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[James01]

The O.C. Small Claims Advisory tells me that I'd need to file suit in San Francisco, if and when it comes to that.  Okay.

[Xenon481]

Even if Prosper holds strong on the stance that they can significantly change material facts in the LRA without approval and somehow get somebody to back them up on it, you are still the owner of the Promissory Note, not Prosper (Pre-SEC loans only). As such, Prosper has absolutely no right (nor have they attempted) to change the terms of the Promissory Note.

My most recent Promissory Note is from April 26th, 2007 and specifically contains language about how Defaults and Remedies will be handled including potential acceleration of maturity; Forgiveness or Settlement of debt is specifically not listed as a valid remedy for default.

Also, the Waivers section of the Promissory Notes contains the following language:

You [the owner of the note] may accept late payments or partial payments, even though marked "paid in full," without losing any rights under this Note, and you may delay enforcing any of your rights under this Note without losing them.

[havastat]

Good points.

I agree that so far as the legal arrangemnt under the original Prosper I agreement is concerned, Prosper is simply a servicing agent on the notes who can be fired if they breach their contract by failing to perform on their servicing obligations on the notes.

Prosper is not the owner of the notes. In its status as a contract note servicer, it has as about much right to modify the notes as a person hired to keep the air conditioning running has a right to change the mortgage.

Moreover, Prosper may possibly be estopped from claiming that it is the owner of the notes with the right to modify the terms, based on previous official and judicial representations. Prosper has previous attempted to avoid liability of various sorts by expressly claiming that it was simply a broker between the lenders and borrowers with no direct interest in the notes, and hence had very limited responsibilities for them.

The failed attempt to pusue defaulters in California courts comes to mind as an example.

[James01]

I'm looking at court records -- in San Francisco Superior Court Case #CGC-08-473799, Prosper Marketplace, Inc. vs. Roger Treskunoff, and in Case #CGC-08-474617, vs. Lavina Lewis -- in Section 9 of the Complaint, Prosper claims "Prosper Marketplace, Inc. is the owner of the account sued upon herein." 

Can you refer me to a specific case in which Prosper claimed no ownership in the notes?

Thanks,

James

[ira01]

I'm looking at court records -- in San Francisco Superior Court Case #CGC-08-473799, Prosper Marketplace, Inc. vs. Roger Treskunoff, and in Case #CGC-08-474617, vs. Lavina Lewis -- in Section 9 of the Complaint, Prosper claims "Prosper Marketplace, Inc. is the owner of the account sued upon herein." 

I believe that was a NAT loan -- one of the loans in a pilot program of suing delinquent borrowers.  The way that program worked, is that Prosper repurchased all of the loans in the test from the original lenders, either for a sum of money (equal to what it would have fetched at the previous JDB sale), or for no money upfront but a proportional share of the supposed eventual litigation returns, at the option of each lender.  So for those loans and those loans only, Prosper really was the owner of the loans (at the time it sued on the loans).  Unfortunately for the lenders, Prosper and its hand-picked collections law firm totally fucked up the whole program, losing virtually all of the cases after failing to properly conduct the litigation.  There is a thread (or several) here discussing the whole program in great detail. 

Can you refer me to a specific case in which Prosper claimed no ownership in the notes?

That was the infamous Gaerske loan, in which Prosper refused to abide by its so-called "100% Identity Theft Guarantee," even after the supposed "borrower" filed sworn affidavits in court that it was his ex-wife who had applied for the Prosper loan (and got the proceeds) without his knowledge or participation. 

[ira01]

Even if Prosper holds strong on the stance that they can significantly change material facts in the LRA without approval and somehow get somebody to back them up on it, you are still the owner of the Promissory Note, not Prosper (Pre-SEC loans only). As such, Prosper has absolutely no right (nor have they attempted) to change the terms of the Promissory Note.

My most recent Promissory Note is from April 26th, 2007 and specifically contains language about how Defaults and Remedies will be handled including potential acceleration of maturity; Forgiveness or Settlement of debt is specifically not listed as a valid remedy for default.

Also, the Waivers section of the Promissory Notes contains the following language:

You [the owner of the note] may accept late payments or partial payments, even though marked "paid in full," without losing any rights under this Note, and you may delay enforcing any of your rights under this Note without losing them.

