spreadsheet of loan performance.

This spreadsheet was then pivoted and aggregated in order to produce 1 month late curves by credit grade and Markov Chains which can be used (when 42 months of data is available) to solve for the expected value of Prosper Loans by credit grade.

I have limited the graphs to 12 months so that there is a minimum of 6 months of data.

1 Month Late or Worse by Count (click picture for larger image):

1 Month Late or Worse by Amount (click picture for larger image):

Questions, Comments, Screams of Anguish?

• 1 Month Late or Worse Curves by Credit Grade (July 1 Update)

• 1 Month Late or Worse Curves by Credit Grade (September 1, 07 Update)

• 1 Month Late or Worse Curves by Credit Grade

• Prosper 1 Month Late or Worse Curves By Credit Grade

• Best of RateLadder 3rd Quarter 2007

• Credit, Charge Cards Trading Cards Collectibles

• Time Travel Romance Books

• Public Timetables Paper Railroadiana, Trains Transportation Collectibles

• Time Travel Romance Audio Books

• Hydroponics Seed Starting Gardening Plants Yard, Garden Outdoor Living

I have received a variety of promotional products (aka swag) from Prosper.  While this post is slightly tongue and cheek, the gift bag give-aways from Prosper have been useful and cool.

Of course, there have been the Prosper tee shirts (Prosper Days 2007, Prosper Night, and Referral), license plate bracket (Prosper Days), and stickers (Prosper Days 2007 and Prosper Night). 

The best promotional product was the USB flash drive given away at Prosper Night.  It is white with the Prosper Logo.  It was used to give away the video presented at Prosper Night.  While, I have deleted the video I have on several occasions used the USB thumb drive.  The USB thumb drive was inside of a Prosper accordion folder with various flyer templates, stickers, and the tee shirt.

Did I miss anything?

• Instant 10% Return

• New Loan Funded — Clearing a personal credit card used for business purchases — $9,500 at 18% — A Credit — DTI 46%

• RateLadder.com will be Presenting at Prosper Days

• 2nd, 3rd, and 4th Kiva Loans

• My Zopa CD is No More

• Halcyon Days Decorative Collectible Brands Decorative Collectibles Collectibles

• Promotional Yu-Gi-Oh Animation Trading Cards Collectibles

• Promotional Pokemon Animation Trading Cards Collectibles

• Promotional Still, Piggy Banks Banks, Registers Vending Collectibles

• Promotional, Advertising Modern 1970-Now Bobbleheads, Nodders Pinbacks, Bobbles, Lunchboxes Collectibles

BankServ powers innovative Lending Club person-to-person lending and borrowing platform  

SAN FRANCISCO, 7 August, 2007 — BankServ, worldwide experts in electronic payments, today announced its part in the successful launch of Lending Club’s collaborative person-to-person (P2P) lending platform. Lending Club has implemented BankServ’s Magex Payment Platform, ACH reporting and cash management solutions. 

P2P banking and payments is set to be a major growth industry. The BankServ solutions have been deployed to support Lending Club’s innovative, online facility that brings a new financial service to various online communities (including university alumni groups, social networks, and professional organizations). The Lending Club solution offers users the ability to get a loan, fully online, at a lower rate than from traditional sources. Lending Club manages user authentication, credit checks and loan processing, and, through its LendingMatch™ technology, matches up groups of compatible lenders and borrowers. 

“We set out to find a company that could support our P2P service and provide us with ACH reporting and cash management facilities that would seamlessly integrate with the other components of Lending Club’s technology, namely credit analytics, portfolio recommendation, profile matching, authentication and collections. We recognized that BankServ’s Magex Payment Platform has become the standard for any company that is serious about launching a P2P financial service,” comments John Donovan, COO, Lending Club. ”Many payment industry experts are convinced that P2P lending will define a new era in electronic payments. There is a clear need for new solutions that improve service and convenience to consumers, and Lending Club has achieved this with its innovative LendingMatch™ technology,” said Mary Ellen Putnam, Vice President of International Business, BankServ. “We are pleased that the BankServ technology offerings have been selected by Lending Club and look forward to working with this impressive team as they build on their success.” 

“We were looking for a partner that brings experience in P2P, the payments industry, and that also understands the need for speed and efficiency. BankServ has proven technology and services that made them an obvious choice for Lending Club,” concludes Donovan.  

—

Link to press release: http://www.bankserv.com/press/news/2007/aug_7_2007.html

• Lending Club and Zopa Use the Same Payment Platform

• Barron’s on P2P Lending

• NetBanker: Person-to-Person Lending 2.0

• Lending Club Partners With Alumni Associations

• The Carnival of P2P Lending #4

• Platform Womens Shoes

• Canadian Club Distillery Advertising Collectibles

• Club Heads Clubmaking Products Golf

• Signature Club A Blush Makeup Store

• Signature Club A Eye Shadow Makeup Store

It is time for the July 2007 update of the IRR Lender “Game.”

