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[HollowOak]

The Motley Fool recently published an article that picked up on an issue that has been hotly debated here and also highlighted in Fred93's blog. This has to do with the way Prosper represented it's status to the courts in an ID theft/bankruptcy case comprising a Prosper borrower.

In a blog article, Prosper admits that it represented its relationship to the borrower (and by implication the relationship of Prosper "Lenders") incorrectly to the court and that it will soon file amendments to correct this mischaracterization.

However, a very interesting thing happened in this blog entry. Some lenders were complaining about the failed debt sales and Prosper's decision to bring these loans in-house rather than sell them off to JDBs. Prosper responded as follows:


Note the very interesting statement: "In the case of the accounts that comprised the “cancelled” debt sale bid file, they have already collected more than 2/3 of the total amount of the best bid."

When Prosper provided the update on the debt sale process (correctly phrased, this should be "announced the cancellation of the debt sale"), I wrote about it here.

In a post in the thread, I provided an estimate of the putative offers that were turned down. My estimate was that Prosper turned down an offer in the region of $232,000 for the $6.6 million of eligible debt. Based on the response in the blog post, Prosper has apparently recovered in the region of $153,000 by using their own "post-charge off collection techniques."

I'd be interested to hear from any of the lenders who shared in this bounty. I know I'm not one of them.

Which brings me to another point in the above post. Prosper once again extols the virtues of diversification:

"A lender that is on one of the loans that came current is probably very happy with the decision — a lender on a loan that declared bankruptcy or does not pay anything, would obviously rather had the debt sale price.

This is one of the key reasons for diversification in the loans you own."

In the normal JDB, all the lenders shared in the proceeds of the JDB. THis way, the results are spotty. I'm undecided if this is a good thing or a bad thing. Obviously, since the vast majority of lenders isn't seeing a penny from these collections, they might be thinking this is sub-optimal and not in the spirit of the originally agreed-to Lender agreement.

[Xenon481]

I have not seen a single penny from Post-Charge-Off-Collections-Techniques.

[Mtnchick]

I have not seen a single penny from Post-Charge-Off-Collections-Techniques.

+1 and I have 14 account that are 4++++++ months late which are in neither collections nor BK which I'm ASSuming are the "we would have put these in the JDB sale if we'd had one" category.

[Fred93]

HO, when you created the spreadsheet, what cutoff date did you assume for the debt sale that didn't happen?  In other words, you included all 4+ late prior to what date?

[Chamatrain]

I have 11 loans 4+ up to 15 months late.  5 of them have been showing nothing.  I was told a while back they are in that special group.  I was never able to get another email answered about them and have not received any pennies, dollars, or information.

[xraider]

I have received nothing.  I have six loans that are 4+ late, including one that states it's in bankruptcy.

At least as of now, my post to the Prosper blog asking about more information on my lates hasn't passed moderation. 

[onthefence]

I have 11 loans 4+ up to 15 months late.  5 of them have been showing nothing.  I was told a while back they are in that special group.  I was never able to get another email answered about them and have not received any pennies, dollars, or information.

It's the 'Prosper has no more defaults' special group.  It does wonders for the statistics they can report to the media.

[red12049]

I have 11 loans 4+ up to 15 months late.  5 of them have been showing nothing.  I was told a while back they are in that special group.  I was never able to get another email answered about them and have not received any pennies, dollars, or information.

It's the 'Prosper has no more defaults' special group.  It does wonders for the statistics they can report to the media.

Actually, it's the Prosper "Mushroom" group... as in, "Kept in the dark, and fed shit".....

R

[onthefence]

Why can't everyone here be nice lenders.  You know the kind that hands over their money & doesn't ask any questions that are too difficult.  The kind of lender that says 'Oh, Ok.  You must be to busy to give me a real answer' when given a boiler template reply to your question to customer support that completely misses the mark.

The kind of lender that is super enthusastic until 9 months in when he or she finally realizes that their ROI is not going to be th 9-12%, but more like 5%... or maybe worse... you just aren't sure yet.

And then quietly goes away, not raising a fuss that might dissuade the new batch of lenders walking in the door.

[Mtnchick]

OK, of the "charged off" accounts' last payment dates that supposedly they've received 2/3 of the highest offered JDB amount here are the payments of my accounts which aren't in collections or BK:

August 2007
December 2007
August 2007
August 2007
January 2008
October 2007
October 2007
November 2007
August 2006 (that one really sticks in my craw)
September 2007
September 2007
July 2007
September 2007
October 2007

Whichever of these loans they are supposedly collecting on, ain't mine.

[bamalucky]

I guess my comment wasn't approved for the blog.

[ratchetr]

I guess I'm one of the lucky few.

I have 5 in the 4+ category (#6 was a NAT loan, no longer listed).
3 of the 5 show nothing since they stopped payment, which was in January, February and May of 08.

1 is the infamous Gaerke loan. There have been 2 recent payments that gave me an extra $3.71 to transfer out. (And if I had to choose between Prosper being honest to the court, and a bit of beer money for me...Sorry Prosper, you did the wrong thing here).

Last one is loan 14742. This one started making bi-weekly (more or less) payments at the end of May (Net 4 bucks). Six have cleared, latest one still has a dagger (and it's the first that pays down a bit of principal.)
This was a StaciM loan that some of you might remember: http://www.prosper.com/lend/listing.aspx?listingID=130718

Haven't done the math, but I suspect I'm a bit ahead compared to a JDB sale (which wouldn't include the Gaerke loan anyway, since it was in BK). If Adam eventually pays off (or just pays interest for life), I'm certainly better off. But at this point I'm not sure I really care. Probably easier to just write these off and move on.

[bamalucky]

I don't care if they collect 00% of the outstanding balance on every 4+ late.My LRA says loans are sold at debt sales.I want mine sold.

Period

[ratchetr]

I don't care if they collect 00% of the outstanding balance on every 4+ late

Or even 100%.

That was the deal. I knew from the start I would make some bad loans, and I knew from the start what Prosper was going to do with them.
All I know now is that I made some bad loans.

[bamalucky]

Mine was supposed to say 100%.This laptop keyboard sux