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[Ray Kremer]

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.

Not really. Lending Club has their suitability policy, and two states that are exceptions to it. Prosper has six states with suitability policies, and nada for everywhere else.

[ladeeda]

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.

Not really. Lending Club has their suitability policy, and two states that are exceptions to it. Prosper has six states with suitability policies, and nada for everywhere else.

I stand corrected. I saw the stand-alone suitability agreements presented to CA lenders but didn't realize that there were additional requirements laid out in the Agreement (section 6, for those who might be interested).

[oregonguy]

Now that I'm no longer an active lender, the thing that really strikes me about my Propser experience is how the mechanics of a descending-price auction wrecked returns for lenders.  Every time a listing was bid down below what the borrower was willing to pay, it took money out of lender's pockets.  Lenders needed those marginal returns that were bid away from good listings in order to (at least partially) counter defaults.  If Prosper had been more successful and attracted more money and bidding action from lenders, this fundamental flaw would have been magnified as listings were bid down further. 

The idea that hidden gems at higher rates could be located by savvy lenders never worked as a practical matter.  There wasn't enough solid information in the listings to be able to accurately distinguish good loans, plus of course there was a lot of deception in listings that further muddied any attempt at analysis.

So, looking back, I see no way that the auction model could have ever worked for lenders.  Prosper in my opinion is making the correct decision by abandoning it.  That said, I wouldn't start lending on Prosper again, even if it were allowed in my state.  Prosper has too many other well documented problems, and I think potential lenders should still stay away.

I finally was able to cash out of prosper 100%, nothing will bring me back to lend again. I am really surprised that they are even still around. There will be more loan originations because you don't need to fund at 100%. It should be interesting, but the rates I see probably mean very few people with decent credit going the route of prosper - which means more defaults.

[xraider]

I won't ever bid again on Prosper either.  To bid, I'd have to sign "new agreements."  I don't understand why, since Prosper changes the terms of the agreements with no concern about consequences already.

Also, Prosper's "collections" activity on my defaults is non-existent.  When I bid, I knew that Prosper would sell defaults to jdbs, per the TOS.  Not one single default out of 20 was sold to a jdb, and Prosper hasn't collected dime one on my defaults in more than a year.

Prosper's "transparency" remains non-existent.  I have 2 bks in ch 13 for more than 2 years, with no payments.  Is Prosper even following up on the payment plans?  No idea.  I emailed and did not receive a meaningful response.  I have no confidence that Prosper is doing anything to follow up on the bks, which would be the easiest thing in the world.

Prosper's current financial difficulties are well deserved.

[christoofar215]

Every single one of my loans that defaulted was NEVER sold to a JDB.   None of them.

They are all still with Prosper's smoking-crack collections team.

[christoofar215]

Now that I'm no longer an active lender, the thing that really strikes me about my Propser experience is how the mechanics of a descending-price auction wrecked returns for lenders.  Every time a listing was bid down below what the borrower was willing to pay, it took money out of lender's pockets.  Lenders needed those marginal returns that were bid away from good listings in order to (at least partially) counter defaults.  If Prosper had been more successful and attracted more money and bidding action from lenders, this fundamental flaw would have been magnified as listings were bid down further.  

The idea that hidden gems at higher rates could be located by savvy lenders never worked as a practical matter.  There wasn't enough solid information in the listings to be able to accurately distinguish good loans, plus of course there was a lot of deception in listings that further muddied any attempt at analysis.

So, looking back, I see no way that the auction model could have ever worked for lenders.  Prosper in my opinion is making the correct decision by abandoning it.  That said, I wouldn't start lending on Prosper again, even if it were allowed in my state.  Prosper has too many other well documented problems, and I think potential lenders should still stay away.

I finally was able to cash out of prosper 100%, nothing will bring me back to lend again. I am really surprised that they are even still around. There will be more loan originations because you don't need to fund at 100%. It should be interesting, but the rates I see probably mean very few people with decent credit going the route of prosper - which means more defaults.

Here's a new idea for low-interest quick borrowing.

A) Put your emergency savings fund in a CD for the time that you need the money lended.

B) Open a secured loan for the term of the CD and secure the CD as collateral on the signature loan.    Most credit unions and community banks charge an embarassingly-low interest rate for these secured fixed loans.


If you don't have the emergency savings fund or any savings fund to borrow against, there is no other collateral or you can't get a single-digit interest rate because your credit sucks, then DON'T BORROW MONEY.

[msava]

I won't ever bid again on Prosper either.  To bid, I'd have to sign "new agreements."  I don't understand why, since Prosper changes the terms of the agreements with no concern about consequences already.

Also, Prosper's "collections" activity on my defaults is non-existent.  When I bid, I knew that Prosper would sell defaults to jdbs, per the TOS.  Not one single default out of 20 was sold to a jdb, and Prosper hasn't collected dime one on my defaults in more than a year.

Prosper's "transparency" remains non-existent.  I have 2 bks in ch 13 for more than 2 years, with no payments.  Is Prosper even following up on the payment plans?  No idea.  I emailed and did not receive a meaningful response.  I have no confidence that Prosper is doing anything to follow up on the bks, which would be the easiest thing in the world.

Prosper's current financial difficulties are well deserved.

My thoughts exactly.