Prosper.com - Its a Deadbeats' Party

[Fred93]

Fred93 has updated his blog today, with musings about PCOCT, the once-heralded "Post-Charge-Off Collection Techniques" Prosper has been using to collect on our loans, and the recent revelations about what's really inside that black box.

http://fred93blog.blogspot.com/2009/08/prospercom-its-deadbeats-party.html

[Beerbud1]

Thanks Fred, good reporting and very accurate.

[Mtnchick]

I *heart* Fred.

Bravo, again!

[bamalucky]

Exellent use of the word pile.

I've never used pile without it's accompanying 2 words when referring to anything Prosper related before.

[ira01]

As usual, great work Fred.  The only thing you forgot to point out is that Prosper's "settlement strategy" is also a clear breach of the LRA, which expressly prohibits Prosper from modifying loans' monthly payments, interest rates, or principal. 

[xraider]

Thanks, Fred.  I can't imagine anyone would donate loan to Prosper after reading your blog!

[LoanChimp]

Great reference to Oingo Boingo    : http://www.youtube.com/watch?v=_UbGtjnluyY

[Tokyo Joe]

Great reference to Oingo Boingo    : http://www.youtube.com/watch?v=_UbGtjnluyY

Still remains one of the very most popular songs ever in the Greater Los Angeles area.

[TotoMMB]

What? You didn't get the memo? Prosper borrowers have entered a quiet period in terms of payments.

(Sorry if this is a rehashed joke).

I think I found the real PCOCT procedures:

1) Pray
2) Stare at phone, hope it rings
3) Laugh
4) Cry
5) Realize Prosper has very little to loose*
6) Laugh harder and give the finger to lenders
7) Repeat

* Yes, I spelled this wrong in honor of all ppl who post (here and elsewhere in the world) and can't figure this out...

[Senator]

* Yes, I spelled this wrong in honor of all ppl who post (here and elsewhere in the world) and can't figure this out...

I see that alot*

* ditto

[bankomatic]

This is how I think prosper should solve the deadbeat problem. Lenders should be owners of the loan portions they bid on and a secondary market has to exist for lenders to sell their portions. When a loan goes default/late a lot of people may be interested in cutting their losses and they could sell their loans on the secondary market. In which case someone could come in (either an individual or a collections company) and buy up the late portions on the cheap. If you hold enough portions to total say $500 dollars AND the borrower is in default then prosper should release the information the borrower provided to prosper to you so that you can persue collections yourself for the portions that you hold. In this way prosper doesn't have to headache themselves in this collections business AND someone who is motivated to collect may actually take over. I am a bit surprised how poorly prosper has done when it comes to collections, but they shouldn't even be doing collections in my opinion. Let the lenders sell their loans or do their own collecting and the problem can be solved that way. In my opinion prosper business model should revolve around servicing the loan, and providing a market for them, not around collecting money from deadbeats, that's an expensive process and not something they should be involved in.

You are welcome prosper, feel free to send me a check  

[ira01]

This is how I think prosper should solve the deadbeat problem. Lenders should be owners of the loan portions they bid on and a secondary market has to exist for lenders to sell their portions. When a loan goes default/late a lot of people may be interested in cutting their losses and they could sell their loans on the secondary market. In which case someone could come in (either an individual or a collections company) and buy up the late portions on the cheap. If you hold enough portions to total say $500 dollars AND the borrower is in default then prosper should release the information the borrower provided to prosper to you so that you can persue collections yourself. In this way prosper doesn't have to headache themselves in this collections business AND someone who is motivated to collect may actually take over. I am a bit surprised how poorly prosper has done when it comes to collections, but they shouldn't even be doing collections in my opinion. Let the lenders sell their loans or do their own collecting and the problem can be solved that way.

