Could our California attorneys comment on Fuller's claim that the only way Prosper can be the plaintiff in a lawsuit is to buy back the loans from the lenders for a pittance? Could it sue in its capacity as servicing agent? Could it buy the loans for an price based on the net amount ultimately recovered?
I may be the last remaining cynic here, but it seems to me that this is no better for lenders than letting the JDBs buy them, since JDBs will likely sue the same people. (Prosper could periodically check court records to see if the JDB has filed suits against Prosper borrowers, and publicize those judgments.) And it creates a major conflict of interest, where ineffectual collections could become a major profit center for Prosper. If Prosper collects effectively, it makes about $150 in servicing fees (assuming 1%) over 3 years on a $10000 loan. If Prosper lets loans default, then buys the cream of the crop for 5% and litigates, it stands to make $9500 (less litigation costs) on that same $10000 loan.