Found it - Lender Registration Agreement (link on bottom of most pages): Legal Agreements
http://www.prosper.com/account/common/agreement_view.aspx?agreement_type_id=8Section 12: "If you obtain one or more borrower loans through the platform, amounts in your Prosper funding account are subject to set-off against any delinquent amounts owing on your loans. Amounts in your Prosper funding account are also subject to set-off against any shortfall resulting from ACH returns of transfers or deposits of funds to your Prosper funding account. You will not receive further notice in advance of our exercise of our right to set-off amounts in your Prosper funding account against any delinquent amounts owing on any loan or loans you obtain. "
Dated - September 7, 2009
1) So I assume this was the new agreement that everyone signed after the quiet period?
2) I would assume any loans by lenders after 07SEP09 would fall in this category?
3) I also assume Prosper does not check on late loans who is a Blender - and that a note from the Lender to Prosper might speed up the process of collection.
Seems to me this is kinda big news and answers one of the main complaints of many on this site - I am suprised it wasn't pointed out earlier.