While the new S1 is a very professional effort, and will probably be approved, it contains powerful weasel-words. Some examples follow.
We all know that Prosper's lame efforts at collections are a very serious problem. I described it as a symptom of the more general "principal/agent" problem in my ancient open letter to prosper. Have they made any effort to do something about this? No. In fact, they have instead institutionalized the idea that doing almost nothing is ok, by explicitly saying in the S1 that they will do almost nothing!
We are obligated to use commercially reasonable efforts to service and collect the borrower loans, in good faith, accurately and in accordance with industry standards customary for servicing loans such as the borrower loans.
Ok, gee, that's a reasonable start. "commercially reasonable efforts"... wonder what that means. Don't have to wonder long. They define it pronto.
If we refer a delinquent borrower loan to a collection agency on or after the 31st day of its delinquency, that referral shall be deemed to constitute commercially reasonable servicing and collection efforts.
Whoa! Just the act of sending the loan to a collection agency satisfies their entire obligation with regard to collections! How conveeeenient. They don't take any responsibility for selecting, paying, checking up on, managing the collection agency, or otherwise ensuring that anything at all is actually done. Later they can say "Hey, we refered that loan to the XYZ collection agency. If they didn't do anything, like they didn't call the borrower or anything, hey that's not our fault. We satisfied our obligation as specfied in the prospectus."
That's really weak.
I think the next sentence may have been an attempt to do something right, or maybe not. It isn't clear because of the poor (ambiguous) english. This sentence should be used as an example in a law school class on how to draft ambiguous sentences.
Furthermore, we may, at any time and from time to time, amend or waive any term of a borrower loan, and may transfer, sell or cancel any borrower loan that is more than 120 days delinquent without the consent of any holder of any Notes of the series corresponding to such borrower loan.
Do you think the "120 days" applies to both the red and blue parts of this sentence, or just the blue part? If it applies to both, it is good. If it applies to just the blue part, then they have reserved the right to change any terms of any loan at any time, which is not so good.