I will try to explain my position a little differently. Since there is still misunderstanding I will blame it on my poor attempts so far, so I will try to find another avenue of approach.
The Borrowers Loan Agreement and the LRA, for that matter almost any contract you care to mention, are a give and take document. A tit for tat if you will, given this action there will be this reaction.
These Prosper agreements are no different. We lenders promise to loan to the borrower X dollars and they then promise to pay back said amounts over time with interest on a certain schedule. Action / reaction. Pretty simple.
The borrower makes payments as agreed and we do not take remedies as allowed to us. Again simple action/reaction, although a negative reaction (to take no action is still an action).
Now if the borrower takes a different action “does not pay as the note states”. Prosper as our administrator has a couple of reactions (remedies, as stated in the Loan & LRA Docs) that they can (or even read that “must”, I do not care) eventually take. Those for our argument are;
1) Wait 30 days then decide within what timeframe to turn this Note over to collections. They only have to turn it over sometime after 30 days (not at 31 days, nor 32 days, or anything until some might argue 120 days. This is the reason I think Prosper put a 3-4 month clause in for this catch up agreement). Yes they have had a standard business practice of turning most of them over fairly soon after the 30 days (especially if there has been no borrower communications), but these documents do not dictate that. As our agent Prosper makes that call.
Side note: The problem in the past was Prosper was not making that timely call, now they are and we are still complaining.
2) Report the borrower to a CRA. While this is not dictated by the LRA nor loan docs it is a fairly standard business practice to do so, and is a stick that Prosper can bring to bear. But they are not required to, nor are they required by a document to report it a certain way.
Typically if the borrower continues to communicate and make efforts (has a conscience) to pay his debt the administrator/lender will report that debt as “as agreed”, which is the same as saying “current”. Nothing unusual, nor wrong, heck my business does the same. Difficult for other lenders to rely on though, but not wrong. You do not want to alienate your borrower, nor encourage him not to continue making acceptable efforts to pay down his obligation. The borrower is still your customer, if you will, until he has paid off this note. So you should be willing to do whatever it takes to keep him paying you until it is paid in full. Especially if your responses are limited like it is in an unsecured note.
As many here have stated, once the loan is turned over to collections the borrower has nothing more to lose, might as well stop paying. That is a big part of the reason for such a miserable return from a collection agency. Other threads here have even complained about Prosper turning them over when the borrower was making partial payments (talk about talking out of both sides of your mouths).
3) Sometime AFTER 120 days Prosper is required to sell this loan and recoup whatever they can for the lenders. Again, not 121 days, nor 122, nor any unreasonable period actually.
That is it; that is the grand extent of the reactions. Prosper has no other options under the agreement, and in fact is not doing anything other than these things with this program.
Of course Prosper has a duty to us to encourage, cajole, beg, plead, place any word you want to here (like say “to agree to”), to get the borrower to pay as per the terms of the note. But the borrower is in control of that piece of the transaction not Prosper. Prosper can only control the reaction, not the action.
Neither the borrower nor Prosper is disagreeing that the loan is in default. Late fees, interest etc and any other remedies we are allowed, can and eventually will take place if needed. So there is no loan modification, only the reaction is being modified from Prospers normal business process (which is not outside the doc’s required processes).
Last thought here is the thread title “Collections – Hardship Arrangements are Benefiting Lenders”. I would submit as long as Prosper “accepts” better than 83% of the payment due, the lenders is benefiting (saves the outside 17% collection costs).
HTH’s lay out my position better. Quit focusing on the payment (borrowers’ action), it is the reaction (Prospers response in our behalf under the terms of the agreements) that is the key point.
WFT
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Topic: Collections – Hardship Arrangement are Benefiting Lenders (Read 44587 times)