Entries Tagged 'Prosper Days 2007' ↓
October 7th, 2007 — Prosper Days 2007, Prosper Days 2008, Prosper.com
Prosper Days 2008
February 25-26, 2008
Parc 55 Hotel, San Francisco
Here is the registration page: Prosper Days 2008 Registration
Also new this year… If you are a member of the press or a blogger you may attend for free: Press Registration
And for nostalgia here is the video of RateLadder at Prosper Days 2007
Related Articles
Related Stores
June 27th, 2007 — Prosper Days 2007, Prosper.com, Statistics
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
Related Articles
Related Stores
March 23rd, 2007 — Prosper Days 2007, Prosper.com
Here is the video from the 3rd Party Showcase. I was lead off, then Eric from Eric’s Credit Community, then a couple of Berkley Grad Students.
Related Articles
Related Stores
March 13th, 2007 — Prosper Days 2007, Prosper.com
If you missed Prosper Days here are the session videos… Alas, the 3rd Party Tools is not one of the videos… What’s up with that?
http://www.prosper.com/prm/prosper_days/video.htm
And here is the photo gallery…
http://picasaweb.google.com/prosperdotcom/ProsperDays2007
One quick highlight from the photo gallery. Here I am asking Chris Larsen CEO of Prosper, if I heard him correctly and asking for clarification on linking loans to listings… He deftly sidestepped the question.
Related Articles
Related Stores
February 14th, 2007 — Features, Prosper Days 2007, Prosper.com
Previously I had some additional questions for the Large Lenders on the Prosper Days Panel.
Both L5 and now pensioner have responded. I would like to thank them for their insights and generosity of time. As I said about L5, pensioner is a sharp tack and I knew he was thinking correctly, I just wanted to be sure. 
Here is the response:
I probably did give the erroneous impression during my Prosper Days presentation that I thought that rate minus defaults is equal to ROI. I am well aware that that is not true. On the other hand, when I am scanning listings I do use that as a quick and simple approximation. This was particularly true when I was trying to get my first $750K loaned out. I was making large bids on AF listings so I did not spend much time with precise calculations. At times I bid several thousand dollars after reviewing a listing for a little as 10 seconds, if I thought that the listing was going to be snapped up.
I am planning on studying the ROI white paper, but have not yet found time to do that. You also mentioned IRR calculations, which is another thing I plan to explore, but have not yet found the time for.
I enjoyed your presentation. My favorite part was the contrasting opinions from your friend and your wife on the same listing.
If this or any other of my communications to you have value, you are welcome to share them.
pensioner
Related Articles
Related Stores
February 14th, 2007 — Features, Prosper Days 2007, Prosper.com
Previously I had some additional questions for the Large Lenders on the Prosper Days Panel.
L5 Returned my email… Here is his response. If you can’t tell L5 is a sharp tack and I knew he was thinking correctly, I just wanted to be sure :)
Thanks for your nice comments, RateLadder! Really good to hear your thoughts.You are absolutely right that interest rate - default (or delinquent) rate doesn’t equal yield ROI.What I was doing (a year’s worth of data then using 1 - current loan %) was a CRUDE approximation. My point was that even a crude approximation using real data from Prosper is, I feel, more relevant than using the Experian data, especially since I feel zeroing in on extended credit stats is very relevant.Now that Prosper has released their ROI estimate tool based on their portfolio data, this is clearly the benchmark to use. As they just released this on Monday, I’ve only played with it briefly, so don’t have full comments for you on it. But it has the advantage of being able to filter based on all the different attributes of Prosper loans, while also giving much better ROI calculations. Basically there are THREE “deducts” from the average rate column — the three negative numbers — that, as I understand it, you want to sum and deduct from the interest rate proposed by a borrower to get the expected yield.I attended a session where they talked about their methodology for determining the ROI, but I didn’t take detailed notes as they said there was a white paper on the site (or maybe in the forums) that goes into this in details. So I plan to get the white paper and think others who are interested in this should get it and read it, too. (Maybe you can post a link to this on your blog.)The key thing they use in ROI is a technique called “roll rates” which estimate on a go-forward basis (based on past data) what percentage of loans in one category will “roll” to the next (worst) category in the next month. For example, their data right now suggests that 3% of C loans will roll to 1-30 days late each month; of those, 25% will roll to 31-60 days late — i.e., 75% “cure” and 25% remain delinquent. Of those that are 61-90 days late, 80% roll (i.e., don’t pay anything), while 20% don’t roll and remain delinquent. Obviously the roll rates vary based on the characteristics of the loan class being studied — credit grade, extended credit scores, etc. — and you can filter on that. They also factor in early payoffs, which is nice, but I think not hugely relevant to me.They did say that their calculations were different than IRR… I didn’t understand the exact differences, but I think the white paper goes into.So, anyway, find the white paper and you (and I) will have answers. Good questions.Feel free to post this to your blog if it’s useful.
Wishing you the very best,
- L5
L5 appreciates Haiku… So this is for him:
R O I
Rate Minus Default?