This is going to be more about accomplishments during the last month rather than pure calculations.  The actual numbers are at Prosper.com IRR Lender “Game” Tracking Page

So without further ado:

Highest IRR Model: leporello 2.61%

Largest IRR Model Improvement: Retireme99  by going from (7.53%) to (0.91%) he improved 6.62%.

Lowest IRR Model: Pensioner (13.82%)

Largest IRR Model Degradation: RateLadder by going from 5.75% to 0.57% he degraded (5.18%).

Highest IRR Best: LazyMan 20.59%

Largest IRR Best Improvement: Retireme99 by going from 13.14% to 16.31% he improved 3.17%.

Lowest IRR Best: Eric’s Credit Community 12.62%

Largest IRR Best Degradation: RateLadder by going from 17.61% to 15.27% he degraded (2.34%).  I audited my spreadsheet and found that last month I was issing $175 of deposits. So the 17.61% was high.

The “game” is tracking portfolio IRR through time. We will be tracking both a best and worst case value. The best case assumes the entire account value will be received at the time of the update. The model case assumes that all loans 1 month or more late will be wroth zero.

Here is the “Game” definition: Prosper Lender IRR “Game”

Here is the a sample spreadsheet: Prosper IRR Spreadsheet.

• Prosper IRR Lender “Game” Mar 07 Update

• Prosper IRR Lender “Game” Feb 07 Update

• Prosper IRR Lender “Game” Apr 07 Update

• Prosper IRR Lender “Game” Jun 07 Update

• Prosper IRR Lender “Game” August 07 Update

• July 4th Holiday, Seasonal Collectibles

• Game Used Memorabilia Sports Collectibles

• Video Game Memorabilia Entertainment Memorabilia

• Baseball-MLB Game Used Memorabilia Sports Collectibles

• Basketball-NBA Game Used Memorabilia Sports Collectibles

Pensioner the former #1 lender on Prosper by amount invested (over $750K at peak) has been generous enough to share his debt sale results with RateLadder and my readers.  Thank you Pensioner. This is important information for the community at large.

All of Persioner’s loans that have been sold were done so via the May 2007 debt sale (he has also had 2 loans go bankrupt.)  Prosper’s reporting of the debt sale results are here: Default Sale History and reprinted below. 

It looks like Prosper’s own reporting is slightly low. Pensioner had 1 loan sell for 21.8%  However, most of his loans fall into the 2.4%-3.3% bracket.

• Pensioner Debt Sale Results for August 07 Sale

• Prosper Debt Sale Offer Roughly 0.93%-4.83%

• Prosper IRR Lender “Game”

• Debt Sale Announcement on the Official Forum

• Another Default Debt Sale

• Large Print Romance Books

• Large 9x7-9x12 Rugs, Carpets Antiques

• Large Cents Coins US Coins Paper Money

• Furniture, Large Appliances Furniture, Appliances Fans Collectibles

• Large Cents Coins Canada Coins Paper Money

Prosper and SBI Holdings to Establish Prosper in Japan and Other Asian Countries

San Francisco – August 6, 2007 – Prosper (www.prosper.com), America’s first people-to-people lending marketplace, and SBI Holdings, Inc., a holding company for SBI Group, the financial innovation leader of Japan, today announced an agreement to form a joint venture to facilitate the launch of Prosper in Japan and explore other Asian markets.

“As Prosper takes the first step toward expanding to Japan, we’re confident SBI is the optimal partner to navigate the regulatory landscape and successfully launch and operate the Prosper marketplace in the region,” said Chris Larsen, co-founder and Chief Executive Officer of Prosper.

“With over $79 million in funded loans and more than 380,000 members, Prosper is the leading person-to-person lending marketplace,” said Hayato Kameta, incoming Chief Executive Officer of the joint venture. “SBI Group’s experience and resources in both the Internet and financial sectors, combined with the vision and infrastructure of Prosper, makes this joint venture well positioned to develop and execute a business plan which meets the regulatory and business environment in Japan and other Asian countries.”

SBI Group has a market capitalization in excess of $8 billion and consists of 65 consolidated subsidiaries and 12 affiliated companies, including 9 public companies. SBI online finance business include SBI E*Trade Securities Co., Ltd., Morningstar Japan K.K. and E-LOAN as a business unit of SBI Holdings. To find out more about SBI Holdings, Inc., visit www.sbigroup.co.jp/english/.

About Prosper

Prosper (www.prosper.com), America’s first people-to-people lending marketplace, was created to make consumer lending more financially and socially rewarding for everyone. Prosper’s membership consists of over 380,000 people from across the country. Since launching in February 2006, over $79 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.

