Print

[Mark12547]

By their own admission. borrower payments wouldn't nearly cover their operating expenses.

Their origination and servicing fees don't cover their operating expenses, but I am not so sure that borrower payments wouldn't.

[ira01]

There's no reason prosper can't just take borrower payments to operate on now.  Why file bk?

If they took Prosper 1.0 borrower payments, that would constitute theft.  If they took Prosper 3.0 borrower payments, that would constitute such an egregious breach of contract that lenders would probably sue them and have a receiver installed on an emergency basis.

[bamalucky]

breach of contract that lenders would probably sue them and have a receiver installed on an emergency basis.

I'm not sure that would fly because it's pretty clear that Prosper owns these loans..

[ira01]

breach of contract that lenders would probably sue them and have a receiver installed on an emergency basis.

I'm not sure that would fly because it's pretty clear that Prosper owns these loans..

Yes, Prosper owns the 3.0 loans, but Prosper also has an obligation to pay the lenders on those loans any money paid by the borrowers (less the servicing fee).

[bamalucky]

Yes, Prosper owns the 3.0 loans, but Prosper also has an obligation to pay the lenders on those loans any money paid by the borrowers (less the servicing fee).

Kinda like the corporate bonds companies sell & then don't pay on?

[ira01]

Yes, Prosper owns the 3.0 loans, but Prosper also has an obligation to pay the lenders on those loans any money paid by the borrowers (less the servicing fee).

Kinda like the corporate bonds companies sell & then don't pay on?

Companies go BK then -- they don't just stop paying bondholders and continue operations.  Creditors can actually force a company into BK.

[bamalucky]

Creditors can actually force a company into BK.

Thats exactly how it works..Until then,they just keep spending creditors money

[Senator]

By their own admission. borrower payments wouldn't nearly cover their operating expenses.

Their origination and servicing fees don't cover their operating expenses, but I am not so sure that borrower payments wouldn't.

Yeah, You & Bama are right.

[zapp05]

1) Hasn't Prosper already hired a company to service notes in case of BK?

Depends on what you mean by "hired".  There's supposed to be some sort of arrangement, but I doubt that Prosper has paid them anything.  Therefore I suspect it's just "talk".

of course, since Prosper lies all the time, it could be total baloney that they've got someone "lined up"

[blue]

So I think I am hearing in the event of a BK:
- Old Notes should continue to be serviced without threat
- New Notes could be serviced after the recent Prosper 'Bridge' funding is subtracted?

Perhaps, but there is no reason to believe the bridge loans would come first.

I see your eric's ROI has you at 3.74%, but Experian at 11.63%

Which one is more accurate?

[Senator]

FWIW Eric's has me listed as

http://www.ericscc.com/lenders/senator

Portfolio Performance
Avg Interest Rate (unweighted):    14.40%
Avg Interest Rate (weighted):    14.40%
Experian Estimated ROI:    9.44%
EricsCC Estimated ROI¹:    -1.63%
Avg Loan Age:    1334 days

Eric's is MUCH closer - if not right on.  See my sig below

[brianguy]

So I think I am hearing in the event of a BK:
- Old Notes should continue to be serviced without threat
- New Notes could be serviced after the recent Prosper 'Bridge' funding is subtracted?

Perhaps, but there is no reason to believe the bridge loans would come first.

I see your eric's ROI has you at 3.74%, but Experian at 11.63%

Which one is more accurate?

Experian is useless, as it pretty much always has been.  it seems to project out as around 10% defaults (charge offs) as a worst case, which is laughable.   some serious flaws in that formula.

[kenL]

By their own admission. borrower payments wouldn't nearly cover their operating expenses.

Their origination and servicing fees don't cover their operating expenses, but I am not so sure that borrower payments wouldn't.

Of course borrower payments would cover expenses, but thats a ridiculous proposition.

lets do the math:  $67,000,000 in loan originations that are current* 3.5% payments per month = ~$2,345,000 per month in payments (but decreasing rapidly). They need about one third of that to cover expenses.

[baeventures]

1) Hasn't Prosper already hired a company to service notes in case of BK?

Depends on what you mean by "hired".  There's supposed to be some sort of arrangement, but I doubt that Prosper has paid them anything.  Therefore I suspect it's just "talk".

of course, since Prosper lies all the time, it could be total baloney that they've got someone "lined up"

"In January of 2009 we entered into a back-up servicing arrangement with a company called CSC.  By this agreement essentially Prosper purchased servicing insurance on behalf of all lenders.  In exchange for a monthly fee, if Prosper were unable to continue servicing loans CSC will step into Prosper’s shoes and continue to service such active loans through their remaining life.  Upon such event CSC would also be entitled to Prosper’s future servicing fees.  CSC is a reputable company with an established track record of loan servicing and we are thrilled to have them as a partner [http://www.csc.com].

Sincerely,
Prosper Customer Support "

BAEVentures

[brianguy]

1) Hasn't Prosper already hired a company to service notes in case of BK?

Depends on what you mean by "hired".  There's supposed to be some sort of arrangement, but I doubt that Prosper has paid them anything.  Therefore I suspect it's just "talk".

of course, since Prosper lies all the time, it could be total baloney that they've got someone "lined up"

"In January of 2009 we entered into a back-up servicing arrangement with a company called CSC.  By this agreement essentially Prosper purchased servicing insurance on behalf of all lenders.  In exchange for a monthly fee, if Prosper were unable to continue servicing loans CSC will step into Prosper’s shoes and continue to service such active loans through their remaining life.  Upon such event CSC would also be entitled to Prosper’s future servicing fees.  CSC is a reputable company with an established track record of loan servicing and we are thrilled to have them as a partner [http://www.csc.com].

Sincerely,
Prosper Customer Support "

BAEVentures

I've been assuming an announcement like this would come along one of these days.   who knows how reliable or trustworthy any of this is, but it's certainly necessary and good to know somebody at Prosper actually admitted it, and found some company to take them over.