No Markov
I will be tracking down this white paper. Prosper Andrew (Top notch. Be nice to him and doors are unlocked. He would do quite well with a donation button. :) responded to a forums request by posting a link in the forums. Here it is: http://www.prosper.com/public/help/topics/lender-marketplace_performance_calculation.aspx
Update pensioner responds: http://www.rateladder.com/2007/02/14/pensioner-responds-avg-rate-minus-default-rate-does-not-equal-expected-return/
Related Articles
Related Stores
February 13th, 2007 — Prosper Days 2007, Prosper.com, Strategy
In the large lender panel pensioner state that he focuses exclusively on 20%+ loans and C, D, and E credit grades. While I don’t have the risk tolerance for those default rates I thought I should impose a rate floor. I have chosen 15%. I have adjusted all my standing orders to no longer bid on any loan less than 15%. If a standing order had a lower rate for a particular grade I raised the rate to 15%. All other rates remain the weighted average over the last 100 days plus 1.5%.
In addition, I have chosen to add an additional extended credit requirement. I will now only bid on listings that have a debt utilization of 5%-70%. I am not able to test this new assumption using the Prosper ROI performance tool as that information does not exist in old data.
Related Articles
Related Stores
February 13th, 2007 — Prosper Days 2007, Prosper.com
The 2nd session was the Big Lender Panel. It was great. Worth the price of admission. The Lenders (with links to their portfolio) were pensioner, L5, and janeybooboo. They are all manual bidders and from the sound of it they spend quite a bit of time vetting the borrowers. The biggest thing I took away from it is that they have no problem filling their capacity. The question I would like to ask them that I didn’t is this….
Subtracting the default rate from the interest rate does not give the ROI. (I think they were implying it was an approximation for ROI.) In order to calculate ROI you need to use a Markov model and assume some default characteristics such as default rates over the life of the loan. (Similar to the new performance tool, but I think they are making some assumptions.) Given that I use standing orders what I would rather do is Monte Carlo a Standing Order against the data and see the actual IRR. Are they in fact using a Markov model or similar? And I would love to know what their Prosper IRR is using my definition.
Update L5 responds: http://www.rateladder.com/2007/02/14/avg-rate-minus-default-rate-does-not-equal-expected-return/
Update pensioner responds: http://www.rateladder.com/2007/02/14/pensioner-responds-avg-rate-minus-default-rate-does-not-equal-expected-return/
The morning session (Lender Portfolio Analysis) was kinda blah and I will spare the details… I found it to be a rehash of the forums advice. The new ROI tool was one topic. I learned a little about it’s internals, but I look forward to reading the “white paper”. Here is a link: http://www.prosper.com/public/help/topics/lender-marketplace_performance_calculation.aspx
Related Articles
Related Stores
February 13th, 2007 — Prosper Days 2007, Prosper.com
I have been playing with the new ROI tool this morning. In some ways it is quite cool, but I don’t have a good feel for what it is trying to tell me except stay away from the old HR. No problem there the RateLadder Portfolio is AA-D with a B+ average weighting. At first glance, it seems they made some trade offs between ease of use and transparency. Here is the documentation for the ROI calcualtor: http://www.prosper.com/public/help/topics/lender-marketplace_performance.aspx
I think I will be attending the 9am Portfolio Analysis for Lenders and the 10:30am Lender Panel. I am the 6′10″ guy with a beard, please say hello.
Portfolio Analysis for Lenders:
This presentation begins with an expert demonstration of the marketplace performance tools, lender statements and accounting details by the engineers who built them. Then Kirk (CFO) will demonstrate how to use these tools to derive optimum lending portfolio ROI. Attendees will have opportunity to ask questions of the pros.
Lender Panel:
Learn from Prosper old timers in this session featuring several of Prosper’s biggest lenders who will share their personal strategies for lending including:
- What they look for in a listing
- What types of listings they steer clear of
- What pitfalls they avoid in lending decisions
- Their ’secret sauce’ based on their personal experiences
Related Articles
Related Stores
February 12th, 2007 — Prosper Days 2007, Prosper.com
RateLadder Presentation at 3rd Party Tools Showcase was very well received. I would have liked a little more time for questions and answers, but the fact that people wanted to ask questions was great… I got some laughs and genuinely had a great time. There was probably 60 people at the presentation. If you were at the presentation please leave comments.
Let me back up. Eric Petroelje from Eric’s Credit Community was leading off… unfortunately the wireless connection went haywire right before he started. He handled it very well and started in on his site without visual aids. I was asked to start while they fixed the connection.
This illustrates that you should never give a live demo unless you can control all the variables. Same idea, but I always heard that you should never ask a question you don’t know the answer too.
A couple of undergrad students at Berkley (David McIntosh and ???) presented the data analysis they had done in preparation for evaluating keywords in loans and the results. Their talk focused on loan funding. I would be more interested in default rates. Regardless, they aren’t publishing the results yet for fear borrowers might game the system.
One interesting question I was asked:
Have I ever considered investing for someone else?
The prospect intrigues me, but I don’t see how the economies of scale would work… If I were charge 20% of the profit and I could earn 16% then I would need to be investing just over 3 million (10% of all loans at this time) before I would break 100K in compensation. So I guess I don’t see how someone could afford to pay for my time.
Related Articles
Related Stores