—

This may or may not be a sccop since I agreed that the “news is under embargo until 12:00 am EST on Sunday.”  Thus I would suspect that this news is being widly released.  Regardless, I am publishing this news as soon as I am allowed. 

• Best of RateLadder 3rd Quarter 2007

• Zopa Shuts Down US Branch

• Lending Club and Accounting for Pennies

• RateLadder and LazyMan Default Debt Sale Results

• The Webby Nominees Are Announced

• Japan Countries Flags Historical Memorabilia Collectibles

• Japan Non-US Countries, Town Views Postcards Collectibles

• Japan Asia Stamps

• Japan Reproductions WW II 1939-45 Militaria Collectibles

• Japan Airlines Airlines Aviation Transportation Collectibles

Matt at Prosper Lending Review has a great article on Credit Scores on Prosper. 

He goes into various details, but the bottom line is that the average credit score and distribution of credit scores on Prosper is skewed to the low end of the scale compared to the national average.

In addition to the comparison that is made I would like to see a comparison against the loan distribution against the national average.

Some advise to borrowers on Prosper…  Obtain a free credit report, make sure any errors are corrected, and if possible become current on outstanding obligations.

Here is a short exert:

I must say that when I came across this data I was quite surprised by this distribution. Matching the two sets of data together, we realize that E and HR borrowers combined represent only about 11% or 12% of the population (people below 520 cannot currently borrow on Prosper). Nearly half of the population falls into the AA or A credit groups. 

• Loan Distribution and Diversification

• Current Delinquency Count for Prosper Loans

• Loan Credit Distribution is an Important Part of Diversification at Prosper

• LazyMan and the Early Days of Prosper Lending

• WealthBoy and Minimum P2P Loan Diversification

• Credit, Charge Cards Trading Cards Collectibles

• Wholesale Trade Distribution Businesses for Sale Opportunities

• Line Terminal Tackle Fishing

• Refrigerators Bottom-Mount Refrigerators Freezers Major Appliances

• Matt Kenseth Racing-NASCAR Fan Apparel Souvenirs Sports Collectibles

Mike over at Prosperous Land has exposed more details of the Rapid Transfer feature on Prosper.

Here is a small excerpt:

To qualify, a lender needs at least $2500 in active loans. I have interpreted this to mean principle[sic] in active loans, but once you hit $2500, that’s splitting hairs. Once this happens, the service is automatically enabled and the lender can get the rapid transfer on any amount greater than $500 and less than 20% of the active loan amount.

This is excellent information…  Apparently, he was called by someone at Prosper called a Lending Services Manager.  Other than thanking a loyal lender lending money, any idea what a Lending Services Manager does?

Mike suggests an announcement on the forum with the details.  While I typically don’t use this feature as the amount required is over my limits, I applaud the clarification and it would be great to see Prosper solidify that clarification.

Great Stuff Mike!

Here is a link to my post on the announcement of Rapid Transfers.

• New Lender Feature — Rapid Transfers

• Prosperous Distress Rate

• My Prosper IRR = (1.35)%

• My Prosper Internal Rate of Return Update (End of October 07) = (0.57)%

• My Prosper Internal Rate of Return Update (End of September 07) = 0.61%

• Land Real Estate Opportunities

• Service Businesses Businesses for Sale Opportunities

• Forest Service Government Advertising Collectibles

• Mike Skinner Racing-NASCAR Fan Apparel Souvenirs Sports Collectibles

• Small 1x2-4 Rugs, Carpets Antiques

ING is offering a $25 bonus for new accounts with a $250 deposit.  Both ING Direct Electric Orange Checking (current APY is 4.00%) and ING Direct Orange Savings (current APY is 4.50%).

You don’t need to leave the money in the account.  The $25 bonus cannot be removed for 30 days. 

You need a referral or they won’t give you a bonus.  Send me an email (kevin [at] rateladder [dot] com) and I will send you the referral.  Please send first name, last name, email, and referral type.

There are only 25 of each type of referral and they will be used on a first come first serve basis.

• Prosper Upgrade Last Night 9/13/2007

• Best of RateLadder 3rd Quarter 2007

• What is my Internal Rate Of Return on Prosper?

• Proser.com the one bad thing

• My Prosper Internal Rate of Return Update (End of Jan 07) — 18.14%

• Orange Crush Soda Advertising Collectibles

• Orange County Choppers American Motorcycles Transportation Collectibles

• Halcyon Days Decorative Collectible Brands Decorative Collectibles Collectibles

• VI Return of the Jedi Star Wars Science Fiction Collectibles

• Return of the King Lord of the Rings Sci-Fi, Fantasy Trading Cards Collectibles