I have had several bloggers ask for advice on their listings or potential listings…  One of them even joined my group and successfully received a $25K loan at an interest rate he was happy with…

As a blogger the reputation of your blog has meaning for you both in terms of your persona, but also in real financial terms…  I have said privately, that I would lend to any blogger of 1 year duration or longer that placed their blog reputation on the line in the listing…

My offer to any blogger that has asked has been the same…  Write a listing and mention your blog and url and I will endorse and bid on your listing and offer all the tips and assistance I know how to provide in order to get your loan funded and the rate as low as possible… 

While I am still making that offer to any blogger, I thought I would share my tips for creating the best possible listing that anyone can use on prosper to get a loan.

1. There are some credit statistics that are factual and out of your control (current inquires, current delinquencies, etc.).  These are simple related to your circumstance and are difficult to adjust for your benefit by definition…  There are others that you can control namely loan amount and the related DTI.  If at all possible with your statistics that are our of your control, adjust your loan amount and there by your DTI to conform to a portfolio plan slice.  These slices are updating frequently and they can be a moving target (ask deep market… his listing went live at 3 in the afternoon and the slices were adjust that evening.)  Why? because the default portfolio plans have a lot of purchasing power…  (My own listing might have gotten as much as $12K+ in portfolio plan bids in 4 days.)
2. End your listing around 5pm est…  For whatever reason that seems to be the time when more bids are placed.  This leads me to believe this is a time of peak lender activity.
3. End you listing on Thursday (assuming normal weekend and not a holiday)…  This may no longer hold the same power as it once did (due to the $50 instant transfer for Facebook users), but the theory goes…  Any lender transfer  of money occurring between 11:01am est Friday and 11:00am Monday will result in the money being available for bidding on Thursday due to the time it takes for the transactions to clear the bank… Not everyone is a facebook user or has the Prosper facebook application installed and therefore I would still use this tip.
4. Tell you story.  Be truthful and honest and put as much detail into the story as you feel comfortable with…  An expenses breakdown and a list of income amount and sources might help with a lower interest rate.  But only provide what you are comfortable sharing.  Your listing should make sense financially, else why are you getting the loan?
5. Use a relevant picture… Do not you use a picture of someone else’s house or someone else’s blond girlfriend (hat tip to Freakonomics who says that young blond women out sell all other demographics in America).
6. Choose the right starting interest rate… Prosper now provides interest rate guidance.  Use the rate with the best chance of funding. You cannot get a loan if you listing does not reach 100% funded…  The listing will only begin to be bid lower after it reaches 100% funded.
7. Get endorsements from friends and get bids from friends who have endorsed your listing.  I had 14+ endorsements (maybe a bit of overkill) and 11 bids from Prosper friends.  I also have a number of bids from friends that are not confirmed Friends on Prosper.  Try to get at least 3 friends to endorse and bid on your listing.
8. Answer questions.  If a lender takes an interest in your listing enough to ask a question, they deserve an answer.  I answered all the questions asked.  Even the question that involved details of my financial life that I am not comfortable sharing.  I intentionally left out an income and budget breakdown from my listing. I do not recommend this if you are trying for your lowest possible interest rate.  But I simply did not feel comfortable sharing that information (perhaps to my interest rate detriment).  But even then I answer the question politely decline to answer and stating my reasons.

I am offering for sale this site RateLadder.com (domain, content, and twitter account) and the domains ProProsper.com and P2PNoBank.com.

Serious inquires only please. Email: kevin at proprosper (.) com if you are interested.

If you used the Prosper peer-to-peer lending service in the past, you’ll be happy to know that they’ve significantly enhanced many features of the service and are now accepting new borrowers and lenders. Using Prosper is now safer and more convenient than it’s ever been, making it an even better source of alternative investment opportunities.

Improved Security

Some of the most significant improvements to the Prosper service include better security, which means lenders can feel more secure about their investments. For instance, borrowers will now be provided a range from which to choose their rate, thus lowering the odds that they are not pricing their listing properly. With this new method lenders will find prices that are commensurate with risk. Also, for borrowers seeking their first loans, they must have a credit score of at least 640. This new listings system ultimately results in better returns to lenders, since they are of generally better quality.

