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[James01]

I'm curious to see whether any other lenders have had their delinquent loans "Settled in Full".  One loan (#17837) that had been making payments fairly regularly now has a principal balance of zero, after this settlement.
I don't remember anything in the agreements I signed about Prosper being able to settle a borrower's debt.  Did I miss something?  I haven't signed any of the new legal agreements since stopping lending back in 2007.  Is it legal for Prosper to do this?  I just sent them an e-mail asking for an explanation.



Thanks for any feedback,

James

[Xenon481]

This is a Prosper 1.0 loan, right?

If so, then it is believed by many to not be legal for Prosper to have taken this action as the agreements between Prosper and the Lenders do not allow for such actions.

[James01]

The origination date is 8/8/07.  If that makes it Prosper 1.0, then yes.

[ira01]

This is a Prosper 1.0 loan, right?

If so, then it is believed by many to not be legal for Prosper to have taken this action as the agreements between Prosper and the Lenders do not allow for such actions.

+1.  Indeed, as I recall the LRA specifically PROHIBITED Prosper from making any settlement that reduced or forgave principal.  But Prosper doesn't give a shit about its legal agreements or Prosper's obligations thereunder.  However, in this particular case, is that actually what happened?  The screen shot appears to show that the borrower actually made full payment (the principal balance was $1,615.32 after the July 25 payment, and the August 30 payment was for just that amount).  While there may or may not be an issue with interest and/or fees, it appears that principal was not reduced as part of a settlement.

[James01]

Since not one penny of this $1,615.32 has appeared in my account, I don't think the borrower actually made the payment.  There's no payment in processing, etc.  It looks like total forgiveness of the principal by Prosper, without my consent (or notification).  The Payment Status for this loan says "Charge-off", and below that, "Paid in full". 

I suggest that other lenders sort through their notes, and look twice at those which are a "Charge-off, Paid in full".  Let's see if Prosper is settling (forgiving) any other loans.  (This is the only loan I have like this, for now.)

[rogerwaite]

IRA, it doesn't show 'paid' in the Status column it show 'Adjusted' (as in "we adjusted the rod we jammed in your ass" me thinks)

[Beerbud1]

What is the loan number please? this loan looks familiar?

[James01]

Beerbud,

It's in the first post -- 17837 -- but here's a screenshot anyway.  You have part of this one?



James

[Beerbud1]

No my bad! close tho, I have notes all around it. Some before and some after it!

[God-Father]

If you look on the LENDER ACCOUNTING tab you will see that you got nothing on the most recent entry for the loan.   On the one I have like this, there was one pretty big payment ($25 on a $50 loan), for a total of $35.65 received. 

[James01]

Yup, the Lender Accounting tab has it.  On August 30, I received $0.00, resulting in a new principal balance of ... wait for it ... $0.00.


Loan forgiveness or settlement by Prosper is not one of the "collection process" which "shall be the exclusive method of servicing and collecting delinquent Notes" per the Lender Registration Agreement I signed on May 3, 2007.

[rogerwaite]

Yup, the Lender Accounting tab has it.  On August 30, I received $0.00, resulting in a new principal balance of ... wait for it ... $0.00.


Loan forgiveness or settlement by Prosper is not one of the "collection process" which "shall be the exclusive method of servicing and collecting delinquent Notes" per the Lender Registration Agreement I signed on May 3, 2007.

So welcome to .org. Won't you join us for a drink to cry in?

[ira01]

Since not one penny of this $1,615.32 has appeared in my account, I don't think the borrower actually made the payment. 

That is certainly possible, but I'm not sure you can know that yet.  The "effective date" was August 30, and I believe that Prosoper may only process these payments monthly.  Given Prosper's general slowness, it is possible that a payment was made but just hasn't hit your account yet.  Or, it is certainly also possible that Prosper forgave that amount (in violation of its legal agreements).  It will be interesting to see what Prosper says in response to your email.  You might want to point out Paragraph 5 in the LRA (I assume you have the same LRA as I do), which states:  "Prosper shall not permit any modification with respect to any Note that would change the interest rate, defer or forgive the payment of principal or interest, reduce or increase the outstanding principal balance, or change the final maturity date on the Note."

[God-Father]

On mine, the last entry was to write-off the remaining balance (no payment).  The previouse entry was where they made whatever kind of settlement payment to get Prosper to agree to the write-off

[James01]

Ira,

Thanks.  The same text is in Paragraph 5 of my LRA, so when (if?) Prosper responds to me I'll point that out.
In my e-mail to Prosper, I also mentioned some of my notes that have been in Chapter 13 for years without payment or followup, one Chapter 13 where the first payment was made two years later (then quickly discharged), and a few Chapter 7s that don't have a discharge date.  Thanks to the .org forums, I was made aware of those sorts of issues. 

God-Father, you might want to also ask Prosper under what authority they wrote off the remainder of your loan -- or whether this was in violation of the legal agreements.

Roger -- good to be here.  I've been lurking for years, but haven't had any reason to post until now.  Glad to join you for a beer.

James