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[Fred93]

Fred93 has again updated his blog.  This installment is an update to his late loan charts.
http://www.prospers.org/blogs/Fred93/2008/10/17/prosper_com_10_15_08_late_loan_stats_upd

Here's the meat...

[The_Cat]

So just at an eyeball you need what, a pay day rate of 100% plus, to make a profit at Prosper unless you are a loan picking savant.

[Xyrus]

Looks like a few of the early months may level off around the 40% mark, the newer lines look like their still heading skyward. Pretty soon, flipping a coin will be as good a judge at picking loans as anyone.

As always Fred, thanks for posting this info.

~X~

[NewHorizon]

Unfortunately, the lines had looked like they'd level off earlier too.  But of course they didn't.

Well, one thing's for sure.  They're not going to exceed 100% minus the percentage of PIF'd loans.   

[bamalucky]

I thought the study that Prosper was touting showed loans stop going late after month #10 

[Capital_Finance_Group]

I thought the study that Prosper was touting showed loans stop going late after month #10 

I know for a fact that that is not correct.

[onthefence]

Fred's graph is great to see how the entire prosper portfolio is doing.

I do think that rateladder's late graph is more informative to see how individual credit grades are doing.  To bad he hasn't produced an update since 7/23/08.

Here is his last one.

[xraider]

I thought the study that Prosper was touting showed loans stop going late after month #10 

That conclusion, by itself, shows that the authors should be stripped of any advanced degrees.

[Fred93]

I like radeladder's chart.  One shocking thing you can see there is that AA loans are going bad at about 4% per year.  I believe this is way beyond anyone's expectations.

This fact is wildly inconsistent with the Experian data, and any other data I have ever seen relating credit scores to loss.  Possible explanations include selection bias, or identity theft, or perhaps a variety of related things, like familial identity abuse, etc.

[ira01]

I like radeladder's chart.  One shocking thing you can see there is that AA loans are going bad at about 4% per year.  I believe this is way beyond anyone's expectations.

Yep -- and around 8% for A's.  I find that also to be shocking.

[onthefence]

This fact is wildly inconsistent with the Experian data, and any other data I have ever seen relating credit scores to loss.  Possible explanations include selection bias, or identity theft, or perhaps a variety of related things, like familial identity abuse, etc.

Keep in mind the Experian default rates are based on no more than a 20% DTI ratio.  Prosper lends far outside that range.  The other qualifiers are that the numbers are based off of only the loans that banks would be willing to accept.  Obviously banks don't accept current DQs, which prosperites do, and they watch the # of current inquiries.

[Fred93]

Keep in mind the Experian default rates are based on no more than a 20% DTI ratio.   Prosper lends far outside that range. 

It turns out that default rate is not a very sensitive function of DTI.

The other qualifiers are that the numbers are based off of only the loans that banks would be willing to accept.  Obviously banks don't accept current DQs, which prosperites do, and they watch the # of current inquiries.

Those are possible and quite believable explanations, however we have no way to test this.   Could be other stuff, like identity verification, or selection bias (ie characteristics of folks who self-select prosper), etc.   ...or the fact that the experian stats were for credit card accounts, which don't behave like prosper loans.  or...

In any case, the point I was trying to make was merely that 4%/year is really high for this highest credit score bucket.  Obviously survival requires careful use of other information.  Sufficiency of this other information is still open to question. 

[RateLadder_com]

I appreciate the compliment.  I will produce another version from yesterday's data.  I figured with the quiet period I should grab that data.  Just in case it ends up being some sort of inflection point.  I should be able to get it done and post by tomorrow.

[onthefence]

I appreciate the compliment.  I will produce another version from yesterday's data.  I figured with the quiet period I should grab that data.  Just in case it ends up being some sort of inflection point.  I should be able to get it done and post by tomorrow.

Cool!  BTW - It might be worth your effort to throw your URL on the graphic.  Stuff like that tends to get hot linked.  You might as well benefit with your url getting advertised on it too so people know where to look for more.

[RateLadder_com]

http://www.rateladder.com/2008/10/20/prosper-1-month-late-or-worse-curves-by-credit-grade/