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[leporello]

What's your next step, Trav?

I'm open to suggestions. 

Sounds like class-action time to me. There were 34 lenders on that loan.

Problem is, there amount of $$ to recover wouldn't be a lot.

[traveler505]

What's your next step, Trav?

I'm open to suggestions. 

Sounds like class-action time to me. There were 34 lenders on that loan.

Problem is, there amount of $$ to recover wouldn't be a lot.

That's the problem.  If there had been offers on a hundred loans, things would be different.

[HollowOak]

What's your next step, Trav?

I'm open to suggestions. 

Sounds like class-action time to me. There were 34 lenders on that loan.

Problem is, there amount of $$ to recover wouldn't be a lot.

34 lenders, "wronged" out of $524 doesn't make a class-action suit. Unless you can show a practice that shows Prosper benefits from this or that the practice is systematically harming lenders, there simply isn't, unfortunately anything that I can see that we can do further regarding this.

It's not as if Traveler505's letter opened a new avenue for collecting on more than one defaulted loan.

[ira01]

Nothing in the agreements prohibits a lender from being a debt buyer.  The early agreements simply referred to sale to "a debt buyer," later versions changed that to "unaffiliated debt buyer."  The term "unaffiliated," I believe, refers to sale of loans to subsidiaries of Prosper Marketplace Inc.  I don't believe that the term would include lenders, since the agreements make it clear that we are customers, not affiliates. 

I agree with this.

As for the next step, the other lenders on this loan should send a demand letter to Prosper for the difference between what they were paid from the JDB and what they would have been paid under Traveler's offer (although, as noted in another thread, we don't know whether Prosper has subtracted any of its costs of sale from the JDB amount).  If there are any in San Francisco, they should sue Prosper in small claims court.  That might get their attention.  In addition, people here may want to divide the list of lenders on that loan up, and each PM a few about this situation.  That way, Prosper can get a lot of demand letters, which also might get their attention.

[ira01]

What's your next step, Trav?

I'm open to suggestions. 

Sounds like class-action time to me. There were 34 lenders on that loan.

Problem is, there amount of $$ to recover wouldn't be a lot.

34 lenders, "wronged" out of $524 doesn't make a class-action suit. Unless you can show a practice that shows Prosper benefits from this or that the practice is systematically harming lenders, there simply isn't, unfortunately anything that I can see that we can do further regarding this.

It's not as if Traveler505's letter opened a new avenue for collecting on more than one defaulted loan.

Although I agree with HO that a class action suit is overkill here (although a broader class action suit, which would cover many topics including, perhaps, this one might lie), I think that there IS more at issue here than this one loan.  For one thing, this was a test case.  If Prosper wasn't so stubborn about not accepting Traveler's offer, other lenders may have made similar offers on other loans.  In addition, there is the question of WHY did Prosper ignore Traveler's offer to the detriment of 34 lenders?  I don't think it is impossible that there is funny business going on with the debt sales.  A lawsuit would allow discovery to find out.  At the very least, I think it is quite likely that Prosper does its usual piss-poor job with the debt sales, even if there isn't any self-dealing going on.  Prosper probably sees the debt sales as an annoyance, and an embarassing one at that.  I doubt it spends much effort or thought on how to maximize the price paid to the lenders.  If so, that certainly does systematically harm all lenders.

[Fred93]

Nothing in the agreements prohibits a lender from being a debt buyer.  The early agreements simply referred to sale to "a debt buyer," later versions changed that to "unaffiliated debt buyer."  The term "unaffiliated," I believe, refers to sale of loans to subsidiaries of Prosper Marketplace Inc. 

And yet, as they were changing the legal agreement to make it clear that the buyer would not be Prosper or a subsidiary, Doug Fuller told us (in his "interview" by Shira) that he intended for Prosper itself to buy some of the loans, right?  Quite confusing.  Are these contradictory?  Or did the response to Doug's comment make them recognize the importance of arms-length transactions and result in the change in the legal document?  Or is each a random event?

[joezyz]

But, to point out again;
We do not know for a fact that they bought the loan for 8.1%.
That is what the lender got after "fees".  There is no way for you to determine that they JDB did not pay 20.1% unless you have the actual contract.

-Joe

[cubbiesnextyr]

But, to point out again;
We do not know for a fact that they bought the loan for 8.1%.
That is what the lender got after "fees".  There is no way for you to determine that they JDB did not pay 20.1% unless you have the actual contract.

-Joe

I just email CS asking what amount Prosper took of my debt sale as reimbursed expenses.  I doubt I'll get a real answer, but asking never hurt.

[xraider]

It appears to be more important to Prosper to keep lenders in the dark and harm us than to do anything that might (gasp) benefit us.

See, e.g., the xraider clause, snuck into the TOS.  Thanks, Trav, for alerting me to that.

[Urbi_et_Orbi]

And yet, as they were changing the legal agreement to make it clear that the buyer would not be Prosper or a subsidiary, Doug Fuller told us (in his "interview" by Shira) that he intended for Prosper itself to buy some of the loans, right?  Quite confusing.  Are these contradictory?  Or did the response to Doug's comment make them recognize the importance of arms-length transactions and result in the change in the legal document?  Or is each a random event?

Perhaps that is why we received such low prices for our bad loans this time - Prosper was the buyer?
 

[acecapital]

In one of my former jobs, I was involved in selling defaulted/underperforming business loans.  We generally pooled small loans, and offered larger loans individually.  We had a list of generally interested parties whom may have been interested in purchasing our loans, and we accepted offers for a certain period of time and took the best one above our lowest acceptable price.  Basically a silent auction with a reserve price. 

