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Author Topic: Why I Won't Bid Anymore  (Read 11528 times)

MsTabbyKats

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Why I Won't Bid Anymore
« on: August 01, 2008, 03:01:35 pm »

I won't bid anymore because I am sick and tired of the following (edited from the original post in the verified section):

1. Borrowers ability to dispute payments......If we cannot rescind a bid one second after hitting "Bid Now", why can a borrower rescind a payment?  Ok, the ability of the borrower to dispute a payment is not Prosper's fault...but it's part of a bad system, which puts the lender at a disadvantage.
Example:
http://www.prosper.com/lend/listing.aspx?listingID=143294

2. Prosper's impotence in  collections.....When I signed up I got the clear impression that they did "something".  The worst case scenario is the borrower isn't allowed to get a second loan.

3. Talking about second loans.....when this was first allowed I thought it was great.  We didn't have to worry about ID theft and the borrower had a good payment record.  Boy...what a mistake!  My portfolio has become inundated with late second loans...and now many first loans are late as well.
Examples:
http://www.prosper.com/lend/listing.aspx?listingID=264553 (This borrower actually told her GL she was broke, and asked him for more $$$)
http://www.prosper.com/lend/listing.aspx?listingID=236142

4. Talking about these "good borrowers"...let's examine the typical Prosper borrower.  People who cannot get loans elsewhere.  Desperate and destitute people. Just think of it....the situation someone is in to post their picture and bad financial situation/history on the internet for the entire world to see. And then to have people bidding on them.  I don't think this is something to be proud of.
I'm not saying every borrower is "bad"...and most actually do pay.  But there is no way to differentiate those who will pay, and those who won't.  If someone is on the brink of getting by, and an emergency comes up like a root canal, their whole financial world could be thrown into chaos.  And again, because of Prosper's inability to do anything....well, there goes another loan.

5. I previously posted a list of all things I would avoid...which eliminated just about everyone.  The only group left was "people on the way up" which were mostly young people starting out.  I've eliminated this group now too.  These people have parents. If the parent doesn't have confidence in his/her precious offspring , why should I? Or should I say, maybe there is a reason their parents won't lend/give them $$$.
Example:
http://www.prosper.com/lend/listing.aspx?listingID=266958

6. Talking about these listings I brought to light and subsequently funded.....I feel terribly guilty.  My sincere apologies to all who bid.  And by apologizing, I've done more that those GLs who are now no where to be found. (Hey Rick etc. ...several of your members are late.  Why haven't YOU responded to my messages.)

7. Business loans.  Most people are incapable of establishing and maintaining a successful business.  They see owners making money and think they can too. But they lack the ability and skills.
Example:
(I won't flame...but......you are supposed to ask questions and settle matters BEFORE you buy the business)
http://www.prosper.com/lend/listing.aspx?listingID=220440
http://www.prospers.org/forum/truevikes_prosper_loan-t8574.0.html

8. I don't want to get "emotionally involved" with prospective borrowers.  One makes emotional bids, and one makes excuses for non-payment.  You know, we all have problems.  The economy is affecting everyone.  I don't tell the borrowers my problems...I don't want to hear their stories.
I won't give examples.....

If you give a hungry person a fish, you will be giving him fish for the rest of his life.  If you teach a hungry person to fish, he will be able to get his own food for the rest of his life.

I thought of Prosper as a place where we could teach people to fish. We could help them clear up their debts, we could help them start a business.  We could cover some tuition payments to the person/children could continue their education.

I never thought of this as an investment of my money...to me it was an investment in people.  However, too many of them have disappointed me.

And that's why I'm not bidding anymore.

There is a sad part...I'm posting a note a borrower sent me after he funded.  Good people will miss out...

"Dear Ms Kats,
I'm so sorry I didn't get to answer your question, I was working the over night shift for UPS and I don't have computer access in the loading bay.
Did you do all this?! All these people that bid? are these on your recommendation?! Well, regardless, you are a woman of your word and it was funded.
The solar panel will work, I'm a minimalist with power usage now. and for some reason if it, lets say the sun stops raising, I can still afford the loan payment.
Either way, you have a build-a-bear with your name on it.
Thank you so, so, so much.
-A"


My message to new lenders:
Enter Prosper as you would a casino.  You go in hoping to make money.  Consider yourself lucky if you come out with what you had when you went in.   But don't be surprised if your money disappears. 

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MsTabbyKats

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Re: Why I Won't Bid Anymore
« Reply #1 on: August 01, 2008, 03:22:53 pm »

Can this be moved to the lobby?
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cowdog

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Re: Why I Won't Bid Anymore
« Reply #2 on: August 01, 2008, 03:28:13 pm »

If you give a hungry person a fish, you will be giving him fish for the rest of his life.  If you teach a hungry person to fish, he will be able to get his own food for the rest of his life.

I thought of Prosper as a place where we could teach people to fish... I never thought of this as an investment of my money...to me it was an investment in people.

