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[ira01]

Mothandrust, if you don't like Ira's math, consider writing to Prosper advising that because of its breach of fiduciary duty to you, your loan has gone bk and has become valueless.  Demand that Prosper repurchase it from you.

I would (and will if any of my lates go bk).

If you want to tilt at windmills, a better letter IMHO would be sent to Prosper if they sell any 0-payment loans to a JDB, asking for a complete explanation of Prosper's efforts to determine whether the loan was ID-theft and if not, whether the borrower had any reasonable explanation for not making even the first payment and, if not, why Prosper chose to sell an obviously fraudulent loan off for pennies on the dollar instead of suing the miscreant for fraud. 

[xraider]

Ira, you know where this is heading.  I'm trying to avoid that.....  Prosper needs to abide by the terms of its agreements with us, and where they don't, and there's harm to lenders, Prosper does need to address it quickly and fairly.

Joining us at the LA Meet and Greet?

[mothandrust]

Mothandrust, if you don't like Ira's math, consider writing to Prosper advising that because of its breach of fiduciary duty to you, your loan has gone bk and has become valueless.  Demand that Prosper repurchase it from you.

IANAL, but if Prosper had acted appropriately as a good fiduciary, they would have sold the debt promptly and I would have got (at most) 4.83%.  How can I demand that they repurchase it at par?

I like Ira01's math (I've been known to drop a decimal point now and again) but it's the principle of the thing--I want Prosper to sell the bad loans through a transparent, competitive, and open bidding process and to do this regularly and consistently.

[Staneslav]

a

[xraider]

mothandrust:  You make my point.  Prosper did NOT act as a good fiduciary, so all we can do is take a wild guess at what you might have received at debt sale.  It's all speculation.

I would demand that Prosper make good on the loan, for that very reason. 

Prosper doesn't meet its fiduciary duty to us when it sits back and hopes that nothing adverse will happen.

[ira01]

mothandrust:  You make my point.  Prosper did NOT act as a good fiduciary,

IMO, on this particular issue (whether or not Prosper should have accepted the highest -- though still meager -- bid for the junk at the end of April), the jury is still out on this question.  With bids 67% less than the last sale in December, I don't think anyone here knows enough to determine whether Prosper was right or wrong to continue soliciting bids for now (and even if it was wrong, whether that rises to the level of a breach of fiduciary duty).  I think the answer depends on what Prosper intends to do now, and what information it has regarding the viability of its plan.  Fuller stated on his blog a few days ago that he expected to have more information today or tomorrow -- that suggests that there is something in the works.  If Prosper reasonably believes that it can obtain more for the JDB package shortly in the future, I believe it that it would be more likely to be a breach of fiduciary duty NOT to try to accomplish that for lenders.  Of course, all of this presupposes that Prosper actually HAS some sort of plan (and given Prosper's track record, that may be a very naive hope). 

so all we can do is take a wild guess at what you might have received at debt sale.  It's all speculation.

 

Well, if we believe Fuller (and we don't really have cause not to, other than his employer's track record), we do know what the highest bids were, and they are very paltry.  Maybe you'll say that if Prosper had sold the loans at the end of March (the earliest we could reasonable have expected the "quarterly" debt sale given the last one in December), instead of trying for the end of April, the prices would have been better.  And maybe they would have been, a bit.  But we also don't know what efforts, if any, Prosper took to try to make that happen.

I would demand that Prosper make good on the loan, for that very reason. 

By "make good," surely you don't expect a repurchase for full principal value, do you?  If so, that is completely unreasonable.  No debt sale ever has returned that much, nor would any junk debt sale ever pay full principal.  Perhaps you just mean that Prosper should pay what it said the high bid was, on the theory that if Prosper had accepted the high bid in late-April, mothandrust would have received that, rather than the 0 of BK.  Of course, the problem with that theory is that most likely mothandrust came out ahead by the BK due to the more favorable tax treatment, so he has no damages (even assuming Prosper's failure to accept the high bid was a breach of duty).

[Senator]

Fuller stated on his blog a few days ago that he expected to have more information today or tomorrow -- that suggests that there is something in the works.

...like maybe Prosper is filing bankruptcy?

[big-al]

Is it possible that the real situation is the prior debt sales went for higher than the true value of the loans, and not that this debt sale was low?  Perhaps in prior sales the high bidder speculated the Prosper loans would have more value than other loans.  Seems like some transparency in the sale process could shed some light on this.

