Hello Your Bank,
I am still lending in Prosper, but only in a very small scale. I am hoping that it will improve and prove itself over time, but I'm not holding my breath.
I have been lending on Prosper since Nov 2006, I have mostly placed the minimum bids for diversification, and I have worked very hard to find criteria that has a low default rate that can be sustained over time. The best strategy that I have come up with so far is to bid on loans that have already paid off at least 1 loan with 20+ on time payments, and do NOT have any CURRENT loans with prosper. I have this criteria in a Porfolio Plan to automatically find listings that match this criteria.
I have an additional Portfolio Plan that finds loans based on the criteria that I was using since before borrowers could have more than one loan, and it is a little more risky because those borrowers haven't already proven themselves in Prosper.
Once I have the Notes, I put them up for auction on Folio at a 6% premium (because I'm not TRYING to sell them but if someone wants them at 6% they can have them, and I sell about 2 Notes a month at that rate). Most of the time my higher rates are sold and it leaves me with the stronger Notes, as well as a 5% instant return, after Folio's 1% service fee.
Most of my defaults happened early in my experience:
Loans that I bid on in My First 6 months (11 of My 20 Defaults)
66147 djnaki2322 EverydayPeop... HR $50.00 17.00% 12-08-06 Default
66371 amberlee FinancialAss... E $50.00 15.00% 12-11-06 Default
69845 amorrill Fair B $50.00 13.55% 12-18-06 Default
74937 RiverwoodPro... Groundangel A $50.03 13.36% 12-21-06 Default
77139 JODYWOWINC Utopia D $50.04 19.10% 12-29-06 Default
76234 FiNDepenDenc... P2PFinancial C $50.03 17.95% 01-12-07 Default
84140 Heavin MONEYDIES E $50.00 19.95% 01-25-07 Default
93780 daddy3 EverydayPeop... D $50.00 19.63% 02-26-07 Default
101287 FROM671 Consolidator... E $50.00 22.00% 03-02-07 Default
113558 scrubshop EverydayPeop... E $50.00 23.00% 04-02-07 Default
123802 bbrave Lend2 D $50.00 19.00% 04-25-07 Default
My 2nd 6 month Period (7 More)
145252 218phone EverydayPeop... B $50.00 18.00% 06-11-07 Default
147846 jemmcc2003 FINANCE-INVE... D $50.00 18.45% 06-19-07 Default
151128 jlp270 EverydayPeop... HR $50.00 21.49% 06-25-07 Default
161241 VolatileCons... No-Bull-Inve... A $50.00 14.75% 07-16-07 Default
159887 Zenni No-Bull-Inve... B $50.00 16.49% 07-16-07 Default
203013 Payingoff200... D $50.00 20.41% 09-26-07 Default
203693 OurDreamBiz CashfundersL... D $50.00 20.00% 10-01-07 Default
--at this point, I reviewed all my data, and decided to establish criteria based on a 99% current rate when using Prosper's Performance Page, since Prosper performance data was now old enough to actually analyze.
My 2nd Year (Last 2)
390379 fenris AA $50.00 19.10% 09-11-08 Default
398281 softparade Engineer AA $50.00 14.75% 09-23-08 Default
So outside of my first year education and the establishing/testing of my criteria, I have had 2 defaults, and since I modified my criteria with Prosper's new grading system, one that will be a default due to bankruptcy (which was one that had two active loans, so I modified my criteria).
Right now my portfolio looks like this:
Principal value of active notes: $1,335.06
Total active notes: 58 View
Current: 57 View
Past due (1-30 days): 0 View
Past due (31+ days): 1 View (will be a default)
Payoff in progress: 0 View
Total charged-off notes: 20 View
Total notes paid in full: 34 View
Total notes sold: 27 View
Average note yield at acquisition: 18.26%
My default rate including 1st year defaults: 15.10%
My default rate excluding 1st year defaults: 2.47%
My expected ROI: about 6-7% for now