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[112233]

there is no collection activity after 90 days of assignment (with no payment) or 120 days after a payment is due?

perhaps this is meant to set up the loan for sale, but what happens if the loan is not sold right away? it just sits around with noone trying to collect?

is this a standard practice in the industry?

2.7 Upon receipt of assignment of an Account for collection, Collector shall use reasonable best efforts to collect delinquent amounts on such Account. Accounts recalled by the Company, and Accounts on which no currently delinquent payments have been received by the Collector 90 days after assignment of the Acount, or after any payments become 120 days contractually past due, the Account shall be transferred back to Company by Collector at no charge to Company. When transferring an Account back to Company, Collector shall transfer to Company all files, records and documentation relating to the Account. Collector acknowledges and agrees that its receipt of Accounts pursuant to this Agreement is for purposes of collection only, and Collector shall not obtain or acquire any ownership interest in any Accounts assigned to Collector for collection hereunder.

http://www.secinfo.com/d11MXs.u2C7n.7.htm

[ira01]

This says that after that amount of time, the account "shall be transferred back to [Prosper]."  There's no evidence this actually happens, and certainly the loans continue to state "in collections" on the loan pages (not that that really means a whole lot, of course).  I'm pretty sure that if this really does happen, it violates assurances that have been made to us by Prosper that loans that are very late (more than 4+ months which miss a debt sale) continue to remain in collections.  Not that Prosper saying one thing and doing something else is so rare either, of course.  Someone should email Doug Fuller about this.

[112233]

if prosper starts/resumes in-house collections after receiving the loan back then everything is fine. Im just concerned there may be a large lag between the time collection activity stops and the loan is sold.

[Fred93]

I believe it is likely that the SEC document is simply in error.

Many Prosper documents contain lots of wrong details, as if the lawyers writing them don't really know the details of how things are done.

[ira01]

I believe it is likely that the SEC document is simply in error.

Many Prosper documents contain lots of wrong details, as if the lawyers writing them don't really know the details of how things are done.

Except that 112233 isn't citing the SEC document itself, which was undoubtedly drafted by Prosper's lawyers and may well be incorrect, but rather an exhibit to the document which purports to be the actual agreement between Prosper and Penncro.  Unless that has been superseded by another amendment that is not included in the SEC filing (which does include one addendum), that is the legal contract governing the Prosper/Penncro relationship.

[Fred93]

...112233 isn't citing the SEC document itself, which was undoubtedly drafted by Prosper's lawyers and may well be incorrect, but rather an exhibit to the document which purports to be the actual agreement between Prosper and Penncro. 

Oh.  Thanks for pointing that out.  It could be that as with the other agreements, they use "after" to mean "anytime after" as opposed to "in a timely fashion after".  In other words, leaving the loans at the agent, and having him still work on them might be consistent with such a reading, eh?

Not that there's any evidence that Penncro ever lifted a finger on anything after the first month.

[ira01]

...112233 isn't citing the SEC document itself, which was undoubtedly drafted by Prosper's lawyers and may well be incorrect, but rather an exhibit to the document which purports to be the actual agreement between Prosper and Penncro. 

Oh.  Thanks for pointing that out.  It could be that as with the other agreements, they use "after" to mean "anytime after" as opposed to "in a timely fashion after".  In other words, leaving the loans at the agent, and having him still work on them might be consistent with such a reading, eh?

Not that there's any evidence that Penncro ever lifted a finger on anything after the first month.

Perhaps, but not the best reading IMHO (not that any of Prosper's legal documents are very good).  Of course the Agreement also says "the Account shall be transferred back to Company by Collector at no charge to Company."  Thus, there is a reasonable argument that Penncro should not collect any fee for any payments made more than 90 days after a loan is sent to collections, or more than 120 days after the loan payment was due.  Of course, I doubt there are more than a handful of loans (if any) that ever made such late payments, so that probably wouldn't have much effect.