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[ira01]

... so that [Prosper] has "skin in the game." 

Agreed.  But for historical completeness, I feel compelled to mention that (as you know) key people at Prosper - including co-founders - individually bid on and participated in many loans.  Even went so far as to pump at least one listing - that of a military veteran - in their since-disappeared forums.  (Not sure, but I wanna say that that loan defaulted.) 

For historical accuracy, I feel compelled to mention that IIRC, the total amount invested by Prosper executives was miniscule.  And I also seem to recall that the performance of their loans was suspiciously better than overall performance. 

Some Prosper people put up their own listings too.

Yes, and I bid on at least one -- Andrew's.  But I seem to recall issues arising with such loans -- didn't at least one receive some sort of special treatment? 

[NewHorizon]

...the total amount invested by Prosper executives was miniscule. 

We have differing definitions of "miniscule".  When all lenders are listed by total investment, CHRISPROSPER (formerly anton) comes in at #21 with about $982K. 

... or is prosper-stats.com messed up?

[ira01]

...the total amount invested by Prosper executives was miniscule. 

We have differing definitions of "miniscule".  When all lenders are listed by total investment, CHRISPROSPER (formerly anton) comes in at #21 with about $982K. 

... or is prosper-stats.com messed up?

I stand corrected.  Those are P3 loans.  I was thinking of P1, where I don't remember anton (or others) having a great deal of money invested. 

[nonattender]

... or is prosper-stats.com messed up?

Prosper Stats is functional and up to date.

[NewHorizon]

Even went so far as to pump at least one listing - that of a military veteran - in their since-disappeared forums.  (Not sure, but I wanna say that that loan defaulted.)

OK, I made myself curious enough to go check.
Here's AMF pumping the loan and others mention other Prosper contributors:
http://www.prosperreport.com/threads/2/0/0/20031.0.HTM

But actually, that loan didn't default.  It just didn't fund.
http://www.prosper.com/groups/member_home.aspx?screen_name=Sharpchef&display_mode=3
(No login req'd)

[msava]

Neither! They turn your account over to a Collection agency!

 That is stupid, isn't?  They've decided to just call people 24/7 in hopes of collecting rather than sell the account or take them to court?

They don't call 24/7. They make 3 calls.

[JackFlash]

 If people default and their loans are moved to "Charge-Off" status, what does that really mean
to the person who defaulted? Is anything marked on their credit report? Are they sued in court?
Or did they just walk off scott free with a stack of cash?

[cubbiesnextyr]

 If people default and their loans are moved to "Charge-Off" status, what does that really mean
to the person who defaulted? Is anything marked on their credit report? Are they sued in court?
Or did they just walk off scott free with a stack of cash?

I think they do get a black mark on their credit, but it's not big.  In reality, they get free money.  They're definitely NOT sued.

[Fred93]

If people default and their loans are moved to "Charge-Off" status, what does that really mean
to the person who defaulted?

This is at the heart of Prosper's malfunction.  It means deadbeats get away with stealing money.

Is anything marked on their credit report?

Hard to know for sure, as I'm not allowed to see arbitrary people's credit reports.  Reports we get are that Prosper has a spotty record.  Sometimes things are reported to credit reporting agencies and sometimes not.

Are they sued in court?

Shockingly, they are not.  Prosper did make a big splash about filing some lawsuits once.  One time.  They hired a supposed hotshot and had him go after 66 borrowers with lawsuits (66 out of something like 9000 charged off loans at that point), and they essentially lost all the suits.  Prosper simply withdrew from a great many of the suits.  In many cases they were unable to even find the borrower!  This demonstrated to thinking borrowers how bad Prosper's systems had been.  Their lack of verification of borrower's information allowed a great many fraudulent loans.  I wrote a blog about this a long time ago. 

http://fred93blog.blogspot.com/2009/11/prospercom-paradise-lost-deadbeats-won.html

Or did they just walk off scott free with a stack of cash?

Bingo. 

[JackFlash]

If people default and their loans are moved to "Charge-Off" status, what does that really mean
to the person who defaulted?

This is at the heart of Prosper's malfunction.  It means deadbeats get away with stealing money.

Is anything marked on their credit report?

Hard to know for sure, as I'm not allowed to see arbitrary people's credit reports.  Reports we get are that Prosper has a spotty record.  Sometimes things are reported to credit reporting agencies and sometimes not.

