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[onthefence]

While it may protect lenders' returns, it will discourage the borrowers who could get better rates elsewhere.

That assumes that Prosper prices the loans appropriately.  As we have seen with Lending Club, the only loans they price anywhere close to correctly would be their As.

Then we have market fluctuations.

Right now, loans are performing better that Prosper was predicting, but that may be due to less competition for loans and/or changes in how prosper authenticates the loan.  If they were to use the number they are getting now in a fully competitive market, I would expect a lot more bad loans to be selected.

Plus, over time Prosper will tend to want to lower the offered interest rate to attract more borrowers.

[weiszguy]

If this is true, it eliminates the fun from prosper.  It eliminates the whole reason I lend.

[onthefence]

If this is true, it eliminates the fun from prosper.  It eliminates the whole reason I lend.

Sadly it was about the only thing Prosper had going for it.

But in the end, the real question was if it was profitable.

[Urbi_et_Orbi]

To improve the experience for our customers, we will be eliminating the auction process on December 19th.

Does anyone really think that was the primary driver behind this decision?

[Mtnchick]

To improve the experience for our customers, we will be eliminating the auction process on December 19th.

Does anyone really think that was the primary driver behind this decision?

Hardly. Considering this makes the experience worse for their customers and lenders I suspect there's a regulatory/legal/etc. reason behind this.

[Xenon481]

To improve the experience for our customers, we will be eliminating the auction process on December 19th.

Does anyone really think that was the primary driver behind this decision?

Hardly. Considering this makes the experience worse for their customers and lenders I suspect there's a regulatory/legal/etc. reason behind this.

Exactly. I suspect there was some sort of "Truth in Lending" or other such related thing in play here as Prosper wouldn't be able to provide the correct statements before the bidding process as the numbers could possibly change.

[Urbi_et_Orbi]

Wouldn't they need to make a filing with the SEC regarding such a change in the platform? 

Is perhaps the auction system what's been holding up approvals for some of the states still off-line and - they decided it was better to cave on their only major point of product differentiation in order to open up more states?

Those VCs must be putting a lot of pressure on Prosper to improve their originations...  What a major blow to the whole Prosper concept that has been touted since day one!

[christoofar215]

Prosper is grasping at straws to stop defaults.

They think by magically determining the APR that they KNOW what lenders will buy for, and they know what borrowers will take---and borrowers should pay enough that lenders don't lose so much fucking money.

This is hilarious.   Let's see how many months go buy after January's originations that the new loans start defaulting.

[God-Father]

2

[Xenon481]

2

What?

[TotoMMB]

I'm assuming the "2" is the number of months until Jan. loans start defaulting.

I always figured the auction process helped the borrower. If I'm willing to borrow at 20% and my final rate is 15%, I'm ahead of the game. But if you tell me - "take 25% or leave it", I'm gone. You're now no different than CitiFinancial, or the cash advance check on my CC statement.

My guess is that even with better repayment rates, the returns aren't near the advertised 10.2%. Stabilizing this piece, may give them a better handle on the numbers. But I think originations are going to drop severely. At least in Q1. If the whole experience is perceived as better (by both sides), it may work out...but I doubt it.

[God-Father]

correct

[Xenon481]

Do we need to start calling this Prosper 4.0 since it is now a completely different product?

[God-Father]

We could, or we could call it Terminal Prosper.

[onthefence]

To improve the experience for our customers, we will be eliminating the auction process on December 19th.

Does anyone really think that was the primary driver behind this decision?

On the surface, it appears to simplify the process.  No more bidding of lenders.  But lenders still need to crunch the numbers to determine if the proposed interest rate is worth the risk.

They are essentially throwing in the towel and making their model just like Lending Club's.  I still don't find Lending Club to be a more attractive offer.

For all I know they are in fact throwing in the towel & combining operations with Lending Club.

But the key difference as to why Lending Club doesn't get as much shit is how they have treated their lenders.  The As are the only loans remotely worth looking at over there at the given interest rates.