Specialized Auction-Like Bidding System

Prosper uses an auction-like system to match borrowers with lenders. Using such a system, lenders can exercise enhanced control over their yield. Lenders have the ability to carefully specify their bidding choices thanks to a highly active auction market and detailed credit information. The auction system now also has a solid minimum bid per listing, which keeps the possibility of a lender mispricing to a minimum.

Prosper Ratings: A Better System for Risk Rating

Prosper was instituted a new rating system called Prosper Ratings. This new and in-depth system gives them the ability to make consistent ratings of listings and provides a proportional link between the estimated loss rate and the rating. Every listing that shares a Prosper Rating will also share the same range of potential loss rates. Looking at the records shows that with a Prosper Rating between AA and B had average returns of 7.13%. These strong returns go to show that direct person-to-person lending is a feasible type of asset for investment.

Improvements to the Portfolio Plan

Browsing through the complete index of listings can be arduous work that takes up a lot of time. Fortunately, Prosper provides a way to help those who lack to time to spend hours browsing listings. Building a portfolio plan allows you to set certain conditions under which the system will automatically bid on a listing. You can construct this plan on your own, or use one of Prosper’s pre-set plans. Both types are simple to set up. Portfolio plans are powerful tools to build your portfolio and find listings that match your preferences without having to pick through them one by one.

Trading of Current Loans

There are more great new features. Thanks to the new Note Trader system, you now are able to purchase, sell or swap notes. Prosper has partnered with Folio Investing to power this new change. This gives lenders the power to liquidate their investments before the 3-year term is up. Also, notes can be bought that are linked to loans you didn’t get a chance to get in on when they were first presented. Any note that was given out after July 13, 2009 is available for trading with the Note Trader system.

I will be attending Finovate Startup today (where Prosper is scheduled to speak). I will be live Twittering at http://twitter.com/BlogTrafficExch

Just in my email Prosper:

Dear Kevin,

Prosper is back with even more ways for you to earn a great return.

To activate your portfolio plans and to start investing right now, sign in and review our new
Lender Registration Agreement.

Introducing New Ways to Invest on Prosper
While speaking about Prosper, Preston DuFauchard, the Commissioner of the California Department of Corporations, said recently, �New ideas and approaches are needed to increase access to consumer and small business credit, especially in today�s environment.�

We couldn�t agree more.

At Prosper, our aim is to provide you with more than just investments. We feel it�s time to take back the system and provide the financial stewardship our country needs – one based on Americans helping Americans. To help bring this about, we�ve worked hard for the past six months to offer you new ways to invest and grow.

Invest on Our Open Market

In response to our nation�s credit crisis, you will now be able to invest in loans made by other financial institutions through our new Open Market initiative. Open Market listings describe existing loans made or owned by lending companies offered for sale on Prosper (such as a car loan).

And because Prosper can offer you a one-to-one relationship between the investment and the underlying asset, these loans are inherently transparent and less complex than traditional debt securitization and other traditional bank lending methods.*

Sound good? There�s more.

Improved Risk Rating System

We�ve been working diligently at revamping our risk rating system, too. Our new robust system allows us to maintain consistency when rating listings�regardless of the loan seller, type of credit score used or type of loan being offered for sale.

We do this in part by combining our proprietary Prosper score with one pulled from Experian�s Scorex Plus. This allows you to better analyze a listing�s level of risk since the final rating represents an estimated average annualized loss rate range�making it easier for you to decide which listings may be your best investments. While we cannot guarantee performance, now you�ll have even more financial information on potential borrowers, along with the assurance that the new Prosper minimum credit score is 640 for individual marketplace listings. At Prosper, we constantly strive to provide you with all of the financial assurance and tools you need to make it easier to invest through us.

Coming Soon�Trade Existing Loans

In other exciting news, you will soon have the option to be able to buy, sell and trade Notes on our new Trading Platform. Please be aware that trade investing through Prosper is not available at this time, as it is subject to regulatory approval.

