Prosper Has Returned with New and Improved Features!

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.

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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.

Loanio Goes Quiet… Period

Found in my email… Loanio registering to sell “Borrower Member Payment Dependent Notes”

Loanio, Inc. today announced that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission (SEC) relating to Notes it will offer on its peer-to-peer lending website. A copy of the registration statement may be viewed at SEC.gov.

A registration statement relating to the securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Prosper Marketplace Auctioning Debt

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.

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Renaud Laplanche, Lending Club CEO in the News

Renaud Laplanche, founder and CEO of Lending Club in California recently spoke with Jackie Hyland from ABC News Money Matters about Lending Club, where borrowers with good credit can obtain personal loans from complete strangers. It was touted as providing a unique and creative way to get a loan that will offer lower interest rates than most credit card companies and banks can. (Note: Prosper is in a quiet period and has more or less shut down lender operations. Loanio (Loanio Blog) has just launched but lack the secondary market of Lending Club.

Here is my synopsis of the interview…

Lending club operates in the same way as a normal marketplace, however instead of having buyers and sellers, the website caters to borrowers and lenders. “Borrowers are there to get a loan, and lenders are there to make investments in these loans requested by the borrowers and fair interest rates as a result, and at the same time feel good about it because they’re helping other people.” Renaud Laplanche told Money Matters.

Peer to Peer lending or P2P lending allows borrowers and lenders to cut the middle man out, exchanging loans for an average interest rate of 10% to 12% instead of whatever high interest rates lending institutions are currently offering. With the recent credit crunch, not only is the demand for peer to peer lending alternatives going up, but Lending Club has also experienced a dramatic increase in the supply of lending options as lenders look for new ways to invest as returns on the stock market slow.

Since May of 2007 when Lending Club was founded, more than $20,000,000 dollars in loans have been offered through the website on a peer to peer basis. A new SEC-backed program was introduced to Lending Club only ten days ago, and has already facilitating the lending of more than $1 million dollars from lenders to borrowers on the website.

Zopa Shuts Down US Branch

Zopa, UK Based P2P LendingZopa, the UK based peer to peer lending company, is shutting down their US branch due as a result of toughening conditions that are currently being experienced by the US economy. Zopa provides loan services in the UK, as well as in Italy and Japan through a pure P2P style marketplace. Borrowers would request loans, and then the individual lenders would contribute as much or as little as they wanted to, towards the request. Then when enough funding has been collected, the loan is finally put together and granted. As the borrower pays back the loan, interest earned goes back to the lenders. This micro lending model has made the system popular in the UK and the Italy, and Zopa is soon to open a branch in Japan following the same model.

With the opening of the United States branch, Zopa found that they could not launch the same kind of lending system due to regulatory issues. In order to provide their service, they have teamed up with credit unions in order to provide these lending services. Lenders would park money in CDs with the credit unions, and this would allow their money to sit before borrowers request the money. This would enable the borrowers and the lenders to enjoy the same sort of interest rate benefits as the European users. The regulatory restrictions that were placed upon Zopa would ironically cause the same conditions leading to the closing of Zopa’s United States branch, however.

The same regulations behind the restriction of Zopa’s services are a part of the US economic crisis that has cause interest rates to skyrocket and the economy to experience a great deal of turmoil in the process. With less and less benefit being offered to lenders and borrowers, Zopa was forced to close down the United States branch. US lenders and borrowers will not be completely put out, however. Zopa is directing its current and future US customers to deal directly with the credit unions that it had partnered with.

Despite rumors, the credit unions had not reduced the amount of loans created. Rather, the credit unions has increased the number of loans made as traditional US bank and lending institutes have reduced their volume. Credit unions are not susceptible to the financial woes of Wall Street, and as such are making as many loans as before, if not more for making up the reduction that is a result of the economic crisis. For this reason, Zopa is glad to be able to provide US customers with a viable option that can provide a great service.

Existing customers will be gradually migrated to the partnered credit unions. Individual borrowers and lenders will still enjoy the same interest rates, customer service and federal insurance for CDs made. Payment schedule will also be identical, only payments will transfer over to the credit unions. This transition is made easy since in the US, loans were setup already with the credit unions.

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Pertuity Coming in September?

http://www.pertuitydirect.com/

Just received the following email…

Welcome To Pertuity Direct

Welcome! Thanks for signing up to receive updates about the Pertuity Direct launch.

We have been hard at work for the last two years, building a social lending business that is targeted toward busy people that would like to enjoy the high investment returns and low loan rates of peer to peer lending, but don’t want to deal with figuring out all of the ins and outs of optimizing the process.

We make social lending hassle free:
For lenders, your investment dollars are deployed and start to earn returns immediately
You get the safety of automatic diversification
If you want to withdraw your money early – not a problem, just a few click to get your money back
Our borrowers are rewarded for working hard to maintain good credit by getting approved and funded quickly with great, low rates
Welcome to social lending without the bidding, gaming or guessing. We handle all the work for you. You get all the benefit.

We are just a few short weeks away from launch and are putting finishing touches on everything so that you will enjoy your experience at Pertuity Direct. So stay tuned, we will be coming to market in September and will keep you in the loop.

The Pertuity Direct Team

Carnival of P2P Lending #9

Welcome to the 9th addition of the Carnival of Peer to Peer Lending

Editor’s Picks:
P2P-Loans.com presents P2P Lending Grows in Popularity as Banks Slow Lending (Are Individual Lenders Suckers or Savvy?) posted at P2P-Loans.com.

Pinyo presents Why Borrowers With Bad Credit Pay A Higher Interest Rates posted at Moolanomy.

LazyMan presents I Borrowed Money On Zopa. Here’s Why… posted at Lazy Man and Money.

Good Information:
Doug Fuller presents Prosper Debt Sale Update posted at Official Prosper Blog.

Wiseclerk presents MyC4 with new look – currency risk now to be covered by lender posted at P2P-Banking.com.

Rate Ladder presents How Lending Club Deals With 121+ Days Late posted at P2P Lending.

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