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[cubbiesnextyr]

As Trav noted in the Lender Agreement Version Archive (Verified Lender's Section), Prosper has changed it's Lender Agreement, again.  As of my writing, I have not received notification of this change.

So far, the only change I see between the new agreement and the "old" (11/8/07) version that I can see so far deals with the sample promissory note.

Old Text

7. Method of Payment. I will pay the principal, interest, and any late charges or other fees on this loan when due. Those amounts are called "payments" in this Note. To ensure that my payments are processed in a timely and ef ficient manner, you have given me the choice of making my monthly payments (i) by automated withdrawal
from an account that I designate using an automated clearinghouse (ACH) or other electronic fund transfer, or (ii) by bank drafts drawn by you on my behalf on my account each month; and I have chosen one of these methods. If I close my account or if my account changes or is otherwise inaccessible such that you are unable to
withdraw my payments from that account or draw bank drafts on the account, I will notify you at least three (3) days prior to any such closure, change or inaccessibility of my account, and authorize you t o withdraw my payments from, or draw bank drafts on, another account that I designate.
With regard to payments made by automatic withdrawals from my account, I have the right to (i) stop payment of a preauthorized automatic withdrawal, or (ii) revoke my prior authorization for automatic wit hdrawals with regard to all further loan payments, by notifying the financial institution where my account is held, orally or in writing at
least three (3) business days before the scheduled date of the transfer. I agree to notify you in writing, at least three (3) business days before the scheduled date of the transfer, of the exercise of my right to stop a payment or to revoke my prior authorization for further automatic withdrawals.
I understand that if I have elected to have my payments made by automatic withdrawals from my account:
a. The interest rate set forth in this Note, and the Annual Percentage Rate and related disclosures set forth in my Truth-in-Lending Disclosure Statement include the one percent (1.00%) reduction in my interest rate (the "Preferred Rate") that I received as an incentive to make my payments by preauthorized automatic withdrawals.
b. I will no longer be eligible for the Preferred Rate, and I must make my monthly payments using bank drafts drawn by you on my behalf on my account each month, if (i) I withdraw my authorization to make payments by automatic withdrawals, (ii) I cancel or close my account without establishing a new account at least three (3) days
before the next monthly payment due date, or (iii) on two occasions during the term of this Note, my entire monthly payment cannot be made by automatic withdrawal from my account on the due date because of insufficient funds in the account, or for any other reason (other than an error by you).
c. If I become ineligible for the Preferred Rate, you have the right to add one percent (1.00%) to the interest rate on this Note. If you exercise this right, the increased interest rate will become effective on the due date of the next monthly payment due under this Note, and will continue for the remainder of the term of the Note. The increase
in the interest rate on my Note will result in a higher monthly payment amount, equal to the amount that would be sufficient to repay in full the unpaid principal I owe as of the effective date of the increased interest rate, on the maturity date at the increased interest rate in substantially equal monthly payments. I must pay the higher monthly
payment amount beginning on the first monthly payment due date after the increased interest rate becomes effective.
d. I understand that if the interest rate on my Note is increased as set forth in this Paragraph, the Preferred Rate will not be reinstated for any reason, even if I continue making my payments by automatic withdrawals.

New Text

7. Method of Payment. I will pay the principal, interest, and any late charges or other fees on this loan when due. Those amounts are called "payments" in this Note. To ensure that my payments are processed in a timely and efficient manner, you have given me the choice of making my monthly payments (i) by automated withdrawal from an account that I designate using an automated clearinghouse (ACH) or other electronic fund transfer, or (ii) by bank drafts drawn by you on my behalf on my account each month; and I have chosen one of these methods. If I close my account or if my account changes or is otherwise inaccessible such that you are unable to withdraw my payments from that account or draw bank drafts on the account, I will notify you at least three (3) days prior to any such closure, change or inaccessibility of my account, and authorize you to withdraw my payments from, or draw bank drafts on, another account that I designate.

With regard to payments made by automatic withdrawals from my account, I have the right to (i) stop payment of a preauthorized automatic withdrawal, or (ii) revoke my prior authorization for automatic withdrawals with regard to all further loan payments, by notifying the financial institution where my account is held, orally or in writing at least three (3) business days before the scheduled date of the transfer. I agree to notify you in writing, at least three (3) business days before the scheduled date of the transfer, of the exercise of my right to stop a payment or to revoke my prior authorization for further automatic withdrawals.

I'll post others that I see.

[Xenon481]

I too have not received notification of these changes, and I verified that I have the e-mail option turned on.

ETA: So they are removing the additional 1% fee for Bank Draft?

[bigsisbj]

According to Beyond Compare (I love that program!)  The only other change is the addition of the following sentance to section 5:

Prosper shall retain as additional servicing compensation, NSF fees and similar fees, except for late charges, which will be paid to you. Prosper shall also retain as additional servicing compensation additional amounts payable by borrowers in respect of the discount foregone by borrowers as a result of the borrower's withdrawal of authorization or other termination of authority for loan payments to be made by automatic withdrawals, as provided in Paragraph 7 of the Note.

[Greebo]

Did you mean "borrower's agreement"?

Cause I ain't agreeing to pay Prosper NUTTIN.

[Shenandoah]

Did you mean "borrower's agreement"?

