zcommodore

Last night, Prosper had a new update.  There were a number of changes but few of them do much for me and a number of them I think are bad.  I haven't done a complete survey of all the changes but I thought I'd highlight a few of the changes and add my thoughts.

Ended listings no longer available.  I think I understand why this change has been made but I don't like it.  I've spent a lot of time researching loans/listings to see what other lenders are doing right/wrong based on extended credit information that was available to lenders.  Now I can't see what that information is anymore so I can't do that research anymore.  Additionally, if a listing I had previously bid on but get outbid or it ends unexpectedly, I would like to be able to see what happened.  If the listing got cancelled or withdrawn, then I might want to see if I can find that out.  I don't necessarily know the borrower's ID and if I do find it but the borrower got suspended, there is no way I can find out what happened.  This is just a very poor implementation to fix an unknown problem.

36% interest rates.  I already mentioned this in a previous blog.  After I posted it, I did a bit more research on ericscc.com.  I found that there were a total of 68 loans on Prosper at 30% or higher.  Of those, only 22 are current or paid.  The rest have gone late(7), defaulted (34 or 50%!) or were repurchased/cancelled(5).  As I said before.  This is a very bad idea.  If a borrower can't get a loan at 29% due to bad credit, it's unlikely they'll be able to manage a loan at 35% either.

2nd loans for borrowers.  I'm somewhat ambivalent about this.  If a borrower has a business and has been successful with a small loan for expansion, I can see how another loan might help them grow further.  On the other hand, if a borrower has gotten a $10K loan for debt consolidation and run up the cards again and wants another $10K loan, then that's not good.  Lenders need to be very careful about bidding on 2nd loans in my opinion.

Authenticated API.  I know nothing about Prosper's API but I think I'm going to have to look into this more.  It appears that now I can do research using extended credit data using this interface.  If this is the case, it may help alleviate some of the problems the other change regarding not being able to view earlier listings caused.

Lender servicing fee.  It's nice that lenders don't have to pay any servicing fees on AA borrowers but the fact that A grade borrowers will have a 1% fee (up from 0.5%) should easily make up for that change on Prosper's end.  There are more A grade loans than AA loans so it is a positive change for Prosper's bottom line.  I have yet to get an AA grade loan simply due to the low returns on most of them.  I may have to look into bidding on a few more of those now though.