At Prosper, we�re excited to welcome you back with these new ways to invest�all built upon the financial transparency, vigilance and openness you deserve.

The Baltimore Sun is reporting the Prosper Settlement.

A settlement for $1 million dollars paid to 20 different states was announced today, with Prosper Marketplace agreeing to the payout after complaints poured in claiming that the peer-to-peer lending service was selling securities that were unregistered.

Prosper Marketplace is a business model that matches up those who want to borrow money with those willing to lend it to them. It’s very much like an auction with the potential lenders bidding on the right to loan money to the loan-seekers. A list of people with the loan amounts they’re looking for appears on the site, and people who would like to make the loan and profit from the interest that the borrower will have to pay back actually bid on the loans. The lowest bidders’ monies are used to fund them, with Prosper Marketplace actually issuing promissory notes to the lenders and managing the transactions.

But unlike some websites that take the information offered by people who want a loan and present it to legitimate lending institutions who bid for the business with the best interest rates and terms, this service allowed anyone to bid in hopes of providing money for the loan. The state regulators that make up the North American Securities Administrators Association decided that the company in essence holds an online auction to find people to fund notes that aren’t secured in any way. Because the loans amount to unsecured promissory notes, regulators say they’re securities that haven’t been properly registered, and so the practice must stop immediately.

Each state must put its stamp of approval on the settlement for the entire penalty to go through, with an agreement that the settlement is valid also including the agreement to stop investigating any prior transactions that Prosper took part in before the investigation began.

It was only a week ago that the Securities and Exchange Commission ordered Prosper Marketplace to stop selling unregistered securities. The spokeswoman for Prosper, Tiffany Fox, indicated that the company is eager to settle the matter. They plan to register with the SEC so that they can continue with their business model. In the meantime, they’re not playing middleman for any new borrowers and investors, but the agreements that were made before the SEC cease and desist order, they make clear on their website, are still valid.

Prosper has announced on its website that lenders can still expect to have their monies paid back, they can still keep an eye on all of their loans, and they can still access the money currently in their Prosper Marketplace account. They also point out to borrowers that they are still expected to honor any agreements they’ve already entered into, and that their plan to register with the SEC, which could take several months to complete, won’t affect current loans.

They also point out on their website that a borrower looking for a loan can still create a new listing for the hoped-for loan, and they’ll do their best to find an alternative way to find a lender.

Photo Credits: 1

http://www.sec.gov/litigation/admin/2008/33-8984.pdf

It appears to me that the ruling is that they have been selling unregistered securities without a license.  What does that mean for the lenders?  

Doesn’t the board and company officers have some personal liability too?

There is some discussion at prospers.org: http://www.prospers.org/forum/prosper_order_to_cease_and_desist_by_sec-t10903.0.html

No one seems sure just yet…

SEC:

