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[Shenandoah]

If those loans were profitable, why are they being dumped?

I am not saying these are good loans or bad.  But the mere resale of them doesn't make them bad.   

It is very common business practice to factor accounts receivable to accelarate a business's cash in the door.

You have just submitted additional proof that you are an idiot.  CPS is clearly dumping bad accounts and not just factoring their AR to improve their cash flow situation.

If you read everything about CPS, it says they provide indirect financing for loans.
That means they never intend to keep their loans in the first place.  They probably originate most loans indirectly, and have a limited amount of cash to close immediately and resell the loan later.  That requires frequent turnover of cash (because they don't keep a lot in reserve) so that they can originate more loans, which means they sell the loans they make.  They intend to make money on origination fees and the sale of the loan, rather than the interest of the loan.  It's just a different business model, and not uncommon in the lending world.


IMO, the resale of the loans isn't the problem - it's the fact that these loans are made to "purchasers with past credit problems, low incomes or limited credit histories" in the first place (also from the CPS documentation).

[NewHorizon]

And remember, practically none of us are familiar with CPS.  Yet we're taking their word about the creditworthiness of the borrower and the recoverability of the value of the collateral should the loan go bad.

I'm seeing parallels between this and what caused our current world-wide economic crisis.  Have we learned nothing?

[xraider]

If CPS's loans were profitable they wouldn't be dumping them on unsuspecting Prosper lenders.   

Well, that's not necessarily true, but probably is true in this case. Another reason to dump loans is because they can make money on origination fees etc, and by reselling the loans they get quick turn around on capital so that they can originate more loans. However, the loans seem to be made to people with bad credit.

Look at the loans.  Bad credit, used cars, horrible LTV.

What will happen the first time these stinkers need major repairs? 

[Beerbud1]

And remember, practically none of us are familiar with CPS.  Yet we're taking their word about the creditworthiness of the borrower and the recoverability of the value of the collateral should the loan go bad.

I'm seeing parallels between this and what caused our current world-wide economic crisis.  Have we learned nothing?

I beleive that CPS's clients are much like Prosper 1.0's clients in the C, D, E, and HR clients were, mostly bad and will eventually default. I believe the numbers will hold true as they do now, up to 40% will default. That begs the same question before which is Who represents the  40% that will default and who represents the  60% that will pay right to the end? Your guess is as good as mine and too risky to take the chance.

[Oak_Hill_Fire]

+1 (and I almost never do that).