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Author Topic: Is this a bad sign?  (Read 212297 times)

ira01

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Re: Is this a bad sign?
« Reply #60 on: March 10, 2010, 12:50:46 am »

You guys toss around all these silly numbers about X% of loans have defaulted, but
that's an incredibly dopey (in its ability to mislead) metric to look at, given that every payment is money.

How about the fact that 23.19% of every dollar lent on Prosper has disappeared as a net charge-off -- that's $44.4 million dollars.  Is that a "silly number" too?  Add in another 2.02% that is 1+ months late, and more than 1 out of every 4 dollars ever lent is gone.  http://www.prosper.com/invest/performance.aspx  And those percentages include loans too new to have gone into the crapper yet -- the final numbers will be considerably worse.  I can hardly wait to see how you try to spin those numbers in pursuit of your perpetual brown nose. 
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Ichabod

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Re: Is this a bad sign?
« Reply #61 on: March 10, 2010, 12:04:16 pm »


Also of note is that, despite a "relatively" high percentage of my loans defaulting, what matters MOST is
WHEN they default.  You guys toss around all these silly numbers about X% of loans have defaulted, but
that's an incredibly dopey (in its ability to mislead) metric to look at, given that every payment is money.

I know *you* know all of this, Urbi - but for the folks playing along at home, I thought it'd be revelatory.

-t

I invested about 10k in 50$ chunks to mostly AA borrowers for about a year, with my last loan in Jan 2008. I haven't done any lending since then and feel incredibly dopey for ever trying P2P. Good for you if you made a profit. I may be just inept at P2P, but regardless, your "WHEN" argument doesn't jive for me. Too many loans went bad early in my portfolio and no one at Prosper or the collection agencies seem to care. All those bad loans ate the interest. I'm going to end with less dollars than I deposited when this is all done. I would have done better leaving my money in a savings account. I'm not investing in Prosper again. Not a chance.


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God-Father

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Re: Is this a bad sign?
« Reply #62 on: March 10, 2010, 12:30:36 pm »

Ichabod

What is your Prosper screen name?
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Ichabod

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Re: Is this a bad sign?
« Reply #63 on: March 10, 2010, 04:21:50 pm »

Ichabod

What is your Prosper screen name?

It's "toutdsuite"
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Tokyo Joe

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Re: Is this a bad sign?
« Reply #64 on: March 10, 2010, 04:43:52 pm »

I know *you* know all of this, Urbi - but for the folks playing along at home, I thought it'd be revelatory.


Another "you're all morons and I'm smarter than you" argument from nonattender?  For such an egghead, his arguments get pretty repetitive, and they all center around "you guys are just too stupid"
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nonattender

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Re: Is this a bad sign?
« Reply #65 on: March 10, 2010, 05:19:12 pm »

I know *you* know all of this, Urbi - but for the folks playing along at home, I thought it'd be revelatory.

Another "you're all morons and I'm smarter than you" argument from nonattender?  For such an egghead, his arguments get pretty repetitive, and they all center around "you guys are just too stupid"

I'll give you an example that might hit home considering you totally called this like 3 years ago and, not
only did you call it, but all of us here began calling the effect after you because of that:  the TJ effect.

Quote from: nonattender
The banks have professional analysts and monstrously tweaked credit decisioning algorithms to make their lending decisions for them (not individuals), and were doing only slightly better than us "people", who, relatively, started into the lending business yesterday (and in a RECESSION), and, also, lenders here, in many cases, chased after the high rates and bid (starry eyed), on loans of low credit quality, which were clearly marked as such, but which are now not allowed to even list since lenders couldn't control themselves (that sound familiar, macro?) and would often ignore risk, in pursuit of high return.  I know I certainly did, at times - I clearly remember lending $80 to "evildick66" an autofund at 29%...

You were the very guy who spotted this temptation/behavior way before anyone else, telling us all that
we needed to be super careful about funding loans, especially auto/instant funders, that had high rates,
not only for the obvious ones that were high risk, but for those of good credit quality who'd take a rate
that was way out of whack (higher) than the alternatives that should've been open to them, otherwise.

If I'd heeded your advice, or, for that matter, listened to myself more closely, I'd be up $80 bucks, now.
Probably more than, that, but that's the one that I remember thinking:  Hmm..  That guy might be right.

-t
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bamalucky

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Re: Is this a bad sign?
« Reply #66 on: March 10, 2010, 05:44:34 pm »

NA,point blank questions.


Do you trust Prosper to do the right thing regarding lenders?

Do you feel Prosper collections are up to industry standards?

Has Prosper ever misled lenders on purpose?

Do you think Prosper verifies enough before giving the borrower money?
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nonattender

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Re: Is this a bad sign?
« Reply #67 on: March 10, 2010, 06:54:01 pm »

NA,point blank questions.

My favorite flavor!

Quote
Do you trust Prosper to do the right thing regarding lenders?

Point blank answer:  Yes.

The right thing for Prosper to do is to pass on to lenders the payments it receives from the borrowers.
I do, indeed, trust that they do that - and I see no indication, past or present, of any other behavior.

