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[xraider]

It wouldn't surprise me if current investors do better than we did. 

Thinking of investing again, Stan?  I'm not either. 

[Your_Bank]

I am getting that point loud and clear.  I am suggesting that most of you jumped in at the wrong time (I'm no better than you for waiting, my excuse is I didn't know about P2P or I probobly would have put some money in it too).  I suspect people on lendingclub had equally pitiful results during the capital/liquidity crisis of 2008/2009. (any research done on that?)  My theory is all about the timing of entry.  Problem I am having is finding a unbiased opinion since most the people on this board have lost money investing in prosper, it is hard to seperate business vs. personal when you loan out your hard earned money.

you are correct.  Practically no one on this forum is lending anymore and we were all the unfortunate early adopters.  My first 200 loans had about a 40% default rate.  at 6-9 months I seriously revised and tightened my lending criteria and the next 425 loans have a default rate of about 20%.  I suspect if I were to try it again with this new version 3.0 Prosper I might be able to get a positive return but the work for that return is more than I want to repeat.

I was originally going to invest 50K and see how it worked before upping that amount substantially.  I stopped at 30K when I realized I was going to lose.  When the last of my loans work thru in late 2011 I figure I will about break even.  Right now I am down $600.  I'm not angry at Prosper and you will no doubt do better than most of the lenders here.  But I would reduce your 50K trial amount to about half or 30K and wait to see if Prosper will survive as a company.  If it goes under its going to be a real hassle getting your money back.

[/quote]

Thanks for you comments Trek.  I must admit, hearing all the words of caution on here has at least made me take some time to question my approach.  I appreciate all the feedback, positive or negative about your lending experiences.  I called Prosper before committing more than $5K to ask about their viability and what the contingency plans were if they were to fail as a company.  I was told they have a standing agreement in place with a loan servicer that would pick up the existing (legacy) book and service them until maturity.  I suspect we would lose all/most of the fancy stats and tracking mechanisms for our portfolio, but "our" notes are protected from bankruptcy.  Any other thoughts or views on that topic?

[Xenon481]

I called Prosper before committing more than $5K to ask about their viability and what the contingency plans were if they were to fail as a company.  I was told they have a standing agreement in place with a loan servicer that would pick up the existing (legacy) book and service them until maturity.  I suspect we would lose all/most of the fancy stats and tracking mechanisms for our portfolio, but "our" notes are protected from bankruptcy.  Any other thoughts or views on that topic?

Prosper has never provided anything proving that the Prosper 3.0 "notes" are protected from a Prosper bankruptcy. Prosper has stated that CSC is the backup servicer for the legacy (1.0 and 2.0) "loans" (not "notes") and has stated that it plans to give CSC the servicing of the 3.0 "notes", however, just because CSC services the 3.0 "notes" does not mean that you as an unsecured creditor to Prosper will see a single cent of the proceeds from that servicing as there are numerous other creditors (secured and unsecured) ahead of you that must be fully paid before you see anything.

[xraider]

Equally problematic:  Just because that agreement is here today doesn't mean that Prosper won't terminate the agreement in the future.

[wftrust]

Thanks for you comments Trek.  I must admit, hearing all the words of caution on here has at least made me take some time to question my approach.  I appreciate all the feedback, positive or negative about your lending experiences.  I called Prosper before committing more than $5K to ask about their viability and what the contingency plans were if they were to fail as a company.  I was told they have a standing agreement in place with a loan servicer that would pick up the existing (legacy) book and service them until maturity.  I suspect we would lose all/most of the fancy stats and tracking mechanisms for our portfolio, but "our" notes are protected from bankruptcy.  Any other thoughts or views on that topic?

I am glad you are giving pause to examine your approach. Never hurts, you are losing nothing to wait a little bit to fully evaluate it.

Sounds to me like Prosper gave you a half answer, which might be in their best interest currently. Version 1 & 2 are actually truly the "lenders" notes. They were written such that we, the ones giving up our cash, "owned" them. Version 3.0 notes are written such that Prosper owns them, and you are instead lending money to Prosper not the borrower. So you have become an unsecured creditor of Prosper it appears. That is where I drew the line on my "investing" any further money with the Prosper platform.

Perhaps once the SEC gets out of the mix and it goes back to the old methodologies I will relook at investing in the P2P concept again. But now is just too dangerous. You are betting on two things happening, repayment of the note and viability of Prosper.

Both iffy.


WFT

[Staneslav]

a

[Fred93]

I called Prosper before committing more than $5K to ask about their viability and what the contingency plans were if they were to fail as a company.  I was told they have a standing agreement in place with a loan servicer that would pick up the existing (legacy) book and service them until maturity.  I suspect we would lose all/most of the fancy stats and tracking mechanisms for our portfolio, but "our" notes are protected from bankruptcy.  Any other thoughts or views on that topic?

Calling them and asking is not the most assured method.  

Yes, they say they have an arrangement in place with someone to service the loans if they croak.  However, they have said lots of things in the past that turned out to not quite be true, so you should interpret their statement more like "They believe they have an arrangement in place, and it will probably work."  However, given the way they have changed their interpretation of contractual obligations in the past, you would have to conclude that management is pretty loose with their obligations to lenders.  There is no certainty here.