I think the borrower would have an excellent case that Prosper either had actual or apparent authority as the lenders' agent, and that as such, when Prosper agreed to settle the debt for less than was owed, the borrower was effectively released from any further obligation on the note.  I think that the lenders' remaining claim would properly be against Prosper for breach of contract (and many other things), and not against the original borrowers.  I think it would be patently unfair to borrowers to have Prosper agree to a settlement that induced the borrowers to make partial payment, and then have the lenders come back for more from the borrower (even though the borrower did, of course, originally owe the full amount).  It would be as if a credit card debtor negotiates a deal with the card issuer to pay say 50 cents on the dollar in exchange for the rest of the debt being written off, and then having some bond buyer appear (after the card holder paid the 50%) and demand the other 50% from the card holder claiming that the issuer lacked authority to enter into the deal because the issuer had securitized the debt and the bond holder was the real creditor. 

[Xenon481]

Even if Prosper holds strong on the stance that they can significantly change material facts in the LRA without approval and somehow get somebody to back them up on it, you are still the owner of the Promissory Note, not Prosper (Pre-SEC loans only). As such, Prosper has absolutely no right (nor have they attempted) to change the terms of the Promissory Note.

My most recent Promissory Note is from April 26th, 2007 and specifically contains language about how Defaults and Remedies will be handled including potential acceleration of maturity; Forgiveness or Settlement of debt is specifically not listed as a valid remedy for default.

Also, the Waivers section of the Promissory Notes contains the following language:

You [the owner of the note] may accept late payments or partial payments, even though marked "paid in full," without losing any rights under this Note, and you may delay enforcing any of your rights under this Note without losing them.

I think the borrower would have an excellent case that Prosper either had actual or apparent authority as the lenders' agent, and that as such, when Prosper agreed to settle the debt for less than was owed, the borrower was effectively released from any further obligation on the note.  I think that the lenders' remaining claim would properly be against Prosper for breach of contract (and many other things), and not against the original borrowers.  I think it would be patently unfair to borrowers to have Prosper agree to a settlement that induced the borrowers to make partial payment, and then have the lenders come back for more from the borrower (even though the borrower did, of course, originally owe the full amount).  It would be as if a credit card debtor negotiates a deal with the card issuer to pay say 50 cents on the dollar in exchange for the rest of the debt being written off, and then having some bond buyer appear (after the card holder paid the 50%) and demand the other 50% from the card holder claiming that the issuer lacked authority to enter into the deal because the issuer had securitized the debt and the bond holder was the real creditor.  

Right, the reason that I point it out is that it shows that Prosper was not properly handling its fiduciary duties as the servicer of the note payments as the promissory notes that we lenders purchased didn't allow for the actions that Prosper took.

[ira01]

Even if Prosper holds strong on the stance that they can significantly change material facts in the LRA without approval and somehow get somebody to back them up on it, you are still the owner of the Promissory Note, not Prosper (Pre-SEC loans only). As such, Prosper has absolutely no right (nor have they attempted) to change the terms of the Promissory Note.

My most recent Promissory Note is from April 26th, 2007 and specifically contains language about how Defaults and Remedies will be handled including potential acceleration of maturity; Forgiveness or Settlement of debt is specifically not listed as a valid remedy for default.

Also, the Waivers section of the Promissory Notes contains the following language:

You [the owner of the note] may accept late payments or partial payments, even though marked "paid in full," without losing any rights under this Note, and you may delay enforcing any of your rights under this Note without losing them.

I think the borrower would have an excellent case that Prosper either had actual or apparent authority as the lenders' agent, and that as such, when Prosper agreed to settle the debt for less than was owed, the borrower was effectively released from any further obligation on the note.  I think that the lenders' remaining claim would properly be against Prosper for breach of contract (and many other things), and not against the original borrowers.  I think it would be patently unfair to borrowers to have Prosper agree to a settlement that induced the borrowers to make partial payment, and then have the lenders come back for more from the borrower (even though the borrower did, of course, originally owe the full amount).  It would be as if a credit card debtor negotiates a deal with the card issuer to pay say 50 cents on the dollar in exchange for the rest of the debt being written off, and then having some bond buyer appear (after the card holder paid the 50%) and demand the other 50% from the card holder claiming that the issuer lacked authority to enter into the deal because the issuer had securitized the debt and the bond holder was the real creditor.  

Right, the reason that I point it out is that it shows that Prosper was not properly handling its fiduciary duties as the servicer of the note payments as the promissory notes that we lenders purchased didn't allow for the actions that Prosper took.

