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[leporello]

Over on .com this post pointed to another Prosper fluff piece in which they define "Prosper Select" as the very best, squeaky-clean borrowers and proceed to quote performance statistics about them.

Makes me see red.

[bamalucky]

You are kidding right?

Prosper has every right to do this..Lenders have been out of control..

Prosper hasn't made anyone bid on HR.

Another attempt from you to blame prosper for lender stupidity.


I don't own prosper loans as a whole..I've always advocated less loans with bigger bids..These little silly $50 bids get you the AVERAGE.

[ira01]

Over on .com this post pointed to another Prosper fluff piece in which they define "Prosper Select" as the very best, squeaky-clean borrowers and proceed to quote performance statistics about them.

Makes me see red.

What makes me see red is the fact that they ran these numbers on the 12 month period ending 7/31/07, observed on 8/31/07.  Assuming that the loans were evenly distributed throughout the year, that means that 1/12 of all the loans observed only had 1 payment due (and half of those couldn't possibly have been more than Late<15, which it appears to me that Prosper counts as "current").  Thus, more than 4% of all loans were counted as current, even though some undoubtedly were not.  In addition, another 1/12 of all loans observed only had 2 payments due, etc.  Fully 1/3 of all the loans observed had 4 or fewer payments due, and we all know that missed payments pick up after that.  Thus, this methodology inherently produces results that are biased towards being too rosy.  What a surprise!

ETA: In fairness, it turns out this has some effect, but not a major one.  Using Prosper's criteria (8/1/06-7/31/07), the ROI's by credit grade are:
AA=9.05
A=9.58
B=9.85
C=9.55
D=13.74 <-- this is responsible for Prosper's near-prime result of 10.73
E=14.99

Using the same criteria, except 4/1/06-3/31/07 (so every loan had at least 5 payments due -- still pretty new, but much better than 1 payment), the ROI's are:
AA=8.62
A=9.28
B=9.47
C=10.41
D=13.2
E=12.09

For most credit grades, the ROI only dropped about 50 bp.  C actually increased 86bp.  The big drop was E's (probably to be expected, since as more time goes by, more go late/default) -- a drop of 290 bp.

Another thing I noticed that seems to be wrong with Prosper's analysis, is that the lender servicing fee increased 50 bp on 2/12/07, which does not appear to be fully reflected in their calculations (the performance page uses about 62 bp as the weighted servicing fee), so for more recent portfolios (e.g., the new investments Prosper is using this advertising to attract), the listed ROI for near-prime and sub-prime Select borrowers should be reduced about 38 bp.

[nonattender]

when you guys bitch and moan about shit like this, it does nothing but undermine complaints about things that are legitimately wrong.

try to relax.

-t

[Tokyo Joe]

You are kidding right?

Prosper has every right to do this..Lenders have been out of control..

Prosper hasn't made anyone bid on HR.

Another attempt from you to blame prosper for lender stupidity.


I don't own prosper loans as a whole..I've always advocated less loans with bigger bids..These little silly $50 bids get you the AVERAGE.

And the circle is complete now; the counterculture is the establishment.  bama' has become what he once railed against...

[leporello]

Prosper has every right to do this..Lenders have been out of control..

Bama, I completely agree with you. Prosper has every right to do this. Just like the Chicago Cubs have every right to claim they finished the season undefeated.^*
---------------------------------------------------------------
^*Other than the games they lost.

[cubbiesnextyr]

Prosper has every right to do this..Lenders have been out of control..

Bama, I completely agree with you. Prosper has every right to do this. Just like the Chicago Cubs have every right to claim they finished the season undefeated.^*
---------------------------------------------------------------
^*Other than the games they lost.

 

[leporello]

Prosper has every right to do this..Lenders have been out of control..

Bama, I completely agree with you. Prosper has every right to do this. Just like the Chicago Cubs have every right to claim they finished the season undefeated.^*
---------------------------------------------------------------
^*Other than the games they lost.

 

I was wondering when that would flush you out of hiding!

You do like the analogy, don't you, Cubbies?

[cubbiesnextyr]

Prosper has every right to do this..Lenders have been out of control..

Bama, I completely agree with you. Prosper has every right to do this. Just like the Chicago Cubs have every right to claim they finished the season undefeated.^*
---------------------------------------------------------------
^*Other than the games they lost.

 

I was wondering when that would flush you out of hiding!

You do like the analogy, don't you, Cubbies?

It's more like when I say the Cubs have the best record in baseball*

*After June 6th.

[traveler505]

when you guys bitch and moan about shit like this, it does nothing but undermine complaints about things that are legitimately wrong.

try to relax.

-t

But, oddly enough, deceptive marketing is more likely to result in serious consequences for Prosper than incompetence.

[nonattender]

when you guys bitch and moan about shit like this, it does nothing but undermine complaints about things that are legitimately wrong.

try to relax.

-t

But, oddly enough, deceptive marketing is more likely to result in serious consequences for Prosper than incompetence.

wow, that's an indredibly specious statement.  (no response necessary.)

anyway, and on a positive note, the index gives some much-needed-quasi-official-guidance to newbies, assuming they're smart enough to connect the dots...

-t

[112233]

when you guys bitch and moan about shit like this, it does nothing but undermine complaints about things that are legitimately wrong.

try to relax.

-t

But, oddly enough, deceptive marketing is more likely to result in serious consequences for Prosper than incompetence.

like catching the eye of the SEC and/or lawsuits?

[nonattender]

You are kidding right?

Prosper has every right to do this..Lenders have been out of control..

Prosper hasn't made anyone bid on HR.

Another attempt from you to blame prosper for lender stupidity.

I don't own prosper loans as a whole..I've always advocated less loans with bigger bids..These little silly $50 bids get you the AVERAGE.

Beautiful in its own right, but, coming from a (former) lead plaintiff, priceless.

-t

[havastat]

The Chicago Cubs indeed finished the season undefeated in select games (Selected after the season was over, naturally).

If only we too could select loans at the end rather than at the beginning of the season, we too could get the same great performance on our own selected loans.

[nonattender]

when you guys bitch and moan about shit like this, it does nothing but undermine complaints about things that are legitimately wrong.  try to relax.

-t

But, oddly enough, deceptive marketing is more likely to result in serious consequences for Prosper than incompetence.

like catching the eye of the SEC and/or lawsuits?

The effective, functional, difference, between an SEC registered peer to peer lending company and an SEC unregistered peer to peer lending company is as follows (which alters net risk profile not one whit, and makes the entire case hinge upon proving some sort of damage, beyond mere lack of registration):

Before registration, lenders were subject to the exact same idiosyncratic risks on a per borrower basis.
"Choose to lend money to borrowers who wind up not paying you back and you lose what you lent out."

After registration, lenders were subject to the same idiosyncratic risks on a per borrower basis, except that now, due to the corporate structure necessitated by the labeling of the notes as "securities", the lenders are subject to a NEW risk, that of operational risk of the p2p lending company itself, as "notes" are now a general obligation of the company, and not a general obligation of the individual borrowers...

Pre registration:   Lenders <-> Borrowers
Lenders own debt obligations of individual borrowers.  Risk is that borrowers do not pay back the loans.

Post registration:  Lenders <-> Prosper <-> Borrowers
Lenders own debt obligations of Prosper, Prosper owns borrower debt obligations.  Same risk as before, except that now there's the added risk that, if anything happens to Prosper, there go all the "notes"...

So, from a functional analytic perspective, the loans were safer before the SEC stepped in to baby us.

All else is greed talking.

-t