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[RateLadder_com]

http://www.rateladder.com/2008/01/15/prosper-is-going-to-sue-deadbeat-borrowers/

[mhs505]

Great news. 

Hey RL, since you seem to have their ear, can you also talk to them about following up with the paperwork when a borrower files BK?  My understanding is that there are legal manuevers that can be undertaken that may keep debts from being dischargeable if they were taken our during a certain period.  Also, there are certain types of BK's underwhich PMI (and thus us) would still get paid if they would only file the paperwork!!

edited to add IANAL and I am sure there are others would could explain this better. 

[Fred93]

I sent the following email to Doug Fuller tonite:

From: xxxx
To: dfuller@prosper.com
Subject: legal text - tax reporting issues

Your offer to "assign to prosper" and "default at zero value" the loans that are in the "legal test" will produce a "sale" for tax purposes, which you will report on IRS form 1099B.  This will result in lenders taking a long term capital loss on the entire principal value of the loans.

When you later pay to lenders the amounts recovered, how do you intend to report those amounts?  If lenders are force to pay tax on those proceeds at a tax rate higher than the long term capital gains rate (which seems likely) then lenders are harmed by this process.

[Xenon481]

As of January 15th, 2008, the total Gross Amount Due to you on these loans is $325.26.

The total of the 68 loans has a gross amount due of $735,709.66 . . .

Based on the gross amounts due as of $325.26 [Should this have been Date or remove the "as"] if all lenders chose to remain in the test, your share would be 4.4211%.

You need to accept this NOW!!!

4.4211% of the Total amount due is $32,526.46, not $325.26!  Not only can Prosper not proofread, apparently they don't even understand percentages as this one is off by a factor of 100.

[xraider]

RL, that's a very interesting email.  I'm not sure Prosper can legally set a price without waivers from lenders, even if there is mathematical exactitude on what JDBs have paid in the past.  However, I think it's an interesting idea, 24% is a generous (to Prosper and to lenders) contingency, and I hope it works! 

There is no discussion of settlement authority.  I assume that Prosper will have the right to determine whether to accept a settlement? 

In California, should any of these cases go to judgment, court costs and service of process fees (as well as garnishment costs) will be awarded to the prevailing party. 

Since none of my loans are in the New Agency Test, I appreciate the update, and would appreciate your continuing to update on the progress of the suits and of payments.  I hope that Prosper does significantly better on these matters for the lenders than did the JDBs.

[cubbiesnextyr]

I have not received this email (and yes I have a loan listed as "New Agency Test").

[Greebo]

Based on the gross amounts due as of $325.26

due as of a monetary amount?

How the heck can something be due as of a monetary amount?

These people need to have someone else check their work.

[ks6328]

 
I got the same email for my two loans in the test.  Mine shows

your share would be 2.1830%

which should be .021830%.

I think I'm going to opt out because

we estimate that the test could continue for up to 18 to 24 months.

and if the secondary market becomes available I intend to be completely out of Prosper before the end of this year.
 

[Mtnchick]

I have not received this email (and yes I have a loan listed as "New Agency Test").

I got mine this AM. I am too financially retarded to understand it. I will follow whatever you sheepherders tell me I should do.

/dead serious

[yankeefan]

I'll probably opt-in  for my four loans just to keep informed on the process. 

[RateLadder_com]

I just opted in at 4.4211%.
If my share amount changes I might reconsider, but as yankee fan says.  I might stay in the pool just to keep informed as to how it is going.

[Urbi_et_Orbi]

Given the uncertainty, I am tempted to take the rather puny JDB price...but, on the other hand, we have been screaming about tougher actions against these deadbeats - and this is what Prosper should have been doing all along - so I feel some sense of "need" to see this through.

I only have 1 loan in the pool.

[LoanChimp]

I am going to opt out of the test.

(That doesn't necessarily mean I wouldn't select this CA in the future if the test is successful and this CA became one of the CA options.)

[HollowOak]

If I had a loan in the test, I would stay in just to see how it all works out. Prosper may divulge more information to those involved in the test than to the rest of us. That alone would be worth the paltry few dollars I'd get from selling out right now.

[cubbiesnextyr]

I haven't gotten my email yet, but I think I'll stay in.