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Author Topic: what's the current "blender" situation?  (Read 23746 times)

Fred93

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what's the current "blender" situation?
« on: August 15, 2008, 04:57:23 pm »

I have to admit that I haven't followed this one for the last year or so.

Starting well over a year ago, lenders were upset because Prosper allowed folks to lend, even tho they were also borrowers, and were behind in their payments.  Prosper promised to stop those folks from lending.  Lenders were also upset because such "blenders" were allowed to continue to NOT PAY their borrowers, even tho they collected interest from money they had lent, and Prosper allowed them to transfer that money out to their own accounts.

Prosper claimed they couldn't touch that money, because they had no right to divert money in the blender's Prosper account into payments owed.  Lenders pointed out that this was easy to fix, with a one sentence change to the borrower agreement, or a small change to the web site.  For example, borrowers are required now to enter a checking account, and agree to allow Prosper to remove money from that account.  The web page could have easily been changed to list the blender's Prosper account alongside the checking account(s), and require the borrower to agree to it as well.  Prosper never made any of these changes, thus insulting lenders who had to watch blenders take money out of prosper while stiffing their lenders.

Prosper apparently never thought this had any importance, because there were so few of these individuals relative to the whole of prosper borrowers.  This was a sad misunderstanding, because allowing blenders to continue was a tremendous insult to honest lenders.

Prosper did make some promises.  Here's one of them, from the old prosper forum (now on www.prosperreport.com)
Quote
Crisis in the making?, Late borrowers who are lenders 
Posted By: Prosper Andrew  3/2/2007 4:44:00 PM 
Here's the data on these loans:

( Sorry - had to remove actual data. Point is, the highest ratio of borrower lending activity to amount borrowed was 16%, and the median was 3% )

We have decided to wait and see how these loans turn out. If one of them defaults, we'll find a way to take the gains from the borrower's lending portfolio and give it to lenders on their loan.

Best regards,
andrew

This post has been edited by Prosper andrew on Mar-2-2007 04:56 PM 

So did any of them ever default (or go >4 months late which is the modern equivalent)?

Has anyone done a database search for late or defaulted blenders?

What is the current status of this issue?

ira01

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Re: what's the current "blender" situation?
« Reply #1 on: August 15, 2008, 06:01:47 pm »

Yes, I believe that a number of blenders have "defaulted."  Prosper, of course, did nothing. 

There were a number of Prosper statements and promises and drama after Andrew's March 2, 2007 forum post that you quoted.  As best as I can recall:

A few months later, someone asked for an update.  IIRC, that may have been Leporello, and that thread may have included a table of late blenders.  Prosper ignored this for a while, and eventually there was a forum shitstorm. 

Prosper (Shira, I believe) then said that Prosper had instituted a change -- late blenders (possibly they had to be 1-month late, I can't quite remember) would not be able to self-initiate outgoing transfers through the web site.  However, if they called Prosper, Prosper would do so for them.  In addition, late blenders could not bid on listings.

Later, someone (Leporello I think) posted an example of a late blender who had successfully bid on a listing.  Prosper explained that for the time being their new restrictions on late blenders had to be imposed manually, which Prosper intended to do once a month.  Thus, depending on when in the month (compared to when Prosper did the manual processing) a blender went late, it was possible for a blender to be fairly late before the restrictions kicked in.  I think this was also the time that Prosper suspended Leporello from the forums for this, later claiming that the suspension was a mistake after a huge firestorm on the forums (including my own giant red signature all over their forums about Lep's suspension).

Then around late-summer 2007, Shira posted that Prosper's lawyers were studying how best to include a right of set-off in the legal agreements that would permit Prosper to seize late blenders' lending accounts and pay them to the lenders on their loans.  She promised either to have this implemented, or at least to provide an update on the lawyers' work (I can't quite recall which), by "the end of the year."  Xraider and I posted our beliefs that several months was a ridiculous amount of time to have to wait for this, especially since it had already been months since Andrew's March 2 promise that Prosper would pay lenders with late blenders' accounts (and I'm pretty sure that the late blender issue had actually been raised on the forums (perhaps by Urbi or Epic?) in the summer of 2006!).  Shira never explained why it would take until the end of the year (2007), and of course, as per usual, nothing was ever heard from Prosper on this again.
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Fred93

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Re: what's the current "blender" situation?
« Reply #2 on: August 15, 2008, 06:14:56 pm »

I found Shira's promise to get back to us by the end of 2007.  As of today, it is one year old.
Quote
Prosper Shira    Posted: Aug-14-2007 3:27 PM
  Hi everyone,

Thank you for raising the issue of late Lender-Borrowers to us.

As of today, all accounts of Lender-Borrowers who are 30+ days past due have been put on hold. This means these Lender-Borrowers won?t be able to place bids or send out group invitations on Prosper until their loans are brought current.

By the end of this year, we expect to have this process automated, but until then we will manually put 30+ days past due delinquent Lender-Borrower accounts on hold.

We are exploring whether and under what conditions state law will allow us to automatically apply lender funds if the lender is a delinquent borrower. We also expect to have an answer to that question by the end of the year.

Beginning with our next site update, borrowers who are also Prosper lenders will be able to apply their Prosper balances to their existing loans themselves, rather than have to move the money to their bank account first.

Sincerely,

Shira

Urbi_et_Orbi

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Re: what's the current "blender" situation?
« Reply #3 on: August 15, 2008, 07:02:48 pm »

I recall raising this issue in a com thread as early as August 2006.  It's been TWO years now. :-(
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Fred93

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Re: what's the current "blender" situation?
« Reply #4 on: August 15, 2008, 07:15:12 pm »

I recall raising this issue in a com thread as early as August 2006.  It's been TWO years now. :-(

Indeed you did.  I found postings from you where you both identified the problem, and gave Prosper the obvious solution, in mid-2006.

