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[Urbi_et_Orbi]

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/19/AR2009091900124.html

The sites typically vet borrowers by pulling their credit reports and requiring minimum credit scores. But the loans do not come without some risk. Lending Club's borrowers have a default rate of about 3 percent. Prosper's default rate is about 5 percent. If a borrower misses payments, the sites report them to credit bureaus. Officials at the sites point out that credit card default rates are in the double digits.

Here's how you can contact the author:

http://projects.washingtonpost.com/staff/email/nancy+trejos/

[bamalucky]

perhaps her sarcasm smiley isn't displaying correctly

[Faithful_Steward1]

Another mindless reporter parroting something he heard (without citing his source) rather than do a small amount of research. Are we surprised?

[bamalucky]

EVERY newspaper or TV story I have been directly involved in got at least some critical info wrong..

[ira01]

I sent her the following email:

Hi,

I was floored by your statement in your P2P piece that the default rate on Prosper is 5% -- did you do any investigation at all?  The real default rate on Prosper is approximately 40%.  See http://fred93blog.blogspot.com/2009/09/prospercom-092009-late-loan-stats.html.  This blog uses Prosper's own publicly available data to create its graphs and analysis.

Even the SEC noted this in a letter to Prosper during the registration process -- "the SEC wrote, "...we note analysis of the prosper loan originations posted by prosper members which shows loans that are not paying according to their terms approaching 40% for your oldest tranches." -- http://www.sec.gov/Archives/edgar/data/1416265/000000000009049230/0000000000-09-049230-index.htm.  Interestingly, the SEC cited fred93's blog that I linked you to above in its letter to Prosper. 

Prosper's own performance page shows about $39 million in charged off principal, out of about $180 million in total originations -- that means that about 22% of every dollar ever lent on Prosper has already been lost -- with another $5.5 million in various degrees of lateness (from 15 days late through 119 days late). 

This dismal performance is why overall lender returns on Prosper are abysmal.  As you can see here -- http://www.ericscc.com/stats/lender-return-distribution -- both the mean and the median ROI (return on investment) for all Prosper lenders are NEGATIVE.  That means that not only is the average (or median) lender not getting ANY return on their investment, they aren't even getting all OF their investment back.

Please let me know if you are interested in writing a REAL article about Prosper -- there is an unbelievable amount to say, and I (and many other very long-time Prosper lenders) would be happy to provide you with information.  You should also take a look at www.prospers.org, the largest independent forum about Prosper.  Unfortunately, most articles about Prosper have been puff-pieces that just reiterate the PR blather spouted by Prosper's marketing department. 

Ira.

[112233]

is 3% for LC correct?. Although I dont follow them closely, that number sounds suspect as well.

[triad]

My note was short.  I pointed her to page 2 of the SEC letter (the 40% deal).

I stated the obvious.  To break even, the borrower has to make 31 loan payments.  Most successfully make the first 12, so you can't use the first year as an indicator.

I then gave her my experience (simplistic as it is):

6 loans.
1 defaulted after 8 payments.
2 stopped paying at 18 months.
2 have struggled, both now make manual payments.  One is current the other is in collections, but *is* making payments.  
1 has made all payments on time, but still has 19 to go.

Even if the last three pay off all they owe, I will lose 5% of my money, not make 10-15%.  I now understand why credit cards charge 15-30%!

I decided to leave off the Will Rogers quote....

[bamalucky]

Here's mine

5% default? Seriously,did you do any investigating at all?

Where did you get that info? Prosper is being sanctioned by the SEC right now,so I would be very interested if they were still trying to tout those lies.

Do you know that it's actually around 40% per Prosper's own website statistics.


How can you call yourself a journalist because you did ZERO fact checking.

[bamalucky]

Can we move this to the lobby because this needs to be made public in case her editor wan'ts to drop in & read

[DCS]

second for lobby

[Flying Missle]

When e-mailing her, you should also cc the editor of the section she writes for at the very least, if not the senior paper editor.

This is not a matter of merely a misprint (i.e. 34 vs. 43), this is a reporter who did no research and took all the information from Prosper (apparently) at face value.

Newspapers continue to tell us they should by kept around because they perform more in depth reporting.... whatever.

[Urbi_et_Orbi]

https://twitter.com/nancytrejos

[pioneer11]

Sent her a little tweet.

[divindj]

this soooooo doesn't surprise me... newpapers always report lies, just look at any "report" on government or environmental dogma errr science... the stupid sheeple reporters simply parrot what they're told without ever fact-checking anything...

can't cure stupid... expect even more lies errr "inaccurate articles" to be published about Prosper as their hunt for cash to stay-afloat becomes more and more desperate...

[triad]

The other risk is if the article gets picked up by one of the wire services.

Last year, Fortune published an article that erroneously said gifts were tax deductible and even though the magazine quickly issued a correction, the original piece continued to see print for a few weeks.