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[Fred93]

Here is the loan in question. Guess who's on it for $560.00. Thats right me.

https://www.prosper.com/secure/account/lender/lender_loan_details.aspx?id=17800

Pardon me if this question has already been answered.  Is this loan late?  What is its state of lateness?   ... ie 1 mo late, 2 mo late ... 4 mo late?

The reason I ask is that Prosper's identity theft guarantee says...

100% Identity Theft Guarantee
...If a lender is the victim of a defaulted loan from a person who has committed identity theft, Prosper will repurchase the loan for the unpaid principal amount. Prosper will work with law enforcement authorities to track down and prosecute persons who have committed identity theft.

Note the use of the word "defaulted".  It is difficult to make sense of that in any precise way, because in the past Prosper only moved loans to the "default" status when they had already sold them to junk debt buyers, which is too late for prosper to repurchase the loan from lenders, and in the present system they NEVER move loans to the "default" status, so there is no reasonable definition of "defaulted" in the Prosper context to make that sentence self-consistent or meaningful.  However, I will presume that is merely sloppy drafting, and they meant to say that the guarantee kicks in only when a loan is late enough to be considered in default, which in the current Prosper vocabularly means in the "charged off" state. 

I believe their intent was to not repurchase loans in which the stated borrower was an identity theft victim, but for whatever reason someone somewhere is paying the loan payments.  I believe there have been other loans where there was identity theft, but the payments were nonetheless made.  The loan to the mom of the notorious Pepsi executive blackmailer comes to mind.

[ira01]

Here is the loan in question. Guess who's on it for $560.00. Thats right me.

https://www.prosper.com/secure/account/lender/lender_loan_details.aspx?id=17800

Pardon me if this question has already been answered.  Is this loan late?  What is its state of lateness?   ... ie 1 mo late, 2 mo late ... 4 mo late?

http://www.lendingstats.com/listings/174869

4+ months late, with (according to LS) only 2 payments made on a loan that originated over a year ago -- on 8/7/07.  Thus, it would appear to be 9 months late (not counting the two recent payments made long after Prosper should have repurchased this loan).

[Fred93]

4+ months late, with (according to LS) only 2 payments made on a loan that originated over a year ago -- on 8/7/07.  Thus, it would appear to be 9 months late (not counting the two recent payments made long after Prosper should have repurchased this loan).

Wow.  Wow.  Now it becomes important to know what collections actions occurred.  Normally, you would expect that if there's identity fraud, the fraud would become known relatively soon.  You'd expect someone would call up and say "Hey, prosper, why are you transferring money out of my bank account." or perhaps you would stop the withdrawls, and the Prosper's collection folks would call and say "When you gonna pay?" which would at the very least initiate a discussion about what the heck is this loan! 

Clearly those things didn't happen.  How can this be?

One way it could be is if Prosper didn't actually take any collections actions at all.

Another way it could be is that the guy is lying about the identify fraud.  But in that case, it now becomes critical what verification steps Prosper took before originating the loan.  Judging from the documents Prosper has filed with the court, there weren't any verification steps.  Had there been, surely Prosper's lawyers would have laid them out, itemized them one by one, and showed the judge that the borrower was lying.  Unless I missed something, they didn't do anything like that.  Instead, they repeated a funny legal sentence that I believe means "We don't really know anything about this." over and over.

So I'm beginning to agree with you.  This looks bad.  Either Prosper did no identify verification pre-origination, or they took no collection actions.

[xraider]

So I'm beginning to agree with you.  This looks bad.  Either Prosper did no identify verification pre-origination, or they took no collection actions.

Or, perhaps, both.

[yankeefan]

From the current Lender's Agreement

7d. In the event of a material default under a Note you purchase from Prosper under this Agreement that is the result of verifiable identity theft of the named borrower's identity, Prosper will repurchase the Note for the remaining unpaid principal balance. The determination of whether verifiable identity theft has occurred shall be in Prosper's sole discretion. Prosper shall not be required to repurchase a Note under this subsection until such Note is at least 120 days past-due, provided, however, that Prosper may in it's sole discretion elect to repurchase a Note at an earlier time.

Some undefined terms, to be sure...

[ira01]

So I'm beginning to agree with you.  This looks bad.  Either Prosper did no identify verification pre-origination, or they took no collection actions.

Don't forget that this loan is a little atypical, in that the ID-theft was committed by the nominal-borrower's wife.  Presumably they had a joint bank account, which maybe hubby didn't keep a close eye on.  So the first 2 payments were made by the wife out of the joint account and hubby didn't know about them or the loan.  Then things go into the crapper, and hubby finds out what wife has been up to.  So he calls the divorce lawyer, and then the creditors who extended credit in hubby's name but in response to wife's applications.  Apparently most creditors said "sorry about that, we'll stop bugging you for the money" when hubby sent them a fraud affidavit. 

