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[pacino58]

I was looking through one of my loans to determine if the person was actually paying and noticed that for the past few payments, all of the payments have gone 100% towards lending fees. 

Payment   Post date   Type   Status           Total           Principal   
number                                     paid           balance   
5460205   Mar-01-2010   Manual   Paid   $2.10    $10.32    
5430787   Feb-16-2010   Manual   Paid   $2.10    $12.29    
5402736   Feb-01-2010   Manual   Paid   $1.20    $14.21    
                  
From Lender  Accounting Screen                  
                  
Payment   Post date   Date received   Group rewards   Total           Lending fees   Principal
number                                                     received                       balance
5460205   Mar-01-2010   Mar-04-2010   $0.00    $2.09    $2.09            $10.32
5430787   Feb-16-2010   Feb-19-2010   $0.01    $2.09    $2.09            $12.29
5402736   Feb-01-2010   Feb-04-2010   $0.01    $1.19    $1.19            $14.21

http://www.prosper.com/invest/listing.aspx?listingID=153436

I attempted to copy and paste from the screens above, but as you can see the lending fees = the total received for the past three payments.  This person has gone late several times but I cannot imagine any reason why the lending fees would be the same as total payments received.

Any ideas?
                           
                           
       

[cowdiddly]

Wow, is this one of the new Prosper managed in house collections? If so I think they finally hit on a way to become viable with all the late loans. Once again screw the lender.

[bamalucky]

I think lending fees are late fees paid to you & they owe so much in late fees it isn't moving their principal down

[pacino58]

I think lending fees are late fees paid to you & they owe so much in late fees it isn't moving their principal down

But the lending fees aren't being paid to me, they are being taken out of my account by service fees

Mar-04-2010 1:41 PM    Mar-04-2010    Withdrawal    Service fee   16584-57    047390495    Completed   -$2.09   $0.00
Mar-04-2010 1:41 PM    Mar-04-2010    Deposit    Principal   16584-57    047390495    Completed   $1.97   $2.09
Mar-04-2010 1:41 PM    Mar-04-2010    Deposit    Interest   16584-57    047390495    Completed   $0.12   $0.12

This was actually a loan that Amsher may or may not have cured, who knows because of the lack of transparency.  It has been going back and forth for about a year or so.

So on March 4, I got interest of $.12, my account was +.12
Got principal paid in the amount of $1.97, account = +2.09
Then, there was a service fee of $2.09, account = 0

Which means that interest and principal is being paid to my account, being credited against their balance due to me, but I am getting nothing because of the service fee.

[Senator]

Looks like your Principal Balance has gome from $14.21 to $10.32

[JammingJAY]

Is this a 3.0 loan?

Maybe prosper has figured out how to stay in business after April.

[pacino58]

Looks like your Principal Balance has gome from $14.21 to $10.32

Exactly, and I have not received a cent except paying for the "service fees"

The loan originated sometime in 2007.

I did email customer service so I could see what their explanation is for the large service fees.  Until then I figured I would see if anyone else had encountered similar service fees.

[regeneration]

Something is wrong.  If 100% of payment is going to lending fees, the principle should not have changed.

By the way, does anyone know what the components of "lending fees" are?  Does it include the late fee that should be paid to the lender?

And has anyone noticed that Prosper has been quite - what is the word - creative in the application (or rather not) of those late fees?  Yes, lets go with creative.  

[Fred93]

And has anyone noticed that Prosper has been quite - what is the word - creative in the application (or rather not) of those late fees?  Yes, lets go with creative.  

I haven't been paying attention lately.  Could you be more specific?

[NPX]

Something is wrong.  If 100% of payment is going to lending fees, the principle should not have changed.

By the way, does anyone know what the components of "lending fees" are?  Does it include the late fee that should be paid to the lender?

Not claiming that this is gospel, but I think it's something like this:

"Prosper Fees" are actually a poor designation for NSF fees, which Prosper sometimes charges to the borrower if an automatic pull fails.  These fees reduce both the amount of the borrower's payment that gets applied to the loan and the amount of the payment that reaches the lender's account.  "Late Fees" are sometimes applied if a payment is >15d late; they reduce the amount of the payment that gets applied to the loan, but not the amount of the payment that reaches the lender.  The application and size of both of these fees depends on state regulations.  In essence, the NSF fees go to Prosper, while the late fees go (eventually, in the form of a larger final "balloon" payment on the loan) to the lenders.

