Listings on Prosper are now all 7 days
Wednesday, April 16, 2008
I'm not sure I agree with that. Some loans are more sure to fund than others, especially in the higher credit ratings of AA and A. I would have allowed those listings to choose 3 days as an option.
I think one of the intents by standardizing at 7 days is to eliminate the desperate borrower syndrome that 'I need money, and I need it fast' which are more than likely to become defaults over time. Prosper stands out among other peer to peer lending sites in that it allows high risk borrowers to create listings, this freedom has certainly been a double edged sword.
Posted by ProsperBlogger 4:13 AM 2 comments
Labels: Borrowing, Prosper News
No More “Bank Account Verified” Icon
Wednesday, February 27, 2008
When you are looking at a listing on Prosper, you used to see 2 icons at the top of the listing, one for homeownership verification and the other was for bank account verification.
The bank account verification icon has now been removed from the site.
People used to view this as a positive sign, which is was, since no loan can be initiated without a verified bank account and seeing an account already verified was more reason to feel safe that a bid would not languish and then get returned when the verification process failed.
Prosper felt that the icon created confusion among lenders, but I think it should have remained. It rewarded borrowers who were proactive and got their accounts verified faster.
Posted by ProsperBlogger 2:37 PM 3 comments
Labels: Prosper News
Criteria for 2nd Prosper Loan has Changed
The minimum amount of consecutive on time payments is now 6 months. Before it was only 2 months. Pre-payments don’t count.
This is a good change. It eliminates the potential for people getting a second loan to cover a first that they know will be in trouble, or generally racking up too much debt too fast. It also gives the credit bureaus more time to update their records so the new Prosper loan is reported.
I would say this is another measure Prosper is taking to curb defaults. It makes sense to establish more of a track record before being allowed to take out another loan.
Posted by ProsperBlogger 2:30 PM 0 comments
Labels: Prosper News
Changes in Advance Search
The first is the 'disappearance' of advanced search categories. I think the intention was to streamline the search, but many think the other columns have disappeared, they have not. Just use the new “add/remove criteria” link at the top right and a large list box will appear, from here you can select whichever criteria you want to search on.
You can call it a personalized advanced search. I wondered why the first time I saw it, but you know, there are some criteria that I just never use so to streamline the page it makes sense for them to just not be there.
On the other hand, many of the fields on that page are not used for lack of knowledge so having them there might encourage users to learn about some criteria they can filter on. My recommendation is that if you are new to Prosper, you might just want to “select all” and see all the options. More experienced users could start to remove items they are not interested in.
The second change was to add some new search criteria, they are:
- Bids from friends ($): Sum of highest single bids from the borrower’s friends
- Bids from friends (#): Total number of bids from unique friends
- Endorsements: Number of endorsements from the borrower’s verified friendsFriends: Number of verified friends the borrower has
So in fact, no advanced search criteria are missing, there are actually more to choose from.
Posted by ProsperBlogger 2:19 PM 0 comments
Labels: Prosper Tips
Payment dates are going to change to improve loan performance
Some good news from Prosper Days 2008 for both borrowers and lenders: Prosper is planning to modify their policy on when payments are pulled from borrowers bank accounts to better match their pay days.
Up until now, the date that a payment is due has always been dependent on the initiation date of the loan. Often times this ended up being at the worst time of the month, for example days before someone’s paycheck arrived in their bank account. Often times this created late payments, incurring borrowers fees and causing the lenders to also lose money as fees are passed on to them.
Soon, payment dates are going to be matched with the borrowers pay day. This is an excellent solution. Prosper is going to target the payment date to match the date a borrower is paid from their jobs. This might not do a lot to lower default rates but will certainly lower the amount of 15 and 30 day late loans as borrowers wait for their next pay period to make a payment.
Posted by ProsperBlogger 4:29 AM 2 comments
Labels: Borrowing, Lending, Prosper News
Prosper’s a-gonna start suing
Prosper is planning to starting the process slowly, as of today, a total of 5 suits have been filed in California with more on the way once the process is smoothed out. It appears a total of 74 defaulted loans are planning to result in suits within the next month or so.
This is very good news for Prosper lenders who have endured a higher than average default rate. Other signs are starting to show progress by Prosper in this area which will improve relations with lenders and create a ‘tighter ship’ with borrowers more aware that defaulting on a loan could have more serious consequences than just a bad mark on a credit report and annoying letters and phone calls.
Posted by ProsperBlogger 4:19 AM 1 comments
Labels: Lending, Prosper News
It’s a good idea to send late borrowers a note
Tuesday, February 19, 2008
I’m treading on thin ice because lenders on Prosper have had their accounts suspended by taking this too far so if you do contact a borrower be careful. To be safe, never contact a borrower after the loan is in default. The legal limit here is that you are not allowed to make any attempt to collect a debt on Prosper’s behalf.
