http://www.prospers.org/blogs/ira01?tempskin=_atom&disp=comments b2evolution 2010-04-24T03:36:37Z ResearchPro [Member] http://www.prospers.org/blogs/ira01/2008/08/09/loans_with_very_high_rates_for_their_cre#c845 2008-09-04T07:18:26Z 2008-09-04T07:18:26Z ira01 [Member] http://www.prospers.org/blogs/ira01/2008/08/09/loans_with_very_high_rates_for_their_cre#c844 2008-09-04T05:50:56Z 2008-09-04T05:50:56Z http://www.lendingstats.com/loans?keyword=&dtiLow=0&dtiHigh=-1&loanAmountLow=0&loanAmountHigh=25000&_rs=1&startDate=2005-11-01&endDate=2007-12-31&accountVerified=&homeOwner=&automaticFunding=&submit=Generate&sort=lenderRate&sortDirection=DESC]]> ResearchPro [Member] http://www.prospers.org/blogs/ira01/2008/08/09/loans_with_very_high_rates_for_their_cre#c843 2008-09-04T01:19:26Z 2008-09-04T01:19:26Z And of course, making an example with a dosen of mistaken lenders to prove something is very statistically significant approach. Hmm...
Also, I should mention that I didn't mean 35%/25K/AA-A literally, you know... No need to spell out the rates for me after you have set the limit (18%+, 22%+) in the original text.

PS I would be greateful if you show me the link to lendingstats data you have used.]]> ira01 [Member] http://www.prospers.org/blogs/ira01/2008/08/09/loans_with_very_high_rates_for_their_cre#c842 2008-09-03T23:24:23Z 2008-09-03T23:24:23Z
Second, one of the points of my original post wasn't that it was "35% 25K" AA/A loans that were dangerous. To the contrary, as I noted twice above, only 2 of the 8 bad AA loans were for $25K, 1 was for $20K, and the other 5 were $15K or less (and 1 was a mere $4K).

Moreover, none of the 8 bad AA loans was for 35% -- the highest rate was 29%, and the second highest was "only" 22%. Five were 20% or less.

As for my "assumptions" you quoted in your comment, I stand by them based upon my 18 months experience with Prosper and my very active participation in Prosper's former forum and in prospers.org. Of course, only time will tell. Maybe these lenders have found the secret to separating out the 68% of high-rate AA loans that haven't gone 2-months late or worse already from the 32% that have. I truly hope so. But I strongly doubt it.

We've seen inumerable newbie lenders on the forums in the past who show up proclaiming that they have Prosper all figured out and that they are going to kick major ass at lending. Almost invariably, they don't. For an oldie but goodie, check out http://www.prosper.com/lend/listing.aspx?listingID=113206. This blender titled his own March 2007 listing "Prosper's #1 Rated Lender Looking for More," and stated that with an estimated ROI of 27.45%, he was #1 out of almost 4,000 lenders with >20 loans and an average loan age >1 month. He claimed that his "stringent qualifiers" before he loaned was "what has placed me at the top." His current estimated ROI is 4.19% (and it used to be even worse). He hasn't bid since July 2007. ]]> ResearchPro [Member] http://www.prospers.org/blogs/ira01/2008/08/09/loans_with_very_high_rates_for_their_cre#c841 2008-09-03T20:07:50Z 2008-09-03T20:07:50Z I said that I question your assumptions and judging of people's portfolio plans as "poor" by finding a single weak point, probably not the most influencial.
Here are the quotes:
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Undoubtedly, these newbie lenders think they are funding "low-risk" AA loans, and are no doubt overjoyed with the extremely high interest rates of these loans. They are going to be in for a very rude awakening in the future.
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whose oldest loan is only 44 days, yet he/she has already dumped almost $50K into Prosper.
***
Someone ought to do these people a big favor and invite them to prospers.org in a hurry.
***]]> ira01 [Member] http://www.prospers.org/blogs/ira01/2008/08/30/finally_a_realistic_though_narrow_articl#c840 2008-09-03T18:40:12Z 2008-09-03T18:40:12Z http://www.prospers.org/forum/prospers_response_to_fool_article-t9179.0.html;msg148715#msg148715.]]> ira01 [Member] http://www.prospers.org/blogs/ira01/2008/08/09/loans_with_very_high_rates_for_their_cre#c838 2008-09-03T05:25:41Z 2008-09-03T05:25:41Z 18%) AA's originated from Prosper's inception through the end of 2007 are already 2-months late or worse (which basically means that they all probably have or will default, since very few loans come back from 2-months late). That's a fact. And it is horrible performance for AA loans. Moreover, some of these loans aren't especially old yet, so presumably there will be additional delinquencies with time. Also, very few of these loans were especially large, so it isn't $25K loans that ruin the performance for the whole group. If you could explain yourself further, I would be happy to respond.]]> ResearchPro [Member] http://www.prospers.org/blogs/ira01/2008/08/09/loans_with_very_high_rates_for_their_cre#c837 2008-09-03T02:48:33Z 2008-09-03T02:48:33Z