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[112233]

http://www.prosper.com/legal/promissory_note_sample.aspx

8. Default and Remedies. If I fail to make any payment when due in the manner required by Paragraph 7, or if receivership or insolvency proceedings or any assignment for the benefit of creditors is instituted by or against me; I die, I fail to keep any promise or meet any other obligations in this Note, or I make a material misrepresentation in connection with my loan, I will be in default and you may at your option accelerate the maturity of this Note and declare all principal, interest and other charges due under this Note immediately due and payable. If you exercise the remedy of acceleration you will not do so until one or more payments under this Note is at least 120 days past due, and you will give me at least 30 days prior notice of acceleration; provided, however, that if my default is the result of a material misrepresentation you do not need to wait until one or more payments is past due, and you do not need to give me any prior notice of acceleration.

what is the purpose of putting this in the borrower's promissory note? shouldn't any late loan have the potential of being defaulted (and accelerated) immediately?

[ira01]

This is purely a guess, but it may be that some (or many) states wouldn't allow a debt to be accelerated just because one payment was late.  I'm not sure if Prosper's alliance with WebBank changed that, if that was indeed the original reason.

[112233]

I'm trying to find something to compare this to, to see if maybe this is some sort of standard (or even law as ira suggested)

For example at lendingclub:

9. Default and Termination. You will be deemed in default on your loan (each, an “Event of Default”) if you: (i) fail to pay timely any amount due on your loan; (ii) file or have instituted against you any bankruptcy or insolvency proceedings or make any assignment for the benefit of creditors; (iii) die; (iv) commit fraud or make any material misrepresentation in this Agreement, the Notes, or any other documents, applications or related materials delivered to us in connection with your loan; or (v) fail to abide by the terms of this Agreement. Upon the occurrence of an Event of Default, we may exercise all remedies available to us under applicable law, this Agreement, and the Notes, including without limitation (x) demand upon you to immediately pay all amounts owed on your loan and (y) terminate this Agreement. Any loans you obtain prior to the effective date of termination resulting from listings you placed on the Website shall remain in full force and effect in accordance with their terms

http://lendingclub.com/info/loan-agreement.action

.. nothing about waiting a # of days before accelerating the loan. so does that mean they will do this at any time after a default?

[GoBrowns2007]

I like "(iii) die".

Just the way it's in there looks odd to me, like you're refusing to repay your loan simply because you died.

[112233]

interesting .. you could be in default if you die even if you're paid ahead  a # of months

[SGriff]

I like "(iii) die".

Just the way it's in there looks odd to me, like you're refusing to repay your loan simply because you died.

How dare you, deadbeat, think you can bail on your loan just because you're dead!!! 

(ETA)

I mean, really, doesn't LC have St. Peter on retainer as an emergency CA?

[Flying Missle]

This is purely a guess, but it may be that some (or many) states wouldn't allow a debt to be accelerated just because one payment was late.  I'm not sure if Prosper's alliance with WebBank changed that, if that was indeed the original reason.

In WA and OR we don't need to wait to call it in default. But I can't speak for the other 48 states.