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Author Topic: 09/24/08 prosper update - inconsistent use of words "charge-off"  (Read 21644 times)

112233

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #15 on: September 24, 2008, 01:22:35 pm »

In last night's update, they updated the myaccount/lending page to introduce the "charge-off" terminology.  However, all they did was to replace the word "default" with "charge-off".  They did NOT change the calculations.  They still show "4+ months late" loan counts seperately.  Also, the "net charge-offs" under "lending performance" shows only the principal of the defaulted loans, not the "4+ months late" charged-off loans.  Same numbers as before.  Only labels changed.

This is inconsistent with the use of the words "charge-offs" on the performance page, where "charge-off" includes both the "4+ months late" loans and the "default" loans added together.


has prosper updated it's definition/formula for "Attractive Risk-Return Tradeoff" ?

http://www.prosper.com/about/media_press_releases.aspx?t=Prosper_Releases_Market_Survey_Results_for_May_2008
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Mtnchick

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #16 on: September 24, 2008, 01:37:29 pm »

Quote
Loans designated as “Charged-offs” after 4 months late

This is completely untrue. I have one that hasn't paid in over 2 years that is still in my 4+ late bin.
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bamalucky

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #17 on: September 24, 2008, 01:37:58 pm »

Same here..I have an 11 month,never made a payment that is still 4+
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HollowOak

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #18 on: September 24, 2008, 01:43:20 pm »

In last night's update, they updated the myaccount/lending page to introduce the "charge-off" terminology.  However, all they did was to replace the word "default" with "charge-off".  They did NOT change the calculations.  They still show "4+ months late" loan counts seperately.  Also, the "net charge-offs" under "lending performance" shows only the principal of the defaulted loans, not the "4+ months late" charged-off loans.  Same numbers as before.  Only labels changed.

This is inconsistent with the use of the words "charge-offs" on the performance page, where "charge-off" includes both the "4+ months late" loans and the "default" loans added together.


Fred, if I read between the lines in Andrew's blog post, they have now instituted new programming and as the loans roll past (their next payment due date?) a certain criterion, they will move into the new category.  Hence this process will complete "over the next 30 days."

That's my best and most favorable interpretation of this.

The less kind one is starting to wonder how all this is dovetailing in with Post Charge-off Collections and when and how I'm ever going to see even the pittance I would have gotten if Prosper had kept to their part of the Lender's agreement and sold the damn lates to the JDBs.

At the very least Prosper owes us an explanation for what conditions the JDBs imposed that was unacceptable to Prosper.

See also my other post regarding Andrew's blog post and his referral in there that they are *now* sending "due in full" acceleration notices to delinquent borrowers. The wording seems to imply that they might never have done so in the past.

That really gravely concerns me.

ETA: on reflection, there is another uncharitable characterization one could make regarding this gradual process. If the process was implemented with immediate effect, then the entire Prosper lender community would have woke up this morning with a few million dollars less in account value.

This way, it will be written off gradually over the next 30 days, thus not being so immediate for the majority of lenders.

ETA 2: Just went to look it up. The charge-off line in Prosper's Performance tab has $19+ million of bad loans on it.  What we can't tell anymore is how many of those have actually been sold and how many of those are now hanging over us, ready to drop in the next 30 days.

Once again, Prosper's accounting changes keep obscuring data that was previously available.  Before, we could see bad debt on Prosper's books and bad debt that was sold off. Now they seem to have just merged these categories into one lump sum. [expletive deleted]
« Last Edit: September 24, 2008, 02:01:04 pm by HollowOak »
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patio11

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #19 on: September 26, 2008, 03:27:15 am »

I don't think it is necessarily bad for Prosper to kill off small loans -- they're disproportionately done by the dregs of the lending pool (if you're AA $1,000 should fit on your cards, handily, for less money than Prosper!)  They also don't result in enough revenue to recoup Prosper's marginal costs in originating the loan -- you can bust out that old Larsen presentation on average costs but as I recall they're about $40 for our more troubled borrowers, so charging them $25 origination fee leaves *Prosper* on the hook for underperformance, and we know that won't do  ;).
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ira01

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #20 on: September 26, 2008, 11:39:19 am »

In last night's update, they updated the myaccount/lending page to introduce the "charge-off" terminology.  However, all they did was to replace the word "default" with "charge-off".  They did NOT change the calculations.  They still show "4+ months late" loan counts seperately.  Also, the "net charge-offs" under "lending performance" shows only the principal of the defaulted loans, not the "4+ months late" charged-off loans.  Same numbers as before.  Only labels changed.

This is inconsistent with the use of the words "charge-offs" on the performance page, where "charge-off" includes both the "4+ months late" loans and the "default" loans added together.

Fred, if I read between the lines in Andrew's blog post, they have now instituted new programming and as the loans roll past (their next payment due date?) a certain criterion, they will move into the new category.  Hence this process will complete "over the next 30 days."

I think that Prosper probably just sent the acceleration notices, so they are going to wait the 30 days for those to take effect, and will then move the loans to charged-off status.
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Fred93

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #21 on: September 27, 2008, 02:49:31 am »

Fred, if I read between the lines in Andrew's blog post, they have now instituted new programming and as the loans roll past (their next payment due date?) a certain criterion, they will move into the new category.  Hence this process will complete "over the next 30 days."

