Prosper did repurchase the loans.
Well, that makes it sound like they paid for them, which they did not.
Partially correct -- Prosper DID pay the lenders who opted-out of the NAT. As per the agreement, Prosper did not pay the opting-in lenders up-front -- they accepted a pro-rata share of any NAT recoveries less certain expenses (including the amounts paid to the opting-out lenders). Given Prosper's ineptitude in conducting the NAT, it looks like the opting-in lenders will get nothing.
Nor did they give a monthly accounting, which was part of the "purchase" transaction agreement.
True.
At what point does lack of consideration invalidate a contract?
This isn't a case of lack of consideration, because the opting-in lenders did get consideration -- the contingent right to the NAT proceeds. I think the best way to characterize the situation is a breach of contract by Prosper. Prosper's breach regarding the lack of monthly accountings would probably be considered a minor breach, entitling the opting-in lenders to sue for any damages (which I think would pretty much be non-existent), but not to rescind the contract. More troubling would be Prosper's fucking up the whole NAT. It is possible that Prosper's lack of competent handling of the NAT breached express warranties to the opting-in lenders (I can't remember now exactly what, if anything Prosper promised in the way of its proposed handling of the NAT at the time, almost two years ago), or possibly breached implied warranties, or at the very least breached the contract between Prosper and its opting-in lenders. There may also be fraud and/or negligent misrepresentation issues with respect to Prosper's handling of the NAT. Of course, the NAT is only one small part of the overall picture of Prosper's repeated screwing over of lenders.
Needless to say, TINLA.