If the "guidelines" referred to the Lender Agreement, and not just the "prosper Policies", then they wouldn't be so insistent on lender's signing the new agreement before participating further.
+1. Moreover, "guidelines" does not include the Lender Registration Agreement, which is a legal contract between Prosper and its "Lenders." Furthermore, the specific terms in the LRA expressly prohibit the very action (forgiving principal) that Prosper has taken. There is no way in hell that Prosper was legally permitted to do that. Under Prosper's argument, Prosper could simply unilaterally modify the LRA to include the following provision: "Prosper may, at any time it so desires, take ownership of all of a Lender's notes and cash account balance, without compensation of any kind, solely in Prosper's discretion. Moreover, Prosper may, solely in its own discretion, transfer as much money from a Lender's linked bank account to Prosper as Prosper desires, with no compensation to the Lender. Furthermore, Lender agrees that Lender's first-born child is now the legal property of Prosper, and Lender shall immediately send such child to Prosper." Is Prosper really suggesting such an amendment would be legally acceptable? If not, how is that any different? If so, then why would anyone ever participate as a Lender in Prosper?
If this case wound up in my small claims court, it wouldn't even be a close case -- I would immediately enter judgment against Prosper in favor of the Lender (leaving aside the fact that I would have to recuse myself from any case in which prosper was a party). I find Prosper's position to be wholly devoid of merit, bordering on the sheer frivolous. Of course, the foregoing is my personal opinion only, and is not intended to constitute, nor should it be construed as providing, legal advice.