[Xenon481]

Is it possible that the real situation is the prior debt sales went for higher than the true value of the loans, and not that this debt sale was low?  Perhaps in prior sales the high bidder speculated the Prosper loans would have more value than other loans.  Seems like some transparency in the sale process could shed some light on this.

Ding Ding Ding!  We have a winner!

[ira01]

Is it possible that the real situation is the prior debt sales went for higher than the true value of the loans, and not that this debt sale was low?  Perhaps in prior sales the high bidder speculated the Prosper loans would have more value than other loans.  Seems like some transparency in the sale process could shed some light on this.

I think the earliest sales almost certainly sold for too high a price.  But I'm not sure what transparency will ever shed light on this, since once a JDB purchases the loans, they surely have no obligation to report back to Prosper on how well they did at collecting from the bad debt, nor would they ever do so since that information would be considered proprietary.  As for whether the previous sale went too high, too low, or just right, who knows?  But the fact that the same JDB apparently didn't bid the same price this time certainly suggests something (but it might just be a glut of bad debt on the market as Fuller says).

[cowdog]

Naw.

Too much debt on the market may be a small factor, but the truth is that Prosper borrowers are just deadbeats. It is unsecured credit, and not much, if any, verification was even done on origination.

Common sense really... if Prosper notes were collectible or had any value, everyone would be scrambling for them and bidding them up.

[xraider]

Ira, actually, I would start at the outstanding loan value.  I think we have some issues with origination, collections and definitely the failure to sell at debt sale.

I really don't think it's reasonable for Prosper to deviate from the LRA on the off chance that it may get more from JDBs in the future.  There is an agreement for a reason.  Prosper has not asked for leave to deviate from it, and mothandrust suffered actual injury from Prosper's failure to abide by the agreement.

All this stuff about tax write-offs is very theoretical.  I don't know enough about tax law (other than what I sign every year) to guess whether you can deduct the bad debt if you don't itemize, and don't know whether mothandrust itemizes.  I also don't know if mothandrust would want to invite scrutiny over a Prosper loan.

[j9359]

Too much debt on the market may be a small factor, but the truth is that Prosper borrowers are just deadbeats. It is unsecured credit, and not much, if any, verification was even done on origination.

But if the other debt on the market is of higher value than the Prosper loans (if for instance it was secured by a car, boat, RV, etc) then folks will bid on that debt instead of the unsecured Prosper debt.  Supply and Demand.
john.

[big-al]

Is it possible that the real situation is the prior debt sales went for higher than the true value of the loans, and not that this debt sale was low?  Perhaps in prior sales the high bidder speculated the Prosper loans would have more value than other loans.  Seems like some transparency in the sale process could shed some light on this.

I think the earliest sales almost certainly sold for too high a price.  But I'm not sure what transparency will ever shed light on this, since once a JDB purchases the loans, they surely have no obligation to report back to Prosper on how well they did at collecting from the bad debt, nor would they ever do so since that information would be considered proprietary.  As for whether the previous sale went too high, too low, or just right, who knows?  But the fact that the same JDB apparently didn't bid the same price this time certainly suggests something (but it might just be a glut of bad debt on the market as Fuller says).

I think the actual bid prices might tell something.  If there were one or two high bidders and the rest of the pack was consistently low, it would look to me like a couple speculators.  If all bids were in the same general range, then that would look to me like that was the actual fair market value.

Since I haven't heard anything to make me believe the value of these loans will go up in the next week, or month, or year, it would make sense to me to sell them now.

[cowdog]

Too much debt on the market may be a small factor, but the truth is that Prosper borrowers are just deadbeats. It is unsecured credit, and not much, if any, verification was even done on origination.

But if the other debt on the market is of higher value than the Prosper loans (if for instance it was secured by a car, boat, RV, etc) then folks will bid on that debt instead of the unsecured Prosper debt.  Supply and Demand.
john.

Almost any debt is of higher value than Prosper loans; there will NEVER be demand for certain unsecured loans because they are worthless, especially unsecured loans where no information was verified beyond an ID, a working telephone and an address.

My God, even unsecured loans made by a bank have a MUCH greater value than the junk paper from Prosper... any lies on the app could bring possible legal ramifications to the borrowers; not so with Prosper. Plus, a bank would have hit all 3 CRAs along with proper wage verification, references from family, a listing of all credit cards and other information. Besides that, a bank would have at some point vouched for the borrower, or assumed it a good risk... there is none of that with Prosper because the institution (Prosper) didn't even use their OWN MONEY to fund the loan; it was funded by bidders on the internet!