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933 Release No. 8984 / November 24, 2008
ADMINISTRATIVE PROCEEDING File No. 3-13296
In the Matter of PROSPER MARKETPLACE, INC., Respondent.
ORDER INSTITUTING CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933, MAKING FINDINGS, AND IMPOSING A CEASE-AND-DESIST ORDER
I.
The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), against Prosper Marketplace, Inc. (“Prosper” or “Respondent”).
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.
III.
On the basis of this Order and Respondent’s Offer, the Commission finds that:
Respondent
Prosper is a Delaware corporation based in San Francisco, California, that owns and operates an online lending platform on its website, www.Prosper.com. Prosper was previously incorporated as JC Capital Solutions, Inc. (“JC Capital”). Prosper is a private corporation and is not registered with the Commission.
Summary
Prosper operates an online lending platform connecting borrowers with lenders. The loan notes issued by Prosper pursuant to this platform are securities and Prosper, from approximately January 2006 through October 14, 2008, violated Sections 5(a) and (c) of the Securities Act, which prohibit the offer or sale of securities without an effective registration statement or a valid exemption from registration.
Prosper’s Platform
Prosper’s lending platform functions like a double-blind auction, connecting individuals who wish to borrow money, or “borrowers,” with individuals or institutions who wish to commit to purchase loans extended to borrowers, referred to on the platform as “lenders.” Lenders and borrowers register on the website and create Prosper identities. They are prohibited from disclosing their actual identities anywhere on the Prosper website. Borrowers request three-year, fixed rate, unsecured loans in amounts between $1,000 and $25,000 by posting “listings” on the platform indicating the amount they want to borrow and the maximum interest rate they are willing to pay. Prosper assigns borrowers a credit grade based on a commercial credit score obtained from a credit bureau, but Prosper does not verify personal information, such as employment and income. Potential lenders bid on funding all or portions of loans for specified interest rates, which are typically higher than rates available from depository accounts at financial institutions. Each loan is usually funded with bids by multiple lenders. After an auction closes and a loan is fully bid upon, the borrower receives the requested loan with the interest rate fixed by Prosper at the lowest rate acceptable to all winning bidders. Individual lenders do not actually lend money directly to the borrower; rather, the borrower receives a loan from a bank with which Prosper has contracted. The interests in that loan are then sold and assigned through Prosper to the lenders, with each lender receiving an individual non-recourse promissory note.
Since the inception of its platform in January 2006, Prosper has initiated approximately $174 million in loans. Prosper collects an origination fee from each borrower of one to three percent of loan proceeds and collects servicing fees from each lender from loan payments at an annual rate of one percent of the outstanding principal balance of the notes. Prosper administers the collection of loan payments from the borrower and the distribution of such payments to the
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lenders. Prosper also initiates collection of past due loans from borrowers and assigns delinquent loan accounts to collection agencies. Lenders and borrowers are prohibited from transacting directly and are unable to learn each others’ true identities.
Discussion
The notes offered by Prosper are investments. Lenders expect a profit on their investments in the form of interest, which is at a rate generally higher than that available from depository accounts at financial institutions. Prosper’s website has included statements that the Prosper notes provide returns superior to those offered by alternative investments such as equity stocks, CDs and money markets. The Prosper website has also stated that it offers lenders ways to “spread your risk out and ensure a more reliable return” and describes how lenders are allowed to use payments from an outstanding loan to purchase a new loan “in order to maximize returns.” In addition, marketing to institutional lenders on the Prosper website characterizes the platform as an alternative to “stock or bond returns” that is “crucial for prudent portfolio management” in “turbulent markets.” Testimonials published on the Prosper website show that customers have used Prosper notes as investment vehicles. Prosper also offers Portfolio Plans that allow lenders to automatically bid on loans based on estimates of risk and return characterized by Prosper.
Lenders rely on the efforts of Prosper because Prosper’s efforts are instrumental to realizing a return on the lenders’ investments. Prosper lenders are effectively passive with respect to elements important to realizing profit on their investments and Prosper is instrumental in each of these elements. Prosper established and maintains the website platform, without which none of the loan transactions could be effected. Prosper provides mechanisms for attracting lenders and borrowers, facilitating the exchange of information between borrowers and lenders, coordinating bids, and effecting the loans. It provides borrower information to potential lenders via the loan listings, including credit ratings. Prosper provides a matrix for evaluating performance and potential returns in the form of historical loan performance, Prosper Marketplace and individual borrower performance, and delinquency activity, among other things. Prosper manages the bidding and subscription process for every loan and has the sole contractual right to service the loans, including administering the borrower and lender accounts, and providing monthly statements that reflect payments made and received on the loan notes, as well as amounts available for bidding on new notes.
Furthermore, under the terms of the notes, Prosper has the sole right to act as loan servicer of the notes. In this capacity, Prosper collects repayments of loans and interest, contacts delinquent borrowers for repayment, and reports loan payments and delinquencies to credit reporting agencies. Prosper also exclusively manages the process of referring delinquent loans to collection agencies for payment, and selling defaulted loans to debt purchasers. Since the lender does not know the borrower’s identity, the lender would be unable in any event to pursue his or her rights as a noteholder in the event of default. Further, if a lender chooses to participate in Prosper’s Portfolio Plan, whereby lenders are permitted to choose portfolios that automatically allocate the lender’s funds among various loans based on risk and return characteristics categorized by Prosper, Prosper chooses the loans on which a bid is made. Lastly, the continued existence and operation of the Prosper platform is essential to the loan transactions taking place. Prosper lenders are too geographically diverse and diffuse to come together without Prosper.
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They lack the requisite experience to run a loan auction or to create and service a loan package. Rather, the Prosper lenders rely on Prosper’s continued operation of the platform in order to transact and to recoup any gain on their investments.
Legal Discussion