"Lending Fees" are the combination of Prosper's 1% servicing fee and Amsher's (supposed) 17% collection fee.  They reduce how much of the borrower's payment makes it into the lender's account, but they don't change how much of the borrower's payment gets applied to the borrower's loan.

So, for example, say a borrower's automatic pull fails, as does the subsequent ten-day pull.  The 23-day pull succeeds.  And let's say that my share of that payment is $10.  If $1 is removed for the NSF on the first pull, this will show up as a "Prosper Fee", which goes directly to Prosper.  That leaves $9 available to go toward the borrower's loan and toward my account.  If another $1 is removed as a Late Fee, this leaves $8 to be applied to the borrower's loan, first paying whatever interest has accumulated since the last payment and then reducing the principal.  That's all the borrower sees in his/her accounting.  The lender will then (maybe) see a reduction in how much of the $9 makes it into his/her account.  In the case being discussed here, Prosper is somehow ginning up "Prosper Fees" that take ALL of the remaining portion of the payment.  I don't know how this is possible, unless there's some additional fee that's snuck in there in addition to the servicing and collection fees.

And, FWIW, I also have noticed this recently with one of my loans.  I inquired, received a nonsense answer that referenced a previous charge-back, and have inquired again.  I'm awaiting further information.

[Beerbud1]

I beleive NPX is correct but what if the borrower makes a manual payment that is less than the equivalent to 1 months payment. The dollar amount goes to pay prosper back for NSF fees first. If there is little or nothing left over  the lender gets nothing and that explains it right there.

[TotoMMB]

I beleive NPX is correct but what if the borrower makes a manual payment that is less than the equivalent to 1 months payment. The dollar amount goes to pay prosper back for NSF fees first. If there is little or nothing left over  the lender gets nothing and that explains it right there.

But why is the lender being penalized for borrower's actions? 17% for Amsher, fine (I don't agree with it, but the principle is "sound"). But how can a payment cover both NSF and principle? If lender sees nothing, why is value of note dropping? Seems like double dipping (paying Prosper, Amsher, fees, reducing value) with pacino getting squat. In 4 months, if things continued, he'd still have $0, yet $14 in principle (and whatever interest that generates) would be wiped out. All-in-all, if loan defaulted, he'd still be in the same position. I just don't get Prosper's accounting.

[NPX]

I beleive NPX is correct but what if the borrower makes a manual payment that is less than the equivalent to 1 months payment. The dollar amount goes to pay prosper back for NSF fees first. If there is little or nothing left over  the lender gets nothing and that explains it right there.

But why is the lender being penalized for borrower's actions? 17% for Amsher, fine (I don't agree with it, but the principle is "sound"). But how can a payment cover both NSF and principle? If lender sees nothing, why is value of note dropping? Seems like double dipping (paying Prosper, Amsher, fees, reducing value) with pacino getting squat. In 4 months, if things continued, he'd still have $0, yet $14 in principle (and whatever interest that generates) would be wiped out. All-in-all, if loan defaulted, he'd still be in the same position. I just don't get Prosper's accounting.

A (portion of a) payment can't cover both NSF fees (ie "Prosper fees") and also pay down either the interest or principal on a loan.  BB is correct that it's possible for a borrower's whole payment to be eaten up by an NSF fee, but in that case there would be nothing left for EITHER the lender OR any reduction of principal or interest on the borrower's loan.  Something else is going on here.

ETC grammar.

[pacino58]

Prosper actually acknowledged that this was an incorrect service fee being charged for this loan. 

Also, Prosper stated there were 6 other loans impacted by this and would be issuing refunds soon.

Thanks for all of the ideas above, even with previous late charges, there should not be any way that it would eat up the entire amount of interest and principle being paid to my account.

For others, this loan was brought current by Amsher after several months of being late.  Thus, if you have a loan that was brought current you may want to check the fees that were being charged by Prosper after the loan was brought current.

[ira01]

Prosper actually acknowledged that this was an incorrect service fee being charged for this loan. 

Also, Prosper stated there were 6 other loans impacted by this and would be issuing refunds soon.

It is absolutely ridiculous that a company whose sole business is originating and servicing loans would make such an error.  I wonder how many other errors Prosper makes in its accounting?  I know I sure don't scrutinize every payment to see if I am receiving the correct amount of money, and I doubt anyone else does either.   

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