It seems that prosper must pool these small loans and sell them in some sort of auction format, and since some loans don't sell there must be some type of reserve price for each pool.  Therefore to get them in any sort of legal trouble you would have to bid on a pool of loans via prospers chosen auction/distribution channel and then have your offer be refused despite it being the highest offer, you can't just send them a letter. 

If you think prosper is not getting as much as they could for these loans, your first step should be to find out how they sell them, and get involved in that process from the position of  a potential buyer.  Though, given that these are pools of significantly past due usecured consumer debt from mostly sub-prime (to say the least) borrowers, $0.08 on the dollar seems pretty fair to me.

acecapital

[ira01]

In one of my former jobs, I was involved in selling defaulted/underperforming business loans.  We generally pooled small loans, and offered larger loans individually.  We had a list of generally interested parties whom may have been interested in purchasing our loans, and we accepted offers for a certain period of time and took the best one above our lowest acceptable price.  Basically a silent auction with a reserve price. 

It seems that prosper must pool these small loans and sell them in some sort of auction format, and since some loans don't sell there must be some type of reserve price for each pool.  Therefore to get them in any sort of legal trouble you would have to bid on a pool of loans via prospers chosen auction/distribution channel and then have your offer be refused despite it being the highest offer, you can't just send them a letter. 

If you think prosper is not getting as much as they could for these loans, your first step should be to find out how they sell them, and get involved in that process from the position of  a potential buyer.  Though, given that these are pools of significantly past due usecured consumer debt from mostly sub-prime (to say the least) borrowers, $0.08 on the dollar seems pretty fair to me.

One problem is that we have no idea how Prosper handles the debt sales, because they won't tell us (and we've asked -- lots).  I think that is outrageous -- these are OUR debts Prosper is selling "for" us.  An auction process would make sense, but I think it is just as likely that Prosper calls the first person it can find and says "Hey, Joe, what will you give me for this basket of bad loans -- 8% of principal?  Ok, that sounds good; send me a check." 

Also, you state that some loans don't sell -- where do you get that from?  IIRC from past debt sales, every loan that went 4+ months late before the cut-off sold, except for the BK's (and possibly a handful that may have fallen through the cracks). 

Prosper chose some very late loans for its "new collection agency test," so obviously it can handle individual loans outside of a pooled process where it wants to.  Unless Prosper can show that its JDB would have paid less overall for the basket of loans it purchased had Traveler's loan been removed, I think Prosper clearly breached its duties to the lenders on that loan by accepting a lower offer than Traveler's (assuming, of course, that Prosper didn't actually get more than Traveler's offer before subtracting large fees for itself as "costs of sale").

[Fred93]

It seems that prosper must pool these small loans and sell them in some sort of auction format, and since some loans don't sell there must be some type of reserve price for each pool.  Therefore

I don't see any evidence of pooling.  In fact, I have some evidence pointing the other way.  I've had 38 loans sold so far, and no two ever sold for the same fraction of outstanding principal.  Therefore, none of these were ever in the same pool.

If you think prosper is not getting as much as they could for these loans, your first step should be to find out how they sell them,

They keep this secret.

and get involved in that process from the position of  a potential buyer.

Several lenders have tried, and have been rebuffed every time.  

Though, given that these are pools of significantly past due usecured consumer debt from mostly sub-prime (to say the least) borrowers, $0.08 on the dollar seems pretty fair to me.

Why do you say "subprime to say the least"?  Some were AA credit grade.  Some were A.

[onthefence]

BigGulp offered to buy a bad debt once.  He was denied too.  So Trav isn't the only one to have attempted this.

With some of the big loans out there going south, who knows who else may have made such offers.

[acecapital]

   
One problem is that we have no idea how Prosper handles the debt sales, because they won't tell us (and we've asked -- lots).  I think that is outrageous -- these are OUR debts Prosper is selling "for" us.  An auction process would make sense, but I think it is just as likely that Prosper calls the first person it can find and says "Hey, Joe, what will you give me for this basket of bad loans -- 8% of principal?  Ok, that sounds good; send me a check." 

I agree that prosper not outlining the debt sale process for lenders is BS.  But there must be some creative way to find out.  Are there any GL's who are still in contact with a borrower who's loan was sold, maybe a friend/relative?  The GL could ask who now owns the loan and take it from there. 

Edit

https://connect.prosper.com/t/1089.aspx

The timing is driven by the accumulation of a large enough number of accounts that results in buyers being interested in doing a transaction. 

- Certainly sounds like the loans are being pooled then sold

We have recently concluded bidding on a package of Prosper loans and are in the process of negotiating terms of the Purchase Sale Agreement with the winning bidder. 

- If there is bidding involved, there must be some sort of auction

   
Also, you state that some loans don't sell -- where do you get that from?  IIRC from past debt sales, every loan that went 4+ months late before the cut-off sold, except for the BK's (and possibly a handful that may have fallen through the cracks). 

I get that from complaints on the forums that some lenders have very past due loans that have not been sold.  If that is incorrect then just disregard the reserve price statement I made.
http://www.prospers.org/forum/new_debt_sale-t4894.0.html

 
Prosper chose some very late loans for its "new collection agency test," so obviously it can handle individual loans outside of a pooled process where it wants to.  Unless Prosper can show that its JDB would have paid less overall for the basket of loans it purchased had Traveler's loan been removed, I think Prosper clearly breached its duties to the lenders on that loan by accepting a lower offer than Traveler's (assuming, of course, that Prosper didn't actually get more than Traveler's offer before subtracting large fees for itself as "costs of sale").

I know most everyone on these forums has a low opinion of prosper, and my opinion of prosper is getting lower and lower every day as well.  But for any company trying to sell tiny, unsecured, low-quality debt not to pool the loans for a sale and instead sell them individually would be unrealistically inefficient and very expensive.