The notes offered by Prosper are securities pursuant to Section 2(a)(1) of the Securities Act and under the Supreme Court’s decisions in both SEC v. W. J. Howey Co., 328 U.S. 293 (1946), and Reves v. Ernst & Young, Inc., 494 U.S. 56 (1990).
A. Application of the Howey Investment Contract Analysis
Pursuant to SEC v. W. J. Howey Co., 328 U.S. 293 (1946), an investment contract exists if there is present “an investment of money in a common enterprise with profits to come solely from the efforts of others.” Id. at 301. An investment contract is a security under Section 2(a)(1) of the Securities Act, the offer or sale of which must be registered pursuant to Section 5 of the Securities Act.
The financial instrument offered by Prosper meets the definition of an investment contract as set forth in Howey. As discussed above, there is an investment of money when lenders invest money to purchase a loan. The lenders bear one-hundred percent of the risk of loss each time they fund a Prosper loan because the Prosper loans are non-recourse.
There is a common enterprise for several reasons. For example, a common enterprise exists because lenders and borrowers are dependent on Prosper in order to engage in new loans or to complete the timely repayment of loans already funded. A common enterprise also exists because the vast majority of Prosper loans are funded by more than one lender and because the majority of lenders fund more than one loan. All lenders would be negatively affected if Prosper were unable to operate the platform. In addition, there is a common enterprise between Prosper and its members because borrowers pay Prosper an origination fee of one to three percent of the loan, and each lender pays annual servicing fees to Prosper of one percent of the outstanding principal balance of the notes.
Further, lenders are dependent upon the efforts of Prosper to realize any return on their investment. As discussed above, borrowers and lenders are prohibited from transacting directly and must rely on Prosper to execute each element of the loan creation and repayment process.
B. Application of the Reves Note Analysis
A note is presumed to be a security under the Supreme Court’s opinion in Reves v. Ernst & Young, 494 U.S. 56 (1990), unless it is of a type specifically identified as a non-security. The types of non-security notes identified in Reves include notes delivered in a consumer financing; notes secured by a mortgage on a home; short-term notes secured by a lien on a small business or its assets; short-term notes evidenced by accounts receivable; notes evidencing “character” loans to bank customers; notes formalizing open account debts incurred in the ordinary course of business; and notes evidencing loans from commercial banks for ordinary operations. Id. at 65. A note that
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is not among the list identified in Reves is a security unless it bears a “strong family resemblance” to the non-security notes identified in the opinion. Id. at 64-65. Reves established a four-part family resemblance test to determine whether a note is a security, which is comprised of the following factors: (i) the motivations of the buyer and seller; (ii) the plan of distribution; (iii) the reasonable expectations of the investing public; and (iv) the existence of an alternate regulatory regime. Id. at 66-67. If a note fails the family resemblance test, it is deemed a security and the offer or sale of such security must be registered pursuant to Section 5 of the Securities Act. The Prosper loan notes are securities under Reves because they do not fall into any of the enumerated categories of non-security notes, and they fail the family resemblance test.
With regard to the motivations of the buyer and seller, as discussed above, Prosper lenders are motivated by the desire to obtain a better return on their money than they otherwise could in another venue. While some Prosper lenders may be motivated, in part, by altruism, altruistic and profit motives are not mutually exclusive. See In the Matter of Robin Bruce McNabb, Rel. No. 34-43411 (Oct. 4, 2000), aff’d, 298 F.3d 1126 (9th Cir. 2002).
With respect to the plan of distribution, the Prosper notes are offered and sold on the internet to the public at large. There is no special level of financial sophistication or expertise that Prosper lenders must have. This wide dissemination and solicitation to the public with no attempt to limit investors is indicative of a security. See Reves, 494 U.S. at 68 (the notes “were…offered and sold to a broad segment of the public, and that is all we have held to be necessary to establish the requisite ‘common trading’ in an instrument”); Pollack v. Laidlaw Holdings, Inc., 27 F.3d 808, 814 (2d Cir. 1994) (concluding that the broad-based, unrestricted sales to the general investing public supported a finding that mortgage participations were securities under federal securities laws).
In analyzing the expectations of the investing public, the lenders in this instance, the relevant issue is what a reasonable investor would believe about the character of the transaction, “even where an economic analysis of the circumstances of the particular transaction might suggest that the instruments are not ‘securities’ as used in that transaction.” Reves, 494 U.S. at 66. The manner in which a transaction is characterized in advertisements is illustrative, and whether there is a “valuable return on an investment, which undoubtedly includes interest.” Id. at 69. As discussed above, Prosper lenders reasonably expect a valuable return on loaned funds and would reasonably believe that the Prosper loans are investments.
Finally, with regard to whether an alternate regulatory scheme exists to reduce risk to potential investors, there are currently no appropriate regulatory safeguards for Prosper lenders, such as those against misleading statements by a borrower about the purpose of a loan, the borrower’s employment and income, or even the borrower’s identity, or against misleading statements by Prosper.
Thus, the Prosper notes are securities under Reves because: (i) Prosper lenders are motivated by an expected return on their funds; (ii) the Prosper loans are offered to the general public; (iii) a reasonable investor would likely expect that the Prosper loans are investments; and
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(iv) there is no alternate regulatory scheme that reduces the risks to investors presented by the platform.
As a result of the conduct described above, Prosper violated Section 5(a) of the Securities Act, which states that unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell such security through the use or medium of any prospectus or otherwise; or to carry or cause to be carried through the mails or in interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery after sale.
Also as a result of the conduct described above, Prosper violated Section 5(c) of the Securities Act, which states that it shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of any prospectus or otherwise any security, unless a registration statement has been filed as to such security.
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions agreed to in Respondent Prosper’s Offer.
Accordingly, it is hereby ORDERED that:
Pursuant to Section 8A of the Securities Act, Respondent Prosper cease and desist from committing or causing any violations and any future violations of Sections 5(a) and (c) of the Securities Act.
By the Commission.
Florence E. Harmon Acting Secretary
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The methodolgy or the sql for obtaining the data these curves from the private data export have already been explained in detail, but briefly…