Problem statement...
Quote
Urbi_et_Orbi    Posted: Jul-2-2006 12:39 PM
  What will actually happen if one of the lending borrowers are late or fail to pay, but they have funded loans on Prosper?

Does Prosper have the legal ability to seize the asset or levy incoming payments to satisfy that individual's obligations to other Prosper lenders?

And the solution...
Quote
Borrowing Lenders, *P Account secondary for Payment? 
Posted By: urbi_et_Orbi  8/9/2006 12:13:00 PM 
For the population of borrowing (dual role) lenders, I would like to see their Prosper accounts added as an automatic secondary payment source. In the event of a late payment, Prosper should be able to collect incoming repayments to satisfy the primary obligation - before the borrower is able to re-lend those funds.

That post was followed by statements of concurrance by a great many lenders.
Quote
nonattender    Posted:  Apr-19-2007 5:50 PM
  Urbi had my support ** 8 months ago ** when he suggested this, and still does.

-t
Quote
brownmoose_com    Posted: Apr-19-2007 5:26 PM
  You've got my support, Urbi.
Quote
leporello    Posted: Apr-16-2007 1:11 PM
  This is one of these "well, duh" ideas. I can't believe Prosper hasn't done this yet. Prosper Andrew has publicly stated that they'll do something if a defaulting borrower has money in listings; this would solve that problem right there.
etc etc.

bamalucky

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Re: what's the current "blender" situation?
« Reply #5 on: August 15, 2008, 08:07:30 pm »

I wonder if NA could use his black book of phone numbers & get an answer to this.

Thank goodness my $2500 blender loan(total 25k) cured this week or I would be even angrier.
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beerbud1

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Re: what's the current "blender" situation?
« Reply #6 on: December 07, 2008, 11:30:06 am »

Here's an answer to your question Fred, This lender is now 4+ months late and in charge off status:

http://www.prosper.com/lend/listing.aspx?listingID=138059

Thank you Prosper for allowing Him to steal from the others of us who purchased his unregistered security
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God-Father

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Re: what's the current "blender" situation?
« Reply #7 on: December 07, 2008, 12:22:10 pm »

Here's an answer to your question Fred, This lender is now 4+ months late and in charge off status:

http://www.prosper.com/lend/listing.aspx?listingID=138059

Thank you Prosper for allowing Him to steal from the others of us who purchased his unregistered security

Ouch - $500

FYI he doesn't have enough loaned out to cover the balance of this loan.
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lhsbandnurd

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Re: what's the current "blender" situation?
« Reply #8 on: December 07, 2008, 06:39:59 pm »

But what he does have is going into his pocket along with the money he stole form other lenders. Talk about insult to injury, sheesh.
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Senator

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Total withdrawals: $3,488.87 minus (-) Total deposits: $3,600.00 = ($111.13)
Cash balance: $0
Principal value of active notes:  $0
Total active notes: 0 of 70.

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bamalucky

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Re: what's the current "blender" situation?
« Reply #10 on: December 26, 2008, 06:34:56 pm »

Andrew promised on the now deleted forums that right of offset would be put in place.

I just typed this to bump something in the lobby.No one has posted for a week.
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ira01

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Re: what's the current "blender" situation?
« Reply #12 on: December 26, 2008, 06:55:10 pm »

Andrew promised on the now deleted forums that right of offset would be put in place.

Shira promised in the late summer or early fall of 2007 that Prosper's lawyers were busy working on the problem, and that they expected to be done "by the end of the year."  Since nothing happened at the end of 2007, now that it is nearly the end of 2008 maybe we'll see the promised action.   :ninja:
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ira01

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Re: what's the current "blender" situation?
« Reply #13 on: December 26, 2008, 07:14:04 pm »

I have a blender that just went <15
http://www.ericscc.com/lenders/kr7377

Vetmom, one of my blenders, just went 4+months late today, and will presumably get charged-off tomorrow or Monday.  She bounced back and forth between 16-30 days late and current from last December through this July, and then basically stopped paying.  What a turd.  Of course, she was an even worse lender than borrower -- she made 10 loans, with 6 of them defaulted/charged-off and 1 more about to.  Lendingstats has her ROI at -24.07%, while Eric's has it even worse: -30.83% .  Of course, the fact that her borrowers stiffed her for a big chunk of her $500 lent is no justification for stiffing her lenders for half of her $18,000.  >:(
« Last Edit: December 26, 2008, 07:16:15 pm by ira01 »
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Senator

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Re: what's the current "blender" situation?
« Reply #14 on: December 26, 2008, 09:21:56 pm »

Unfortunately it makes sense from a blender point of view.  If my borrowers aren't paying me, then why should I pay my loan, especially when Prosper doesn't seem to care.
« Last Edit: December 26, 2008, 09:26:13 pm by Senator »
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Stats as of 12/29/2010:
Total withdrawals: $3,488.87 minus (-) Total deposits: $3,600.00 = ($111.13)
Cash balance: $0
Principal value of active notes:  $0
Total active notes: 0 of 70.

Successful loans are made to persons who are on a clear path to financial stability. -Mjerryfirst May 18th, 2008.

I know that when I make my 10% those "unbelievers" will call it luck cause that will be the easiest way to excuse their mistakes. -Researchpro May 5th, 2009.

It's a great time to be poor and irresponsible in America. -PPT May 2009
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