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[onthefence]

AFAIK, Chrsfs is just taking a long time to detox from the Kool-Aid.

It will take a while.  He has only had one default so far
http://www.lendingstats.com/lenders/Chrisfs 

[cowdog]

Even limited intelligence can figure out 17.87% one month late+ is a problem.

That is just the start though... with another 3.17% already in the late pipeline, that 17.87% is going to hit 20% soon enough.

 

[Urbi_et_Orbi]

LendingStats, which tends to be optimistic, shows Chrisfs with an estimated ROI of 0.90%.


Not sure he's so busy cheerleading.

[gelt4u]

Did I hear somewhere that even the secondary market won't fix this problem -- 'cause its gonna be limited to loans that are current?

I certainly hope not.

I'm sure many would like to dump their losers, and, if the price were low enough, I am sure others would buy.  It seems that Prosper would be missing a lot of income by excluding sales of lates.

[ira01]

Did I hear somewhere that even the secondary market won't fix this problem -- 'cause its gonna be limited to loans that are current?

I certainly hope not.

I'm sure many would like to dump their losers, and, if the price were low enough, I am sure others would buy.  It seems that Prosper would be missing a lot of income by excluding sales of lates.

I can't remember whether this is the case or not, but allowing resale of lates opens up a lot of potential fraud.  Borrower takes out a $25K loan and skips the first payment (and maybe the second one too for good measure).  Lenders figure this loan is toast, list it on the secondary market and Borrower's friend comes along and buys a big chunk of it (let's say half of it was put up for sale) for 50 cents on the dollar.  Then Borrower makes a big payment to get current, and resumes regular monthly payments.  Borrower and Friend split the roughly $6K they just stole from the original lenders, and the only blemish Borrower has on his credit report is 1 30-day (or 60-day) late.  Indeed, Borrower could PIF the loan and then repeat the whole process again.  Or maybe Friend will be the borrower this time, and the original Borrower will be the secondary market purchaser.  Think crooks won't figure that out?

[gelt4u]

Did I hear somewhere that even the secondary market won't fix this problem -- 'cause its gonna be limited to loans that are current?

I certainly hope not.

I'm sure many would like to dump their losers, and, if the price were low enough, I am sure others would buy.  It seems that Prosper would be missing a lot of income by excluding sales of lates.

I can't remember whether this is the case or not, but allowing resale of lates opens up a lot of potential fraud.  Borrower takes out a $25K loan and skips the first payment (and maybe the second one too for good measure).  Lenders figure this loan is toast, list it on the secondary market and Borrower's friend comes along and buys a big chunk of it (let's say half of it was put up for sale) for 50 cents on the dollar.  Then Borrower makes a big payment to get current, and resumes regular monthly payments.  Borrower and Friend split the roughly $6K they just stole from the original lenders, and the only blemish Borrower has on his credit report is 1 30-day (or 60-day) late.  Indeed, Borrower could PIF the loan and then repeat the whole process again.  Or maybe Friend will be the borrower this time, and the original Borrower will be the secondary market purchaser.  Think crooks won't figure that out?

good point

[mothandrust]

The first part of your second paragraph is incorrect, because Prosper can't just declare a debt "totally worthless," which is the standard for bad debt, when it clearly is worth something given the (admittedly low) offers by the JDB bidders.  

Won't most stock brokers buy from their customers worthless stock for like a $1 so their customers can then take the loss?

What if Prosper made a standing offer to buy any bad debt for $0.01 on the dollar, they could even then charge $0.01 on the dollar for the service to make it a wash.  So if you choose to take the full loss (especially within the year), you could.  If Prosper really thinks they could get more for this debt in the future, it would even be profit stream for them. Only issue is Prosper could hold indefinitely and continue to artificially inflate returns.

Most stockbrokers will do that, but hopefully none will say, "Gee, I asked some of my clients and no one was willing to bid more than 1.5 cents per share on this Microsoft stock of yours.  I got 8 bids and that was the highest...sorry, can't tell you who bid what...confidentiality you know.  Naturally, I was looking out for you best interest, so how about I personally buy them for 3 cents a share and take them off your hands?"

Prosper has, for heaven's sake, an electronic platform for auction bidding on debt instruments!

Why not put up the Junk Debt auction live on the site so lenders can see the process is transparent and competitive?

ETA: Changing title of thread back to "Fuller"...someone was playing around with the spelling.