Do 3.0 loans come with a 100% ID theft guarantee?
I have noticed a consistent opinion that zero payment deadbeats are all (or at least likely) ID theft. What is the basis for that? Can't they just be people who use to have good lifes, jobs, marriages and now something has gone terribly wrong?
I think you are mixing up two kinds of fraud. I don't know if a high percentage of zero-payment loans are ID-theft fraud, but in my opinion, an extremely high percentage of zero-payment loans are fraud. Sure, there are no doubt a few borrowers who get run over by a bus, come down with a debilitating medical condition, lose their job and savings, etc., in the 30 days between a loan originating and the first payment being due. But I believe they are a very small minority. I believe that most zero-payment borrowers had no intention of paying on the loan right from the get-go, which is fraud (if you sign the promissory note agreeing to make monthly payments knowing at the time that you weren't planning to, that is fraud). As I posted numerous times on Prosper's original official forum, probably almost three years ago, Prosper should have investigated every single zero-payment loan. If the borrower provided evidence of death, serious illness, job loss, etc., in the 30 days between origination and first payment due date, then fine -- shit happens. But if there were no such extenuating circumstances, then Prosper should have sued each and every such borrower for fraud, including seeking punitive damages. It wouldn't have taken very many such (well-publicized) lawsuits for fraudsters to get the message that Prosper is not a good place for them. In addition, any such borrower who filed BK should have had Prosper file the paperwork to get the Prosper loan adjudicated as non-dischargeable. But, as we all know, Prosper didn't do any of that, because it isn't Prosper's money going down the tubes, and Prosper doesn't really give a crap about lenders.
ETA: In addition, Prosper should take a page from the health insurers' playbook, and do some post-default underwriting -- when a borrower defaults under suspicious circumstances (including too soon after origination), investigate their loan application (i.e., the listing and supporting documentation) to see if there are misrepresentations (for example, call the employer if the loan was not verified pre-funding, as most aren't, and verify employment and income). For any borrowers found to have lied, file a police report, sue the hell out of them, etc. Again, the idea is to spread the word that Prosper is not a good place to rip-off.
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Topic: First Prosper V.3 loan headed toward the crapper (Read 17795 times)