Hollow Oak points out "I think not. None of the reasons that caused me stop lending has been addressed. In addition, the new model makes it, IMHO, riskier, since, if my understanding of the prospectus is correct, my Prosper investment is not secured by loans anymore, but will be part of the whole Prosper liability/asset mess if Prosper becomes insolvent."
I'm starting to consider LendingClub again. On the whole, I did pretty well there, even if it was a much smaller portfolio.
[/quote] and...... Direct from prospers prospectus.
Q: Will lender members receive payments on the Notes in the event Prosper declares bankruptcy or otherwise experiences
financial distress?
A: If Prosper were to become subject to a bankruptcy or similar proceeding, the rights of the holders of the Notes could be
uncertain, and payments on the Notes may be limited, suspended or stopped even if the borrowers are making payments on the
corresponding borrower loans. The Notes are unsecured and holders of the Notes do not have a security interest in the
corresponding borrower loans or the proceeds of those corresponding borrower loans. The recovery, if any, of a holder on a
Note may be substantially delayed. Even funds held by Prosper in an account for the benefit of the holders of Notes may
potentially be at risk. To limit the non-payment risk in connection with Prosper’s insolvency, Prosper will grant the indenture
trustee a security interest in Prosper’s right to payment under, and all proceeds received by Prosper on, the corresponding
borrower loans and in the bank account in which the borrower loan payments are deposited. The indenture trustee may exercise
its legal rights to the collateral only if an event of default has occurred under the indenture, which would include Prosper
becoming subject to a bankruptcy or similar proceeding. Only the indenture trustee, not the holders of the Notes, will have a
Yep, this is the part that bugs me too.
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Topic: My chips are off the table - playing with the house money now (Read 369040 times)