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[ladeeda]

Higher rates for lenders.  

Did Prosper just do something that would give lenders higher rates of return?!

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

And does that mean lenders are customers now?!

Gotta say, this made me LOL. Yes, yes, you're customers!

With one key difference, Lending Club still has that high "financial suitability" requirement for lenders, and Prosper all you need is some extra money sitting around.

Just to clarify, suitability requirements are imposed at the state level, and state regulators determine whether suitability requirements are appropriate. Prosper does have them in several states, including California.

[Tokyo Joe]

I guess it was kind of pointless to send us all those "Come back to Prosper!" emails over the last couple of months...

[Urbi_et_Orbi]

We've come full circle in a sense, and every loan is now a "flash-fund" loan. Will Prosper bring back that nifty lightning bolt icon?

[Xenon481]

We've come full circle in a sense, and every loan is now a "flash-fund" loan. Will Prosper bring back that nifty lightning bolt icon?

You are right, all listings are now Auto-Fund. And historically (according to Prosper's own data), Auto-Fund listings that become loans have had a significantly worse default rate than their non-Auto-Fund counterparts of otherwise similar quality.

[moremoneymarc]

If lenders don't own the loans that p* recruits, funds, and services, hasn't P* became an online bank again and haven't lenders just became non FDIC insured depositors?  If so a private insurance on lender deposits could make it viable again.

[ladeeda]

We've come full circle in a sense, and every loan is now a "flash-fund" loan. Will Prosper bring back that nifty lightning bolt icon?

You are right, all listings are now Auto-Fund. And historically (according to Prosper's own data), Auto-Fund listings that become loans have had a significantly worse default rate than their non-Auto-Fund counterparts of otherwise similar quality.

I would think that would've been an adverse selection issue.

[Urbi_et_Orbi]

I would think that would've been an adverse selection issue.

I would probably tend to agree with the notion that flash-fund loans would represent more of an obvious adverse selection issue when co-mingled into a mixed population of loans.  I do think the dynamic of the marketplace will change somewhat now.

I think there will be an incentive to quickly fund loans considered to be "viable" and, since listings end when fully funded, the money gets spread around faster for more loans.  I also think some lenders, hesitant to place money on listings due to irrational bid-down, will now find the process more appealing.  I suspect the marketplace now has the potential to become more appealing to institutional lenders or large individual lenders, allowing quick take-downs of the best loans. 

The downside, of course, is that we have now moved as far away from the original idea of Prosper as possible, without actually referring to it as a bank.  I also think smaller lenders will now have less potential upside.

I would not be surprised to see originations quickly jump to $4-5 million per month.

The idea of Prosper, as conceived by Larsen and Witchel, is now officially dead.  At this point, they really need to re-write their tired old marketing materials.

[Urbi_et_Orbi]

Prosper has now filed Post-Effective Amendment No. 3 to form S-1 with the SEC.

http://sec.gov/Archives/edgar/data/1416265/000141626510000555/prosperposam310d22d10.htm

The most, outrageous change, IMO, is Prosper now allowing partially funded listings to originate as loans.  That just goes to show the level of desperation.

This Post-Effective Amendment No. 3 relates to the Registration Statement on Form S-1 (File No. 333-147019) of Prosper Marketplace, Inc.  The purpose of the amended and restated prospectus included in this Post-Effective Amendment No. 3 is to supplement and revise the prospectus dated as of July 26, 2010 to reflect:
 
·   changes in the way that Prosper sets interest rates for borrower loans and Borrower Payment Dependent Notes (i.e., the use of pre-set interest rates for loan listings rather than using an interest rate bidding process to determine interest rates for borrower loans and Notes);
 
·   a change to allow for the partial funding of loan listings (i.e., to allow a borrower to set a minimum and maximum loan amount, rather than just the maximum loan amount that is permitted by the current model);

·   an increase in the bidding period for loan listings from 7 days to 14 days; and
 
·   updated performance information about Prosper’s platform and the incorporation by reference of information included in our SEC filings.