I certainly agree with that, and I've said it many times.  In many ways I'm sorry that the securities class action came along when it did, because it had the effect of short-circuiting an effort to hold Prosper responsible for its many breaches of duty to its lenders.  But at least hopefully the class action will teach Prosper a strong lesson (if it doesn't bankrupt it out of business). 

[James01]

Can you refer me to a specific case in which Prosper claimed no ownership in the notes?

That was the infamous Gaerske loan, in which Prosper refused to abide by its so-called "100% Identity Theft Guarantee," ...

I've been unsuccessful in finding any information on the Gaerske case, through Google or through the courts.  Could you tell me what venue it was tried in, or do you have a case number?  This is my first experience navigating the court system.  The California Superior Court websites are such a patchwork.  Some have case documents online; most don't.  Some charge a fee to do a party search; some don't.  I've found records in San Francisco, San Diego, and Sacramento counties, but no Gaerske yet.  This gives me a new respect for the work that (good) lawyers do.

[ira01]

Can you refer me to a specific case in which Prosper claimed no ownership in the notes?

That was the infamous Gaerske loan, in which Prosper refused to abide by its so-called "100% Identity Theft Guarantee," ...

I've been unsuccessful in finding any information on the Gaerske case, through Google or through the courts.  Could you tell me what venue it was tried in, or do you have a case number?  This is my first experience navigating the court system.  The California Superior Court websites are such a patchwork.  Some have case documents online; most don't.  Some charge a fee to do a party search; some don't.  I've found records in San Francisco, San Diego, and Sacramento counties, but no Gaerske yet.  This gives me a new respect for the work that (good) lawyers do.

IIRC, it was in BK court in Oakland.  There is a lengthy thread about it here somewhere, although I can't find it -- perhaps I have his name spelled slightly wrong.  Xraider is the one who brought the matter to light -- I'm sure she'll jump in with a link and/or more info, although I think she is out of the country on vacation now.

[Beerbud1]

Can you refer me to a specific case in which Prosper claimed no ownership in the notes?

That was the infamous Gaerske loan, in which Prosper refused to abide by its so-called "100% Identity Theft Guarantee," ...

I've been unsuccessful in finding any information on the Gaerske case, through Google or through the courts.  Could you tell me what venue it was tried in, or do you have a case number?  This is my first experience navigating the court system.  The California Superior Court websites are such a patchwork.  Some have case documents online; most don't.  Some charge a fee to do a party search; some don't.  I've found records in San Francisco, San Diego, and Sacramento counties, but no Gaerske yet.  This gives me a new respect for the work that (good) lawyers do.

IIRC, it was in BK court in Oakland.  There is a lengthy thread about it here somewhere, although I can't find it -- perhaps I have his name spelled slightly wrong.  Xraider is the one who brought the matter to light -- I'm sure she'll jump in with a link and/or more info, although I think she is out of the country on vacation now.

Gaerke loan was in and from Northern Ohio! I believe "He" filed Bankruptcy in Cleveland. He was/is a Chiropractor. She was arm candy!

[Beerbud1]

Here is the Thread you were looking for:

http://www.prospers.org/forum/anyone_on_ashley_gaerkes_loan_possibly_in_the_name_of_oakland_gaerke-t8232.0.html

[NewHorizon]

Lemme throw in:
Fred93's take on the collection test cases overall:
http://fred93blog.blogspot.com/2009_08_01_archive.html

Prosper's take on their collection test cases:
http://blog.prosper.com/2009/11/03/the-results-from-the-legal-collections-test/

Recent ORG discussion about an article on Prosper's current collection procedures where, imho, Prosper is more concerned about minimizing Prosper's court costs than minimizing lenders' cost of uncollected funds.
http://www.prospers.org/forum/empty-t28065.0.html

[ira01]

Here is the Thread you were looking for:

http://www.prospers.org/forum/anyone_on_ashley_gaerkes_loan_possibly_in_the_name_of_oakland_gaerke-t8232.0.html

Yep, that's the one.  And now I see why "Oakland" was in my head.   

[tmullin1217]

Not "Settled" but adjusted, rather.

Status    Total        Int        Princ        Balance
Paid        $0.96        -         $0.96       $43.27
Paid        $0.96      $0.96      -            $85.42
Paid        $3.81      $0.06     $3.75       $44.22
Paid        $0.96      $0.09     $0.87       $47.97

There's another payment currently processing, that is of the type "Adjust 2"

Dec-31-2012    Adjust 2   Processing    $0.81