I think you are missing at least three salient points. First, while it might have made sense for Prosper to have leeway to make these sorts of determinations, under the legal agreements that it wrote and that it and each lender agreed to, it doesn't. Prosper has no more right to ignore its legal obligations than the deadbeat borrowers do.
Don't disagree. Make Prosper turn the deadbeats over to collections and get nothing. Works for me... Let's continue to do what doesn't work. See my other post on the legal agreements.
Second, Prosper has proven itself -- MANY times -- wholly incapable and/or unwilling to act in lenders' best interests, or to place lenders interests (or Prosper's legal duties to lenders) above the interests of Prosper and its owners/management. That is why, I think it is safe to say, few if any lenders here would give Prosper ANY discretion in making these determinations. Because if Prosper thinks that there is any possible way to act in a way that benefits itself, even a little (and even at great cost to lenders), that is the path Prosper will choose. For example, if Prosper figures that it is beneficial to Prosper's PR efforts to report more loans as "current" (even though they aren't), it will do so regardless of whether lenders pay the price.
To facilitate that, it wouldn't surprise me at all if Prosper starts reporting these "payment plan" loans as "current" not only to the CRAs, as it is doing now, but on its performance page as well. Similar to how Prosper used to fraudulently (IMHO) manipulate its default statistics by only counting loans that it had sold to JDBs as "defaulted" even after Prosper stopped having JDB sales (in another breach of the LRA) -- thus, there were a slew of loans that were as much as 10 or 12 months past due that Prosper still wasn't including in the default statistics (which allowed Larsen, et al. to falsely claim absurdly low default rates -- often half or less than the real rate -- to any reporter that would listen).
I would fully expect that they would reflect the results most favorably to themselves possible, and that is reflected that in my statements above. If it benefits me, even marginally, then I will take it. Most people know that most businesses in the country today will spin any results, good or bad, to make themselves look most favorable. Wouldn't you? It is a matter of survival and a paycheck for the workers there.
I will take a bird in hand today, for the hope of two later from Prosper, or worse yet the collection agency...
Third, you fail to look at the bigger picture. Sure, properly managed payment plans might get lenders more money on THOSE loans. But, in the aggregate it might very well still COST lenders more money overall, because borrowers that are current (and who would have remained current) will choose to take lower payments just because they can (and because there is no downside if Prosper is going to falsely report late loans as "current"). This risk is exacerbated by Prosper's admission that it doesn't do much (if anything) to verify borrower claims of hardship.
I see that point quite clearly. However, if a borrower is not going to maintain a current status and has in fact gone to 30 days past due, the likelihood that they will not eventually default on this loan shrinks dramatically. So again, I would prefer (on each loan that is past due) that there be some flexibility on Prospers part to collect something, anything at all, when the words out of the borrowers mouth is "I am not going to pay this loan since I cannot afford the payment.".
Yes as I stated earlier this is the area I would prefer to see Prosper wait a longer period before the offer is made (say 60 days), but the LRA ties their hands in that (hard to wiggle out of that 30 day requirement).
I would also add here that stating that there is an increased likelihood of current loans taking up this option is like saying that because you know credit card companies will waive fees and reduce interest rates to those that call, it should not be offered to anyone. That is rather narrow minded, and not in our best interest, in my opinion. I think Prosper having an ability to suggest (notice I did not say accept) a payment plan on those non-performing loans is in all of our best interest.
WFT