I read through a prospectus on Prosper's website.
http://www.prosper.com/downloads/Legal/Prosper_Prospectus_2009-07-13.pdfI think I figured out a source for the 5% claim--AA rated loans only on page 61.
On page 17, psychobabble.
On page 24, conveniently picks loans from 2007 so it only shows default rates for 2 years, but even then at 12 months, E and HR are well past 5%.
On page 51, even B grade loans are expected to have annual loss of 5.99%.
On page 61, 178 defaults for grade AA / 3526 total loans for grade AA originating for November 2005 to October 2008 gets you 5.05% using $, it's 6.7%
So:
5.0% for grade AA For money, it's 6.7% (I used unpaid principal divided by total loaned)
9.7% for grade A and 11.5%
13.4% for grade B and 15.2%
17.5% for grade C and 19.4%
20.8% for grade D and 21.5%
32.3% for grade E and 31.6%
43.8% for HR and 39.6%
And, these are by loan cateogry, not by age. Elsewhere, Prosper admits that loans that are still being paid on can make the numbers go higher.
And, yes, I'm angry that the now reprinted article is claiming a mere 5% with no qualifier for age of loans or grade.
Using these number, I should have expected 15% of my 6 loans to stop paying, not the 50% I have actually had.
Fortunately, I started slow at $100 a month pin money and found the boards right at month 4.
Credit card companies deserve their 30%.