If that were the correct interpretation, we should see some loans moving from "4+" to "charged off" every day, but I haven't seen any move.  Therefore your interpretation doesn't seem to be right.

There is no interpretation which makes sense.

ira01

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #22 on: September 27, 2008, 12:02:12 pm »

Fred, if I read between the lines in Andrew's blog post, they have now instituted new programming and as the loans roll past (their next payment due date?) a certain criterion, they will move into the new category.  Hence this process will complete "over the next 30 days."

If that were the correct interpretation, we should see some loans moving from "4+" to "charged off" every day, but I haven't seen any move.  Therefore your interpretation doesn't seem to be right.

There is no interpretation which makes sense.

I think my interpretation, in the post immediately above yours, makes sense (although we don't know whether it is correct or not) -- that Prosper just recently sent the acceleration notices, which pursuant to the Notes require 30 days advance notice before they are effective, and will mark the loans "charged-off" once they have been accelerated.
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brianguy

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #23 on: September 27, 2008, 10:06:34 pm »

* AA borrowers' closing fees increased to 2%
* minimum closing fee increased from $25 to $75

Wow.  I definitely will never take a loan from Prosper now.

the minimum is not that huge, if you analyze it.  $25 is so small it might as well be $0.  most closing fees are probably already $75 or higher, and with the increase to 2% for AA that will become even more true.  I think AA's should get some benefits for being AA's but hey, so be it.  the default rate for AA's seems much higher than anyone expected and that drives up costs enough to justify.

I don't want to see anyone gouged by Prosper but the bottom line is lenders (and arguably Prosper, in the long run) have been getting screwed by the borrowers anyway so I don't really feel that bad.  if Prosper prices themselves out of the market in the long run they'll be sorry.  we all know there are new alternatives and competitors popping up and they have never really cornered the market with so few alternatives ala eBay


Quote
Once in charge-off:
• The loan cannot return to “Current”. It will remain a “Charge-off”, even if the borrower pays the full balance of the loan
(


I feel this is a poor idea... I know credit card companies do this, but they also do a lot of other very, very bad things.  the entire point of Prosper is to avoid credit cards, but the more they start acting like them I think the more annoyed potential borrowers would be.  and this particular one even frustrates me as a Lender
« Last Edit: September 27, 2008, 10:09:12 pm by brianguy »
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Shenandoah

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #24 on: September 29, 2008, 04:26:34 pm »

the entire point of Prosper is to avoid credit cards,

I'm curious where you got that from?
They're completely different products.  I can see Prosper as being a replacement for personal bank loans, and I can see Prosper being used to pay off CCs if a borrower has realized the error of their ways and made changes to their financial life.  But I don't see Prosper as a replacement to CCs in any way, and I especially don't see it as being "the entire point."
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brianguy

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #25 on: September 30, 2008, 04:04:38 pm »

you're right not "the entire point".  I should've said one of the points of Prosper is to avoid credit cards, payday lenders, etc.  that is one of the things I've heard Chris Larsen say in interviews talking about Prosper (which makes sense, why pay Citibank 19.00% to 30.00% when you can pay individual lenders less and help them get a better return), and I'm sure that theme has been mentioned elsewhere before (official blogs, newsletters, etc.)

personal lines of credit from a bank are becoming more and more rare.  I would tend to think those have nearly, at least for the time being, dried up completely from several institutions.  by and large they're being replaced by CC's.  another thing Larsen says, CC's were not meant to be lending tools.  now maybe these lines of credit are still more commonly available from some credit unions.  but they are not nearly as common nor available as they used to be.
« Last Edit: September 30, 2008, 04:10:17 pm by brianguy »
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Fred93

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #26 on: October 08, 2008, 02:36:05 am »

I still don't see any of my 4+++++++ late loans transitioning to "charged off".

This is just nuts.  Prosper says they're gonna do it, and months and months and months go by, and not a goddamn thing gets done.  The loans just sit there rotting.

Mtnchick

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #27 on: October 08, 2008, 09:15:26 am »

I still don't see any of my 4+++++++ late loans transitioning to "charged off".

This is just nuts.  Prosper says they're gonna do it, and months and months and months go by, and not a goddamn thing gets done.  The loans just sit there rotting.


+++++++++++++1
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ira01

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #28 on: October 08, 2008, 11:33:58 am »

I still don't see any of my 4+++++++ late loans transitioning to "charged off".

This is just nuts.  Prosper says they're gonna do it, and months and months and months go by, and not a goddamn thing gets done.  The loans just sit there rotting.

You say that like it is a surprise.  Has Prosper ever done ANYTHING when it said it would?
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gassman0102

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Re: 09/24/08 prosper update - inconsistent use of words "charge-off"
« Reply #29 on: October 20, 2008, 05:27:05 pm »



I think my interpretation, in the post immediately above yours, makes sense (although we don't know whether it is correct or not) -- that Prosper just recently sent the acceleration notices, which pursuant to the Notes require 30 days advance notice before they are effective, and will mark the loans "charged-off" once they have been accelerated.

The 30 day clock is ticking down.  What are the chances that the 4++ loans will become Charge Off loans this week?
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