But not Prosper, no way.  After all, unlike the other creditors (who were already out the money blown by wife, with little likelihood of recouping it from anyone regardless of whether the loan was ID-theft or not), Prosper was in a completely different situation -- it wasn't yet out any money (to the contrary, it had "earned" the origination fee), and it could care less whether anyone (wife or hubby) repaid some or all of the loan.  But if Prosper accepted hubby's ID-theft claim, it would have to dig into its own pocket for $25K to repurchase the loan from the lenders.  So, of course, Prosper tried to hang tough.  It denied hubby's ID-theft claim, notwithstanding the sworn fraud affidavit (and notwithstanding all of the other creditors acknowledging the ID-theft).  And either due to gross negligence or fraud, it submitted blatently false documents to the BK court "explaining" how Prosper supposedly operates (nevermind that these documents are completely irreconcillable with the LRA and the real world of how Prosper operates).  Then, months later, due to xraider's excellent work (and quite a bit of luck), this becomes public here.  Now Prosper is screwed.  If it isn't careful, a federal BK judge, the BK Trustee, or a U.S. Attorney is going to be asking some difficult questions about Prosper's court filing.  So Prosper needs to make this all go away. 

Any idiot can predict that Prosper will soon repurchase this loan from the lenders, and (if anyone asks) will say "see, this proves we live up to our '100% ID-theft guarantee.'  As soon as we were convinced that this loan was an instance of ID-theft, of course we repurchased it.  But these things simply take time, and all that discussion on .org had nothing to do with it."   

[112233]

but for whatever reason someone somewhere is paying the loan payments.  I believe there have been other loans where there was identity theft, but the payments were nonetheless made. 

there are probably different flavors of ID theft. I can imagine a scenario where a person needs money and steals the ID of a relative to get it, but at the same time does not want to "harm" that person so they make payments on the loan.

I also read somewhere that ID theft occurs the most by family members.

[ira01]

but for whatever reason someone somewhere is paying the loan payments.  I believe there have been other loans where there was identity theft, but the payments were nonetheless made. 

there are probably different flavors of ID theft. I can imagine a scenario where a person needs money and steals the ID of a relative to get it, but at the same time does not want to "harm" that person so they make payments on the loan.

I also read somewhere that ID theft is occurs the most by family members.

I agree.  I know I have read that many cases of ID-theft are committed by people who have every intention of making the payments, they just can't get credit in their own names.  And often they do make the payments, until something happens making them unable to do so.  When I clerked for a federal judge, we had a case involving that fact pattern -- the imposter worked in a medical office and stole the ID of a patient in order to obtain credit, which she used and paid for some time until she bacame unable to.  The person whose identity she stole was unaware until after she got derrogatory information on her credit report which interfered with a planned home refi.  (Our case was a civil case with the victim suing TRW and Trans Union for alleged violations of the FCRA).

[beerbud1]

Payment cleared!!

[Fred93]

The story is told today in my blog. 

http://www.prospers.org/blogs/Fred93/2008/08/23/prosper_com_you_got_some_splainin_to_do

I emphasized the question of the truthfulness of Prosper's response to the court, rather than the issue of whether this is indeed identity theft, and thereby should trigger Prosper's identity theft guarantee.

[aurel57]

The story is told today in my blog. 

http://www.prospers.org/blogs/Fred93/2008/08/23/prosper_com_you_got_some_splainin_to_do

I emphasized the question of the truthfulness of Prosper's response to the court, rather than the issue of whether this is indeed identity theft, and thereby should trigger Prosper's identity theft guarantee.

I agree, regardless about the outcome of the identity theft claim, I do not like Prospers response. Actually their response is quite scary.

[Teddie33]

Payment cleared!!

Great, don't you just love a loan payment on a fraud loan........

[ira01]

Payment cleared!!

Great, don't you just love a loan payment on a fraud loan........

Not as much as a 100% repurchase by Prosper, which is what it owes the lenders on this loan.

[Teddie33]

Payment cleared!!

Great, don't you just love a loan payment on a fraud loan........

Not as much as a 100% repurchase by Prosper, which is what it owes the lenders on this loan.

I don't understand your reason to let people with the means to pay, out of this loan.

[ira01]

Payment cleared!!

Great, don't you just love a loan payment on a fraud loan........

Not as much as a 100% repurchase by Prosper, which is what it owes the lenders on this loan.

I don't understand the reason to let people with the means to pay out of this loan.

Who are you referring to?  A couple of payments have apparently been made by the BK trustee out of available funds from Mr. Gaerke, despite the fact that he was apparently a victim of ID-theft and never took out the Prosper loan.  Those payments aren't going to continue forever -- would you pay off a loan that you never took out? The person who should pay off this loan is Ms. Gaerke, but apparently she has no money so that isn't going to happen either.  So the next best payor of the loan is Prosper, because it is the one who allowed this ID-theft loan to originate.