Are they sued in court?

Shockingly, they are not.  Prosper did make a big splash about filing some lawsuits once.  One time.  They hired a supposed hotshot and had him go after 66 borrowers with lawsuits (66 out of something like 9000 charged off loans at that point), and they essentially lost all the suits.  Prosper simply withdrew from a great many of the suits.  In many cases they were unable to even find the borrower!  This demonstrated to thinking borrowers how bad Prosper's systems had been.  Their lack of verification of borrower's information allowed a great many fraudulent loans.  I wrote a blog about this a long time ago. 

http://fred93blog.blogspot.com/2009/11/prospercom-paradise-lost-deadbeats-won.html

Or did they just walk off scott free with a stack of cash?

Bingo. 

  Wow. I'm just in shock. I suppose word is out, that if you want free money, go to Prosper.


  My thinking is that they lost in court because the money they tried to reclaim wasn't their money.
Thus they had no claim to it. The actual lender would have to sue in court.  Prosper likely halted their
lawsuits because it was costing them far more money than the loan was worth.

 Think about it, Prosper might make $100 in fees on each loan. So if they spend $1000 in court costs
to reclaim a loan, regardless if they win or lose, they lost overall. So it was likely the unwritten company
rule that if a loan goes bad, don't spend a nickel on chasing down the money.

[ira01]

My thinking is that they lost in court because the money they tried to reclaim wasn't their money.  Thus they had no claim to it. The actual lender would have to sue in court. 

No, that isn't correct.  Although as our servicing agent, Prosper should have been allowed to sue on the notes on behalf of the lenders, in order to avoid even the remotest chance of that being a  problem, for this litigation test, Prosper first repurchased all of the loans from the lenders (lenders had a choice: sell their share back to Prosper for the pennies on the dollar Prosper obtained at the previous junk debt sale, or sell their share back to Prosper for zero cash down, and a pro rata interest in all of the litigation recoveries after expenses).  Thus, when Prosper filed these 66 lawsuits, it was the sole owner of all of the loans. 

[yankeefan]

My thinking is that they lost in court because the money they tried to reclaim wasn't their money.  Thus they had no claim to it. The actual lender would have to sue in court. 

No, that isn't correct.  Although as our servicing agent, Prosper should have been allowed to sue on the notes on behalf of the lenders, in order to avoid even the remotest chance of that being a  problem, for this litigation test, Prosper first repurchased all of the loans from the lenders (lenders had a choice: sell their share back to Prosper for the pennies on the dollar Prosper obtained at the previous junk debt sale, or sell their share back to Prosper for zero cash down, and a pro rata interest in all of the litigation recoveries after expenses).  Thus, when Prosper filed these 66 lawsuits, it was the sole owner of all of the loans. 

I believe that, in the end, after they didn't collect anything, they paid those of us who took the pre-rata option the same as they paid the others.

[ira01]

My thinking is that they lost in court because the money they tried to reclaim wasn't their money.  Thus they had no claim to it. The actual lender would have to sue in court. 

No, that isn't correct.  Although as our servicing agent, Prosper should have been allowed to sue on the notes on behalf of the lenders, in order to avoid even the remotest chance of that being a  problem, for this litigation test, Prosper first repurchased all of the loans from the lenders (lenders had a choice: sell their share back to Prosper for the pennies on the dollar Prosper obtained at the previous junk debt sale, or sell their share back to Prosper for zero cash down, and a pro rata interest in all of the litigation recoveries after expenses).  Thus, when Prosper filed these 66 lawsuits, it was the sole owner of all of the loans. 

I believe that, in the end, after they didn't collect anything, they paid those of us who took the pre-rata option the same as they paid the others.

Yes, I believe that is correct.

[JackFlash]

 So why did Prosper lose those 66 cases if they had top notch legal team and actually owned the loans?

[bjjb99]

 So why did Prosper lose those 66 cases if they had top notch legal team and actually owned the loans?

Read these threads at a minimum.  I'm sure others will provide additional links.

http://www.prospers.org/forum/q_a_with_doug_fuller_prosper%E2%80%99s_vice_president_of_operations-t3312.0.html

http://www.prospers.org/forum/empty-t17080.0.html