[Urbi_et_Orbi]

Setting Interest Rates
 
We have an interest rate committee, consisting of our Chief Executive Officer, Chief Financial Officer, Executive Vice President, Acquisition and Risk Management, and General Counsel, which meets regularly to set interest rates for all borrower loans.  These rates are set forth in a rate table, which is posted on our website.  The table dictates the interest rate for all borrower loans, based on Prosper Rating, as well as additional factors, such as estimated loss rates, loan terms, group affiliations, competitive conditions and the general economic environment. The yield percentage on each series of Notes is equal to the interest rate on the related borrower loan, minus Prosper’s servicing fee, which is currently set at 1%.
 
The interest rate committee meets on at least a monthly basis, but may meet more frequently as changes in market conditions and the general economic environment dictate.  At each meeting, the committee reviews the interest rate table and makes adjustments to it the extent the committee deems necessary.  The factors besides Proper Rating that the committee takes into consideration in updating the table, as well as the weight the committee accords each such factor, may change from time to time.
 
The interest rate table currently in effect is set forth below.  In addition, the interest rate for each loan listing, as well as the yield percentage for the corresponding Notes, is included in the listing report we file for that listing before it is posted on our website.  This information is also included in the listing itself when it is posted on our website.  In addition, we keep the copy of the current interest rate table posted on our website.

[ira01]

Prosper has now filed Post-Effective Amendment No. 3 to form S-1 with the SEC.

http://sec.gov/Archives/edgar/data/1416265/000141626510000555/prosperposam310d22d10.htm

The most, outrageous change, IMO, is Prosper now allowing partially funded listings to originate as loans.  That just goes to show the level of desperation.

This Post-Effective Amendment No. 3 relates to the Registration Statement on Form S-1 (File No. 333-147019) of Prosper Marketplace, Inc.  The purpose of the amended and restated prospectus included in this Post-Effective Amendment No. 3 is to supplement and revise the prospectus dated as of July 26, 2010 to reflect:
 
·   changes in the way that Prosper sets interest rates for borrower loans and Borrower Payment Dependent Notes (i.e., the use of pre-set interest rates for loan listings rather than using an interest rate bidding process to determine interest rates for borrower loans and Notes);
 
·   a change to allow for the partial funding of loan listings (i.e., to allow a borrower to set a minimum and maximum loan amount, rather than just the maximum loan amount that is permitted by the current model);

·   an increase in the bidding period for loan listings from 7 days to 14 days; and
 
·   updated performance information about Prosper’s platform and the incorporation by reference of information included in our SEC filings.

I agree that this is a bad idea, but doesn't LC do the same (if not directly, then indirectly via LC itself partially funding some loans)?

[Urbi_et_Orbi]

[Urbi_et_Orbi]

I agree that this is a bad idea, but doesn't LC do the same (if not directly, then indirectly via LC itself partially funding some loans)?

I think this is potentially worse, considering Prosper puts no skin in the game, keeps all risks with lenders - and perhaps even adds an unknown new level of risk by dispensing a partial amount.

[TotoMMB]

Anyone notice this:

The table dictates the interest rate for all borrower loans, based on Prosper Rating, as well as additional factors, such as estimated loss rates, loan terms, group affiliations, competitive conditions and the general economic environment.

Attempting to bring relevance back to groups?

[pioneer11]

No more HRs:  Probably helps the newbie lender from getting all excited by the "high" returns.

My earlier statement turns out to be wrong.  I just checked my credit union and found that their APR is 0.4% higher on the 3 year and 3% higher on the 5 year.  So, if I wanted a loan I would give Prosper a try first.

I fear that the partial funding policy to lead to more desperation loans being made.

[TotoMMB]

Pretty big discount for being a previous Prosper borrower. .35% advange to AA, 1.75% better for Ds.

Of course, I'm assuming these rates only apply to previous borrowers who fully repaid their intial loan(s).

I haven't read any of the legalese, but what about have 2 active loans? Still an option? Any change to the 6-month waiting period?