You are welcome prosper, feel free to send me a check 

Although a good idea, anyone who bought up pieces of a late loan would be considered a debt collector, and would probably have to be licensed.  So no individuals would be able to participate, except in a few cases such as a state that didn't require licensing for less than a certain number of loans (like New Mexico, IIRC, from Travellers' attempt to purchase a defaulted loan from Prosper for twice the amount Prosper accepted from a JDB instead). 

Also, I don't think this plan would work with Prosper 3.0, since Prosper now owns the entire loan.

[Mtnchick]

Also, I don't think this plan would work with Prosper 3.0, since Prosper now owns the entire loan.

It doesn't seem that right now they need to worry about a massive amount of loans on 3.0. What would be the possibilities of allowing previous lenders to "own" their portion of the loan for debt collecting?

[bankomatic]

This is how I think prosper should solve the deadbeat problem. Lenders should be owners of the loan portions they bid on and a secondary market has to exist for lenders to sell their portions. When a loan goes default/late a lot of people may be interested in cutting their losses and they could sell their loans on the secondary market. In which case someone could come in (either an individual or a collections company) and buy up the late portions on the cheap. If you hold enough portions to total say $500 dollars AND the borrower is in default then prosper should release the information the borrower provided to prosper to you so that you can persue collections yourself. In this way prosper doesn't have to headache themselves in this collections business AND someone who is motivated to collect may actually take over. I am a bit surprised how poorly prosper has done when it comes to collections, but they shouldn't even be doing collections in my opinion. Let the lenders sell their loans or do their own collecting and the problem can be solved that way.

You are welcome prosper, feel free to send me a check 

Although a good idea, anyone who bought up pieces of a late loan would be considered a debt collector, and would probably have to be licensed.  So no individuals would be able to participate, except in a few cases such as a state that didn't require licensing for less than a certain number of loans (like New Mexico, IIRC, from Travellers' attempt to purchase a defaulted loan from Prosper for twice the amount Prosper accepted from a JDB instead). 

Also, I don't think this plan would work with Prosper 3.0, since Prosper now owns the entire loan.

Well, even if it's only companies who can persue collection, let them bid on the loans in a competitive auction. I think that way lenders get something for those loans and deadbeats are hounded by collectors like they should be.

[ira01]

This is how I think prosper should solve the deadbeat problem. Lenders should be owners of the loan portions they bid on and a secondary market has to exist for lenders to sell their portions. When a loan goes default/late a lot of people may be interested in cutting their losses and they could sell their loans on the secondary market. In which case someone could come in (either an individual or a collections company) and buy up the late portions on the cheap. If you hold enough portions to total say $500 dollars AND the borrower is in default then prosper should release the information the borrower provided to prosper to you so that you can persue collections yourself. In this way prosper doesn't have to headache themselves in this collections business AND someone who is motivated to collect may actually take over. I am a bit surprised how poorly prosper has done when it comes to collections, but they shouldn't even be doing collections in my opinion. Let the lenders sell their loans or do their own collecting and the problem can be solved that way.

You are welcome prosper, feel free to send me a check 

Although a good idea, anyone who bought up pieces of a late loan would be considered a debt collector, and would probably have to be licensed.  So no individuals would be able to participate, except in a few cases such as a state that didn't require licensing for less than a certain number of loans (like New Mexico, IIRC, from Travellers' attempt to purchase a defaulted loan from Prosper for twice the amount Prosper accepted from a JDB instead). 

Also, I don't think this plan would work with Prosper 3.0, since Prosper now owns the entire loan.

Well, even if it's only companies who can persue collection, let them bid on the loans in a competitive auction. I think that way lenders get something for those loans and deadbeats are hounded by collectors like they should be.

I'm guessing there wouldn't be much interest.  Certainly it appears that companies weren't falling all over themselves to bid on the defaulted loans for a JDB sale; I doubt there would be a whole lot more interest for less delinquent paper.  In any event, I think Prosper CAN'T sell individual pieces of Prosper 1.0 loans (unregistered securities), and as Mtnchick noted, there isn't much Prosper 3.0 paper around (nor does it look like there will be anytime soon).