The terms of service state:
You should not contact delinquent borrowers directly. Prosper has a detailed delinquency schedule for borrowers, and any additional contact you have with a borrower may expose you to civil or criminal penalties for unlicensed debt collection. The language and tone you use when collecting a debt matter are important in the eyes of the law so what you might consider reasonable may in fact be illegal. If you were to accidently[sic] break the law you'd be putting yourself, your fellow lenders, and Prosper at risk of litigation.
What this means is you are allowed to contact your borrowers if they are just late. I have done this on two occasions now, and both loans have become current. One borrower replied almost instantly with a ‘don’t worry, payment in transit’ note which was nice to read. Not only did it remind the borrower that we are people but also allayed my fears of fraud.
Here is a suggestion for a note you can send, modify it to suit your needs, but consider doing it. The more people that contact late borrowers, the more likely they are to remain current. While it might not make a big difference, small differences are significant.
Hello,
I wanted to congratulate you on your recently funded loan. I was one of the winning bidders and am glad to be of assistance in fulfilling your request. Your loans metrics and reasons met my personal criteria for risk; it would appear it did for others as well.
I am writing to urge you to keep in mind that I and the others are all individuals, not banks or institutional lenders, and we are counting on your repayment. I’ve decided to take a leap of faith; Prosper has a significant number of defaults and delinquencies, especially later in the loan cycle. This is very damaging to the lenders portfolio and has caused many to pull their money out of Prosper in search of better returns.
Prosper is an excellent resource, I personally believe very strongly in the idea of community lending and want this concept to succeed. It takes both sides to make this work so please take note of your loans late status and rectify it.
It’s good to know you can turn to your peers again in the future and I know from experience it’s much, much easier to get funded once you have had success with Prosper. Wishing you luck and a successful transaction.
Posted by ProsperBlogger 6:57 AM 1 comments
Labels: Lending, Prosper Tips
Length of Employment Has Big Impact on Default Rates
Wednesday, February 6, 2008
It appears that yes, there is certainly a correlation. At all employment levels the rate of default drops. Default rates for people employed 10+ years is less than half of the rate of people employed for less than 6 months. Generally, people employed more than 1 year have a substantially lower default rate, but the best performance are those steadily employed for the longer period of time.
Personally, I had expected a higher disparity between the length of employment ranges but there is enough evidence to support the conclusion that people employed more than 10 years are the safest risk.
For any borrowers employed more than 10 years, you should make a point of this fact in your listing.
Posted by ProsperBlogger 6:47 AM 0 comments
Labels: Lending, Prosper Tips
Borrowers Need Longer and Better Descriptions for Better Chance of Funding
Tuesday, February 5, 2008
It’s been proven that the longer the description (within reason) the better the chances of getting funded are. As lenders, we want to know what the money is for and why you feel you are qualified for the loan. While many lenders on Prosper don’t care and just look at the numbers, most don’t.
There are a few reasons a short description is a turn off. First, it appears the borrower has something to hide. Second, it appears the borrower doesn’t really care about this listing implying they don’t care about paying it back. Next, lenders want to know if you have writing skills, this may sound ridiculous but its true: when something is very badly written it demonstrates a lack of care which implies no repayment. Furthermore, lenders just want a basic idea of who someone is, the way a borrower describes their needs tells lenders a lot.
As far as better descriptions go, there is certainly room for improvement. My biggest pet peeve is the “magical thinking” listing that seems to imply an alignment of the stars or some other metaphysical event that will cause Prosper lenders to flock to a listing. This attitude implies the loan will be repaid magically as well. A good description does 4 simple things:
- Clearly describe why the loan is needed
- Clearly describe your financial situation
- Explain any marks on your credit
- Clearly describe why and how you intend to pay
Posted by ProsperBlogger 5:15 AM 0 comments
Labels: Borrowing, Prosper Tips
Prosper Adds New Collection Agency: AmSher
Monday, January 28, 2008
AmSher is privately held company and is licensed in all fifty states. They have been around since 1939 in a few variations until 1986 when they started in collections.
Many of you might have seen the email announcement from Prosper. While AmSher charges a slightly higher fee for collections, my advice is to change your settings and give them a chance, at the very least to signal to FirstSource and Penncro that there is alot of dissatisfaction with their performance.
You can change this setting in the Account tab > Lending tab > on the bottom right.
Posted by ProsperBlogger 6:54 PM 1 comments
Labels: Prosper News
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