It's all just a farce to prop up the soaring default rate.
While that may very well influence Prosper's decision making, the best answer to that is for Prosper to simply count the loans as defaulted for performance purposes. That would eliminate that particular conflict of interest.
No lender cares if the amount is 6 cents or 9 cents on the dollar, it is a loss that can't be written off, so Prosper is denying lenders both their money and their losses by holding the debt.
First of all, it isn't 6 cents or 9 cents, it is apparently about 3 cents for AA-D, 2.4 cents for E and HR, and 1.3 cents for NC (and perhaps only 1.2 cents for Texas loans). Second, I care what the amount is (and I imagine most other lenders do too). Third, for the thousandth time, the writeoff issue is irrelevant at this point in the calendar. As long as Prosper gets the loans sold off for sure by December 31, we all get exactly the same ability to write them off as if Prosper sold them tomorrow.
No one wants to buy this crap; the loans are totally worthless . . . .
Apparently not true -- there ARE (supposedly) bidders. They're just bidding at fire-sale prices.
PMI, take 1 penny on the dollar and let lenders write off their losses.
In December, maybe, but I'll be pretty pissed if they sell my loans off for 1 penny in May (especially since 1 made a payment about a month ago).