Debt Sales and Charge-off Collections – Status and Plans
"So what’s happened in the past 15 months?"
http://blog.prosper.com/2009/08/10/debt-sales-and-charge-off-collections-–-status-and-plans/Doug Fuller runs down the debt auctions and reviews the alternative efforts they used (and will use) to get lenders the best recovery on our deadbeats.
"Perhaps most importantly, the new legal structure that Prosper adopted as part of the registration process gives us the flexibility to pursue a wider range of collections. Starting now, our plans relative to charged off accounts are as follows:
1. We continue to monitor the distressed debt market and to see if a sale is a possibility.
2. Until such time that the expected sale price exceeds the projected net recoveries for the first 12 months after charge-off, we are not going to sell.
3. We are going to place the accounts with a collection agency that specializes in charged-off accounts (the first agency has been identified and the contract is in the works).
4. The agency is going to employ a settlement strategy with settlement authority based on age, charge-off balance and current credit score. For post charge-off accounts, this is the best strategy to maximize total dollars recovered."
"In order to maximize dollars to lenders, Prosper is going to waive any Failed Payment Fees, Bank Draft Fees or Servicing Fees that would come to Prosper in our normal payment hierarchy."
Agreeing to the following clause is a bit more palatable now, I'd say. Gotta have it in there. Now when your borrower screws up, Prosper can now do whatever it takes to wring 'em completely dry and drop whatever falls out, into you lap....
"Prosper and any third-party servicer servicing a borrower loan shall have the right, without your consent, at any time and from time to time and subject to the servicing standard set forth in this Section, to change the payment date or reduce the principal amount or the rate of interest or the place and manner of making loan payments on a borrower loan, or amend or waive any other term of such borrower loan, or charge off any borrower loan that Prosper or any third-party servicer servicing the borrower loan deems uncollectible."