Hi Steve, and welcome.
You will find mostly FORMER lenders here, since we didn't receive the returns we wanted and because many of us feel that Prosper hasn't acted with the lenders' interests in mind.
I'd be careful, because Prosper has a history of changing the rules midstream, and of favoring borrowers over lenders. You cannot expect Prosper to take ANY steps to collect on your late loans, and you're essentially relying on the morality of your borrowers, who have very few consequences if they fail to repay. IIRC, Prosper will, when it feels like it, report to ONE of the credit bureaus. If challenged, it has been reported that Prosper will back down. Thus, there is little motivation to repay loans.
One early default will wipe out LOTS of repaid loans -- particularly if the loans repay early. If I'm LUCKY, I'll net 2% on my portfolio after three years. That's 2% total, not 2% per year. My Experian predicted ROI was more than 14%.
I stopped lending in large part because I had the audacity to call the collection agency to see what I could propose to Prosper to make collections more effective. In return, Prosper changed the Lenders' Registration Agreement to forbid lenders from contacting collection agencies, and didn't tell people about the changes in the LRA. People here pointed it out. I then posted on Prosper's own boards (which it shut down within a month, but which are archived on
www.prosperreport.com) that the changes in the LRA weren't effective because Prosper didn't provide notice of them. The other reason I stopped lending was because, at essentially the same time, Prosper began permitting borrowers to take out second loans while they still had an active loan. I felt that increased the risk to lenders and, in fact, all but one of my borrowers who took out second loans while having an active first went on to default on both.
Prosper also retroactively changed the terms of service so that it no longer had to sell defaulted loans to junk debt buyers, but instead is "working" the defaulted loans themselves, with very little success. In other words, Prosper does whatever it wants to, and most of us have so little at risk that it's not worth suing over each of these violations. That's what Prosper is counting on, I think.
Prosper is currently being sued in a class action for SEC violations.
My husband excoriated me for making unsecured loans to strangers over the internet, and rightly so.
As Ira01 says, caveat lender.