Cause I ain't agreeing to pay Prosper NUTTIN.

It's in the Example Promissory note which is given in both the lender's and borrower's agreements.

[cubbiesnextyr]

According to Beyond Compare (I love that program!)  The only other change is the addition of the following sentance to section 5:

Prosper shall retain as additional servicing compensation, NSF fees and similar fees, except for late charges, which will be paid to you. Prosper shall also retain as additional servicing compensation additional amounts payable by borrowers in respect of the discount foregone by borrowers as a result of the borrower's withdrawal of authorization or other termination of authority for loan payments to be made by automatic withdrawals, as provided in Paragraph 7 of the Note.

Can anyone explain to me what that means?

[HollowOak]

With Cubbies's permission I moved this thread to the Lobby. I apologize to those responders who posted in the expectation of having their posts remain in the more private areas of the boards. If you feel strongly about not wanting your post in The Lobby, PM me and I'l move or delete your response.

[onthefence]

According to Beyond Compare (I love that program!)  The only other change is the addition of the following sentance to section 5:

Prosper shall retain as additional servicing compensation, NSF fees and similar fees, except for late charges, which will be paid to you.

So who was paid the NSF fees before?  Is this the current standing practice, or a change?

[traveler505]

My comment here is incorrect; I posted a correct explanation below.

According to Beyond Compare (I love that program!)  The only other change is the addition of the following sentance to section 5:

Prosper shall retain as additional servicing compensation, NSF fees and similar fees, except for late charges, which will be paid to you.

So who was paid the NSF fees before?  Is this the current standing practice, or a change?

That language was in the 11/8/07 version.  The comparable language in the 2/15/06 Lender Agreement was wordier, but had the same meaning.  This does not appear to be a substantive change.

[traveler505]

Did you mean "borrower's agreement"?

Cause I ain't agreeing to pay Prosper NUTTIN.

A sample promissory note is attached as an exhibit to the Lender Agreement.

[traveler505]

I too have not received notification of these changes, and I verified that I have the e-mail option turned on.

ETA: So they are removing the additional 1% fee for Bank Draft?

That's what it looks like. 

However, it seems that the elimination of the 1% fee would have been accompanied by an increase in the rate caps from 35% to 36% (in the absence of more restrictive state laws), and that hasn't happened.

[ira01]

I too have not received notification of these changes, and I verified that I have the e-mail option turned on.

ETA: So they are removing the additional 1% fee for Bank Draft?

That's what it looks like.

From the snippets quoted in this thread, it appears that Prosper's two changes are contradictory.  In the sample Prommissory Note, they appear to have removed the 1% fee for the bank draft option, yet the added language in Paragraph 5 states that this 1% fee shall go to Prosper as "additional servicing compensation."  What a surprise -- Prosper's changes make no sense.

[traveler505]

According to Beyond Compare (I love that program!)  The only other change is the addition of the following sentance to section 5:

Prosper shall retain as additional servicing compensation, NSF fees and similar fees, except for late charges, which will be paid to you. Prosper shall also retain as additional servicing compensation additional amounts payable by borrowers in respect of the discount foregone by borrowers as a result of the borrower's withdrawal of authorization or other termination of authority for loan payments to be made by automatic withdrawals, as provided in Paragraph 7 of the Note.

Sorry I missed this earlier; please disregard my previous post regarding the first quoted sentence.

The quoted sentences were deleted from the "Servicing Compensation" paragraph of Section 5, not added to it.  They were present in the 11/8/07 version, and omitted in the 1/4/08 version.

The first deleted sentence was mostly redundant; the "Servicing Rights" paragraph already specified that NSF fees belonged to Prosper.  The only potentially significant change is that the agreement is now silent as to who gets the late charges; previous versions clearly assigned them to the lenders.

The second deleted sentence matches the change in the promissory note.  Presumably, the 1% bank draft charge on loans prior to 1/4/08 will either be waived, or Prosper will rely on the versions of the Lender Agreements which were in effect prior to 1/4/08 to justify its claim to these funds.

[ira01]

According to Beyond Compare (I love that program!)  The only other change is the addition of the following sentance to section 5:

Prosper shall retain as additional servicing compensation, NSF fees and similar fees, except for late charges, which will be paid to you. Prosper shall also retain as additional servicing compensation additional amounts payable by borrowers in respect of the discount foregone by borrowers as a result of the borrower's withdrawal of authorization or other termination of authority for loan payments to be made by automatic withdrawals, as provided in Paragraph 7 of the Note.

Sorry I missed this earlier; please disregard my previous post regarding the first quoted sentence.

The quoted sentences were deleted from the "Servicing Compensation" paragraph of Section 5, not added to it.  They were present in the 11/8/07 version, and omitted in the 1/4/08 version.

Well at least that makes sense then.  I wonder why Prosper did this, however.  Without the bank draft fee (actually an ACH discount), more borrowers may choose the bank draft option, which has to be a pain in the ass for Prosper to handle (and we know they don't handle them in an especially timely manner).  My guess is that the 1% bank draft fee actually violated some law or regulation, which Prosper just figured out (or got a nastygram from a regulatory agency). 

[gelt4u]

ira - are you sure they are removing it?

or are they just renaming it?

the verbiage 'discount the borrower's forgo' seems to indicate that it is still there.