On the subject of "protected from bankruptcy", that is certainly wrong.  Did they really tell you that the notes were "protected from bankruptcy"  Read the prospectus.  The notes they sell you are unsecured debt of Prosper, and rank equally with other debt.  They are not protected from bankruptcy of prosper.  

The only protection you get from bankruptcy is the weight of the notes and the associated loans.  If the amount lent on those loans, and therefore the amount of the notes, is substantially larger than Prosper's other debt, then the bankruptcy judge would surely steer most of the available funds to Prosper's note holders (ie you).  

A bankruptcy judge would surely assign a trustee to make the loans get serviced somehow, so it does seem likely that the loans would be serviced.

[Urbi_et_Orbi]

This thread is getting close to being lobby-worthy.

[TotoMMB]

This thread is getting close to being lobby-worthy.

+3/4

[Beerbud1]

Nominate for Lobby!

[Your_Bank]

I called Prosper before committing more than $5K to ask about their viability and what the contingency plans were if they were to fail as a company.  I was told they have a standing agreement in place with a loan servicer that would pick up the existing (legacy) book and service them until maturity.  I suspect we would lose all/most of the fancy stats and tracking mechanisms for our portfolio, but "our" notes are protected from bankruptcy.  Any other thoughts or views on that topic?

Calling them and asking is not the most assured method.  

Yes, they say they have an arrangement in place with someone to service the loans if they croak.  However, they have said lots of things in the past that turned out to not quite be true, so you should interpret their statement more like "They believe they have an arrangement in place, and it will probably work."  However, given the way they have changed their interpretation of contractual obligations in the past, you would have to conclude that management is pretty loose with their obligations to lenders.  There is no certainty here.

On the subject of "protected from bankruptcy", that is certainly wrong.  Did they really tell you that the notes were "protected from bankruptcy"  Read the prospectus.  The notes they sell you are unsecured debt of Prosper, and rank equally with other debt.  They are not protected from bankruptcy of prosper.  

The only protection you get from bankruptcy is the weight of the notes and the associated loans.  If the amount lent on those loans, and therefore the amount of the notes, is substantially larger than Prosper's other debt, then the bankruptcy judge would surely steer most of the available funds to Prosper's note holders (ie you).  

A bankruptcy judge would surely assign a trustee to make the loans get serviced somehow, so it does seem likely that the loans would be serviced.

Good points Fred.  When you read the perspectus there are certainly no assurances given to the note holders of prosper.  A little scary, but read about any perspectus and you'll get scared.  Its definately a concern of mine, hence why I waited for the latest round of financing before increasing my portfolio size.  Thanks for all the words of advice.

[ira01]

Nominate fro Lobby!

+1.

[Staneslav]

a

[Your_Bank]

I called Prosper before committing more than $5K to ask about their viability and what the contingency plans were if they were to fail as a company.  I was told they have a standing agreement in place with a loan servicer that would pick up the existing (legacy) book and service them until maturity.  I suspect we would lose all/most of the fancy stats and tracking mechanisms for our portfolio, but "our" notes are protected from bankruptcy.  Any other thoughts or views on that topic?

Calling them and asking is not the most assured method.  

Yes, they say they have an arrangement in place with someone to service the loans if they croak.  However, they have said lots of things in the past that turned out to not quite be true, so you should interpret their statement more like "They believe they have an arrangement in place, and it will probably work."  However, given the way they have changed their interpretation of contractual obligations in the past, you would have to conclude that management is pretty loose with their obligations to lenders.  There is no certainty here.

On the subject of "protected from bankruptcy", that is certainly wrong.  Did they really tell you that the notes were "protected from bankruptcy"  Read the prospectus.  The notes they sell you are unsecured debt of Prosper, and rank equally with other debt.  They are not protected from bankruptcy of prosper.  

The only protection you get from bankruptcy is the weight of the notes and the associated loans.  If the amount lent on those loans, and therefore the amount of the notes, is substantially larger than Prosper's other debt, then the bankruptcy judge would surely steer most of the available funds to Prosper's note holders (ie you).  

A bankruptcy judge would surely assign a trustee to make the loans get serviced somehow, so it does seem likely that the loans would be serviced.

Good points Fred.  When you read the perspectus there are certainly no assurances given to the note holders of prosper.  A little scary, but read about any perspectus and you'll get scared.  Its definately a concern of mine, hence why I waited for the latest round of financing before increasing my portfolio size.  Thanks for all the words of advice.

Actually, Your_Bank, I'd be more concerned about the fact that you don't technically own the notes. If prosper uses them to pay off debts, it doesn't matter if they have a servicer lined up or not.

It was a good idea to wait for the next round of financing. I'll give you big kudos for that.

It's my understanding (and correct me if I'm wrong) that the reason Prosper lenders are no longer the note holders with the borrower but instead hold a note with Prosper is because of the SEC ruling.  Is that correct?

[ira01]

It's my understanding (and correct me if I'm wrong) that the reason Prosper lenders are no longer the note holders with the borrower but instead hold a note with Prosper is because of the SEC ruling.  Is that correct?

That allegation has been made (by Prosper and its cheerleaders), but no evidence has been presented that the SEC required Prosper to structure things the way it did.