For me, this is the biggest failure of Prosper... I envisioned Prosper to offer a virtual guarantee that poor credit risks could become members, gain information on how finances should be handled, and eventually turn their lives around including getting a loan if they needed one, once they saw how to use it to benefit their situation.

Without the aspect of community, without transparency, and without the support mechanisms that Prosper so loudly touted as integral to the platform, there isn't much to entice those who want to learn to fish... those who would rather just be given a handout are here instead.
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hanumanhojo

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Re: Why I Won't Bid Anymore
« Reply #3 on: August 01, 2008, 03:50:02 pm »

Back in the days of the old Prosper forum, I used to be able to financially counsel (or flame) potential borrowers.  And then based on their response, decide whether to bid or not.  Now with that ability of interaction gone, I'm only a capital provider in an impersonal broken system.

Also, the credit crunch has brought the yield of quite a number of other investments up to the level of my fairly sterling Lendingstat ROI.  Given that these investments are more tax efficient than Prosper, there is no reason for me to put my money here.

Finally, all those effectively defaulted loans sitting at 4+ months late pisses me off.  I can't even write those off on my taxes while Prosper continues to drag there feet.  Meanwhile, I do have to pay taxes at normal income rate on the loans that do pay.  Finally, the capital loss deduction is only $3K so that effectively caps the ability to scale on Prosper. 

After tax risk/reward is just plain screwed up with Prosper.  I'm sure Pensioner will be taking that $3K a year capital loss deduction for the rest of his life as will Muleshoes.
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christoofar215

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Re: Why I Won't Bid Anymore
« Reply #4 on: August 01, 2008, 06:20:33 pm »

MsTabby, you probably still have me on ignore (but thanks for dropping in on IRC).

I have watched you lend and read your diamond in the roughs and actually followed your bids, and in a few cases I think you've followed a couple of mine.

This has seriously deteriorated my belief that you can even break even on Prosper.


Out of all the people on .org, MsTabbyKats reads the tea leaves pretty hard and is one of the most cautious lenders on here.   And now she's stuck with deadbeat borrowers demanding payment reversals WITH THE HELP OF PROPSER CUSTOMER SERVICE.


WHAT.  THE.  FUCK.


WHY is Prosper even ALLOWING payments to be reversed?   If you want to try to reverse an ACH, then go to your bank and fight it that way.   WHY is Prosper allowing debtors to reverse payments they owe?   They agreed in the Promissory Note that they would be auto debited for their payments, and if they missed--Prosper is free to pull again.


Prosper is not a crapshoot... it is a guaranteed losing situation.   You are GUARANTEED not to even get all of your principal back.

And look at me... on LS I still have a green circle, but I bet you by October it will start to look more and more like MtnChick's, because borrowers have figured out that Prosper nor AmSher does jack shit for collections.
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christoofar215

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Re: Why I Won't Bid Anymore
« Reply #5 on: August 01, 2008, 06:46:30 pm »

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bamalucky

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Re: Why I Won't Bid Anymore
« Reply #6 on: August 01, 2008, 06:52:16 pm »

Quote
WHY is Prosper even ALLOWING payments to be reversed?   If you want to try to reverse an ACH, then go to your bank and fight it that way.   WHY is Prosper allowing debtors to reverse payments they owe?   They agreed in the Promissory Note that they would be auto debited for their payments, and if they missed--Prosper is free to pull again.

It is being reversed at the bank.Reversals aren't Prospers fault.They shouldn't be left on the hook for the reversal money when it's taken back.

You can't blame Prosper for this one.
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Xenon481

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Re: Why I Won't Bid Anymore
« Reply #7 on: August 01, 2008, 06:56:01 pm »

Quote
WHY is Prosper even ALLOWING payments to be reversed?   If you want to try to reverse an ACH, then go to your bank and fight it that way.   WHY is Prosper allowing debtors to reverse payments they owe?   They agreed in the Promissory Note that they would be auto debited for their payments, and if they missed--Prosper is free to pull again.

It is being reversed at the bank.Reversals aren't Prospers fault.They shouldn't be left on the hook for the reversal money when it's taken back.

You can't blame Prosper for this one.

We can't blame Prosper for the reversal, but we can blame them for not then turning right around and suing the borrower for breach of contract.

Caladia

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Re: Why I Won't Bid Anymore
« Reply #8 on: August 01, 2008, 06:59:44 pm »

WHY is Prosper even ALLOWING payments to be reversed?   If you want to try to reverse an ACH, then go to your bank and fight it that way.   WHY is Prosper allowing debtors to reverse payments they owe?   They agreed in the Promissory Note that they would be auto debited for their payments, and if they missed--Prosper is free to pull again.

When the notation shows "Disputed Payment," that doesn't necessarily mean a borrower actually disputed or reversed the payment.  That is Prosper's default notation for any payment that fails after 4 days.  It may just mean that the borrower's bank was slow to process the payment and notify Prosper of the account's insufficient funds. 

(See Mark12457's post on the topic here: http://www.prospers.org/forum/community_payment_or_collections_payment-t5499.0.html;msg80971#msg80971)

Even if a borrower does dispute or reverse a payment, they don't do it through Prosper, they do it through their bank, just as you suggest above.  That's why MsTabbyKats pointed out that the "Disputed Payment" problem is not Prosper's fault.

