Last night I went to the Prosper Bay Area meet and greet Organized by Big Gulp. Chris Larsen (CEO), Andrew (Product manager?), and Carin (new employee in creative, job title?) where there from Prosper. I saw several familiar faces, meet some new faces, and heard a number of promises of great things to come in the near future (collections improvements!!!).
However, for me the the thing that stood out the most was jcw3rd. He is a large lender (>10K), and old lender (avg loan age > 150 days), and his portfolio is in phenomenal condition. ~270 active loan with 7 lates and 1 default (less than 3% late). He is diversified from AA-HR on a standard bell curve.
Here is his lending stats page (10.32% ROI).
Here is his Eric CC page (12.25% ROI).
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3 comments ↓
It is refreshing to see a lender achieving some success and feeling satisfied with his portfolio. However, in all fairness, those 7 late/defaulted loans equate to 2.5% of his portfolio. LendingStats averages out his weighted portfolio at B-, so that 2.5% is merely in-line with the Experian averages. That’s better than most of us are doing, but I’m not sure matching the expected failure rate is cause for true celebration!
I am not saying that you are wrong, but the answer is more complicated than that…
for a 3 year amortized loan the default/late rates are lower near the end of the loan than in the beginning. I am not saying he is past the point of highest defaults. Just that so far he has held up fairly well.
I fully expect to make better than CD rate returns 8+%, just don’t ask me to prove it until 1/1/2010. Until that point I will take it on faith and continue to track the late curves: http://www.rateladder.com/2007/09/08/1-month-late-or-worse-curves-by-credit-grade-september-1-07-update/
Fair enough. I did oversimplify the circumstances substantially. Of course, you also have to consider that his portfolio is only 140 days old. Since loans rarely recover from the >1 Month bucket, and he is likely to have more go late, it is likely that his annualized percentage of defaulting loans will run higher than that 2.5%. Again, it is impressive that he’s doing better than most of us. I’m just saying that his returns are pretty consistent with what I would expect based on the Experian default rates–he just happens to be invested in higher-rated loans than many of us.
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