zcommodore

Since it is the time for Peace on Earth, I thought I'd post a few positive thoughts about Prosper.

Over the past year, anyone who wishes to be fair must admit that Prosper has made some very significant improvements to it's site.  Even though month-to-month the amount of loans hasn't changed much, the quality of loans originated has improved significantly and a lot of it has to do with changes Prosper has made IMO.

Bidding Guidance: At the end of October, Prosper added some numbers to the bid screen with Prosper-based default rates that act as a reference for lenders, especially newbies, to see how similar loans have done in the past for lenders.  Since that time, the median loan by credit grade has moved from the C/D range to the low B range.  That change right there will probably be one of the biggest factors that reduces the total number of defaulted loans as a percentage of all loans per month.

Additional Credit Information: In mid-February, coinciding with Prosper Days 2007, Prosper added a lot more credit information including amount delinquent, revolving credit balance, bankcard utilization, and income range.  There were a number of other items added as well but I feel these are the most useful of the bunch.  Shortly after these were added, the number of the highest risk loans being made started dropping.  Default rates (loans going 1-month late or worse) started going down as well.

Removal of Group Fees: At the end of May, Prosper eliminated the "Match Reward" for group leaders and started it's referral program to replace it.  In the middle of September, Prosper eliminated all group fees entirely.  These two changes put an end to some of the worst abuses of Prosper that a few sleazy people acting as group leaders had practiced.  Group leaders no longer had any incentive to simply "pump & dump" (fully fund a listing at maximum rate only to be completely outbid in the end) listings for borrowers.  Many times it appeared this was done only to collect group rewards.  If a few of those borrowers stopped paying, no problem since there were enough others who were paying to make up for it.  In the end, the lemnders who focused mostly on fully funded listings were left holding the bag.  It is my opinion that this has helped decrease default rates as well.  Unfortunately, there were a few "good groups" who did earn their fees who have closed.  Overall, this was a big plus for Prosper I believe.

Collections Improvement: It is very early in this process but I've started to see a bit of evidence that Prosper is working to improve collections.  Lenders have been asking for this for a long time and I believe there are some changes being made in the right direction so I don't see how anyone can complain about that.

Ease of Use: There aren't many options outside of Prosper for p2p Lending but from what I've seen, Prosper has the best user interface.  It is easy to search for listings based on specific credit criteria beyond interest rate and/or credit grade.  It is easy to set up a standing order to do auto-bidding if you like.  Part of my thoughts on this might be just because I've been using the site for well over a year but I've seen others mention some of these things as well.

There are other things I consider positive but these were the high points from my perspective.  Merry Christmas all.