• The Y axis is the percentage of all loans orginated of a given age that are currently 1 month late or worse…
• The X axis is the days loan origination.
• The curves stop when there is less than 250 loans in the “bucket.”
• These curves are for all loans of a given Credit Grade. One would get different curves (flatter slopes=better); for exmaple, if you were to choose loans with 2 or less inquires and 5 years of credit history you would see flatter slopes.

The range is 7-8% for AA all the way to ~55% for HR.

(Click Graph for Larger Version)

Prosper Vintage Curves

I though Prosper had already done this: http://www.rateladder.com/2007/10/30/prosper-files-s1-with-sec/

From Prosper This morning:  http://blog.prosper.com/2008/10/15/prosper-filing-registration-statement-enters-quiet-period/

Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you’re an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you’ll be able to track and monitor your loans; and you’ll be able to withdraw funds from your Prosper account.

If you’re a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you’re a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we’re required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.

Prosper just released it monthly survey and it included commentary from CEO Chris Larsen.  What do you think, is this the “greatest economic crises America has ever faced”?  (For my part there is no doubt it is in my lifetime, but I don’t see this getting to the level of the Great Depression…)

Here is what the CEO said:

In the midst of one of the greatest economic crises America has ever faced, and on the heels of last week’s Federal Reserve report indicating that for the first time in over a decade consumer borrowing significantly contracted, people are naturally asking what role Prosper will play and what trends we are seeing.

Although it’s a bit too soon to point to Prosper data that correlates directly with the financial meltdown that has only begun to unfold, there are some noteworthy trends that have accelerated since the credit crunch began 14 months ago that are relevant to the current environment.