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christoofar215

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Re: Why I Won't Bid Anymore
« Reply #9 on: August 01, 2008, 07:06:38 pm »

Quote
WHY is Prosper even ALLOWING payments to be reversed?   If you want to try to reverse an ACH, then go to your bank and fight it that way.   WHY is Prosper allowing debtors to reverse payments they owe?   They agreed in the Promissory Note that they would be auto debited for their payments, and if they missed--Prosper is free to pull again.

It is being reversed at the bank.Reversals aren't Prospers fault.They shouldn't be left on the hook for the reversal money when it's taken back.

You can't blame Prosper for this one.

Ugh then the word "dispute" shouldn't even be there.

It should just say "ACH transaction failed at borrower's banking instution" and leave it at that.
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MsTabbyKats

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Re: Why I Won't Bid Anymore
« Reply #10 on: August 01, 2008, 07:14:49 pm »

MsTabby, you probably still have me on ignore (but thanks for dropping in on IRC).
I took you off ignore a long time ago. ;)
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christoofar215

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Re: Why I Won't Bid Anymore
« Reply #11 on: August 01, 2008, 07:57:12 pm »

MsTabby, you probably still have me on ignore (but thanks for dropping in on IRC).
I took you off ignore a long time ago. ;)

*hug*

 ;D
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mothandrust

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Re: Why I Won't Bid Anymore
« Reply #12 on: August 02, 2008, 09:09:01 pm »

Quote
5. I previously posted a list of all things I would avoid...which eliminated just about everyone.  The only group left was "people on the way up" which were mostly young people starting out.  I've eliminated this group now too.  These people have parents. If the parent doesn't have confidence in his/her precious offspring , why should I? Or should I say, maybe there is a reason their parents won't lend/give them $$$.

There is a reason why nearly every listing on Prosper does not have any parents or siblings or friends bidding on it--it is because the borrower is a poor credit risk and the people closest to them know they won't get their money back.

So at best they will put up an bidless endorsement or a $500 pump-and-dump with no stated rate and then dodge the question when asked.

In the case of that college kid buying the brand-new chick-magnet racing bike, no parent in his right mind is going to subsidize folly like that. 

But what if a young person starting out met your criteria and had help from parents (bidding $300 at 1%) and a college professor (bidding $200 at 1%) and his boss (bidding $250 at 2%) in order to buy a used Honda Civic, and whose other numbers met your criteria? 



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MsTabbyKats

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Re: Why I Won't Bid Anymore
« Reply #13 on: August 02, 2008, 10:45:22 pm »

Quote
5. I previously posted a list of all things I would avoid...which eliminated just about everyone.  The only group left was "people on the way up" which were mostly young people starting out.  I've eliminated this group now too.  These people have parents. If the parent doesn't have confidence in his/her precious offspring , why should I? Or should I say, maybe there is a reason their parents won't lend/give them $$$.

There is a reason why nearly every listing on Prosper does not have any parents or siblings or friends bidding on it--it is because the borrower is a poor credit risk and the people closest to them know they won't get their money back.

So at best they will put up an bidless endorsement or a $500 pump-and-dump with no stated rate and then dodge the question when asked.

In the case of that college kid buying the brand-new chick-magnet racing bike, no parent in his right mind is going to subsidize folly like that. 

But what if a young person starting out met your criteria and had help from parents (bidding $300 at 1%) and a college professor (bidding $200 at 1%) and his boss (bidding $250 at 2%) in order to buy a used Honda Civic, and whose other numbers met your criteria? 



Well, I'm not bidding anymore, under any circumstances.  But, yes, you are correct.  That would show some confidence (of course assuming it's not part of a conspiracy  ;)).

However, there is the issue of "financial responsibility" for these young people, and I think that it's often lacking because they don't have enough worldly experience.  With that and Prospers cracker-jack collections team a problem arises.  If someone misses a payment, and "nothing bad" happens, he/she may lack the maturity  needed to understand that there really is an obligation to the wonderful lenders.  In short...I mean they are still kids and probably more concerned with their pimples than their loans.

Also, people who make one loan of $300 get about $6 per month.  I doubt such a person would monitor his/her account the way we do.  So this parent or college professor might not be aware that the loan is late.  That is...unless lenders violate TOS and contact these endorsers.

The college kid/motorcycle has not been a problem...and he needed it as a cost efficient way to get to school and work.  The chick magnet thing was just a perk! :)





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mothandrust

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Re: Why I Won't Bid Anymore
« Reply #14 on: August 03, 2008, 02:03:07 am »

Well, you have stated very good reasons why you're giving up lending. 

While we often disagree on what a diamond is, we do agree that the amount of "rough" is overwhelmingly large.

Prosper's main product--anonymous homogenized people-to-numbers diversified lending--is broken. 

What is a shame is that the people at Prosper who should be listening are not, and those who are in power to make substantive changes won't.
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