The biggest trend that continues in the Prosper marketplace since the credit crunch began last summer is that the percentage of borrowers with sterling credit that are listing and getting funded on Prosper remains at record levels (See “Mix of Funded Borrowers” Table). We expect this trend to continue particularly as more lenders on Prosper have become more conservative in their bidding strategies; and as more people, even those with the very best credit, are having their credit card limits reduced and home equity lines cancelled, and are being turned down for auto loans and private education loans.

Another key trend we’re experiencing is that as consumer borrowing from traditional financing sources is shrinking, Prosper is experiencing solid growth. Year-to-date, the number of loans in terms of units is up 24% over the same time period last year, and up 37% in September 2008 compared to September 2007. At the same time, loan originations year-to-date in terms of dollars have increased 8% over the same period last year, and are up 7% in September 2008 compared to September 2007.

At a time when every sector in the economy seems to be under pressure and shrinking, the growth Prosper has experienced is very respectable. However, some may wonder why there is a disparity between unit growth and loan dollar volume growth. The answer lies in the average loan amount being funded on Prosper. Year-to-date the average loan amount is $6,047, down 13% or $925 compared to the same period last year. In September 2008 the average loan amount was $5,544, down 23% or $1,631 from September 2007. This indicates that lenders on Prosper are being more cautious by directing their bids toward listings with lower requested loan amounts.

All of these trends on Prosper are significant and interesting, but far more important in this time of economic upheaval is the opportunity for Americans to revitalize the spirit of It’s A Wonderful Life; to channel the essence of Bedford Falls and George Bailey; and to “do well by doing good.”
 

September 2008 Prosper People-to-People Lending Market Survey

Purpose of Personal Loan Listings and Fundings

Borrowers who post listings in the Prosper marketplace are asked how they intend to use their personal loan. The following reflects borrowers’ statements of intended use of loan proceeds with regard to both listings and loans. Prosper does not verify or confirm after funding how loan proceeds are used.

Other than a brief flirtation with the Draft Gore movement I have stayed away from my political views on RL, but I am afraid I can no longer stay silent. I am an off the deep end libertarian who believes that Clinton proved to be an awesome president (in terms of free will, government staying out of personal life, and fiscal responsibility.) My other political concerns are the environment, trade deficit, our dangerous reliance on foreign oil (boo swift boat campaign but yeah wind, solar, and natural gas as our way out of the problem. I have a love/hate thing with T Boone Pickens), modern copyright law, and privacy rights. (in terms of both privacy and copyright Joe Biden is less than ideal as a VP choice with his support of FBI wire taps and support of the RIAA and MPA, but at least he understands the issue even if I disagree with him… and yes that was a Palin and McCain dig.)

Can you believe that Pennsylvania’s law makers do not believe the citizens of the great state of Pennsylvania have the where with all to do with their money as they see fit (see Prosper Blog post: Lenders residing in PA).

I can barely even imagine someone telling me what I should do with my hard earned money. If I choose to help my fellow American by extending credit to them, why on earth should I not be allowed to? (I don’t believe in protectionism borrowing rates either aka state rate caps, but I think there is at least something to debate on that front.)

Don’t even get me started on how bailing out the greedy PRIVATE corporations (AIG et al) with PUBLIC money only encourages further GREED. (AIG turned down on the table offers prior to the government bailout. Why? They thought they could get a better deal from the government and they were right.)

So what can a Pennsylvania “Lender” do?

1. The most obvious thing is to email, phone, and mail you state legislator and Governor. The PA government needs to know that the citizens of PA think it is ridiculous that they are being told that they cannot invest in their fellow American.
2. A slightly less copacetic way around the problem is to use an alternative address other than you PA address.  Do you have a vacation home?  Maybe Earth Class Mail? 

Please understand, I am not an anarchist and I do not believe in subverting the government. I do believe in fiscal responsibility, individual rights, and the freedom to spend and invest your money as you see fit.

PA get a grip! You are a presidential battle ground state. Do you think your citizens cannot think for themselves and make their own choices?