Quote
Do you feel Prosper collections are up to industry standards?

Point blank answer:  Yes.

The debt collection industry is enjoying a massive surge in volume, lately, but with very low recovery.
There are all kinds of reasons why that's the case, but it mostly boils down to:  no blood from stones.
In the beginning, we all thought Prosper loans might be the first thing a troubled borrower paid - now,
the behavior we're seeing is weirdly reflective of the overall economy:  Pay your CC and keep using it,
even if that means not paying something that'd, traditionally, be "more important", like your mortgage.

Quote
Has Prosper ever misled lenders on purpose?

Point blank answer:  Not to my knowledge.

I'll grant you that in the early days the press was very rosy, but that is just the nature of the "press".
I'll also grant you that, in the early days, an overly simplistic ROI calculation was being presented and
additionally that the Experian default rates, which have been replaced by actual market data, weren't
terrifically on point, relevant, or that tightly correlated with what was observed, but it's what we had.

Quote
Do you think Prosper verifies enough before giving the borrower money?

Point blank answer:  Yes... but, naturally, I'd always like to see improvements, though that is difficult.

-t
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bamalucky

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Re: Is this a bad sign?
« Reply #68 on: March 10, 2010, 06:58:28 pm »

Do you really think advertising lender rates of 6-14% isn't misleading?

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brianguy

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Re: Is this a bad sign?
« Reply #69 on: March 10, 2010, 07:19:53 pm »

Do you really think advertising lender rates of 6-14% isn't misleading?




the one that always gets me is the 8% douche right on the front page.

honestly, my portfolio isn't even that bad compared to most people (I have 7 defaults and 1 a month behind out of 29, but one default continues to pay back the principal), and I'm projected to lose 3%, which is about 10% lower than they claim your average person will make.  it's just all smoke and mirrors b.s.
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nonattender

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Re: Is this a bad sign?
« Reply #70 on: March 10, 2010, 07:24:22 pm »

Do you really think advertising lender rates of 6-14% isn't misleading?

That's not for me to say, but what I will say is that my return from loans made in 2006-2008 is hovering
within that range, and my portfolio consists almost entirely of very high risk loans (that I hand selected)
from the "bottom of the credit quality barrel".  I wasn't going for a steady-state return, so, I'm not your
normal case, but, given that credit qualifications to list for a loan have gone up (practically none of the
loans that I made could even be made today, since a 640+ FICO is necessary to borrow anything), and
given that LendingClub, which launched with similar credit standards (but does not allow its lenders the
ability to price the rates on loans), is claiming an average lender return of like 9% (though, their market
data is not transparent like Prosper's, so we have to take their word on that), I don't think it's "far out".

Naturally, there will always be a distribution of returns in any marketplace, so, if I go eat up risky loans,
chasing higher returns, and get my ass handed to me, that doesn't mean some other guy won't do fine,
which, really, is always the case with a market.  That said, lots of "risky" loans are now off the menu...

-t
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ira01

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Re: Is this a bad sign?
« Reply #71 on: March 11, 2010, 12:52:49 am »

Do you trust Prosper to do the right thing regarding lenders?

Point blank answer:  Yes.

The right thing for Prosper to do is to pass on to lenders the payments it receives from the borrowers.
I do, indeed, trust that they do that - and I see no indication, past or present, of any other behavior.

I guess you forgot the several times that Traveler caught Prosper helping themselves to excessive fees from lenders, and that despite Prosper promises to repay the money in a stated short time period, it actually took many months, and a complaint to regulators before Prosper did so.

And how about Prosper's unilateral and legally unauthorized switch from Penncro to AmSher on existing loans.  Prosper promised that the switch wouldn't cost lenders any higher fees, but that too turned out to be a lie.  After delaying for a very long time in making the promised refunds of excess collection fees, Prosper made a partial payment, but never did pay back the rest of the excess charges.

Moreover, Prosper owes lenders more duties than just turning over borrower payments.  For example, how about the "New Agency Test" (Prosper's test litigation project), in which Prosper induced lenders to "sell" their loans back to Prosper for $0.00 and a pro rata share of the net recovery by making various promises, such as that the NAT would be conducted diligently and that Prosper would provide the opting-in lenders with a monthly accounting of the project.  We all know how that turned out (the NAT was a complete cluster-fuck, and Prosper still hasn't provided a single "accounting").

Quote
Quote
Has Prosper ever misled lenders on purpose?

Point blank answer:  Not to my knowledge.

I'll grant you that in the early days the press was very rosy, but that is just the nature of the "press".
I'll also grant you that, in the early days, an overly simplistic ROI calculation was being presented and
additionally that the Experian default rates, which have been replaced by actual market data, weren't
terrifically on point, relevant, or that tightly correlated with what was observed, but it's what we had.

Bullshit.  Chris Larsen was still giving media interviews claiming a 2.x% (then a 5.x%) default rate, using a completely bogus methodology long after it was obvious to everyone with any knowledge that those claims were nothing but a fraud.
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ira01

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Re: Is this a bad sign?
« Reply #72 on: March 11, 2010, 12:58:21 am »

Do you really think advertising lender rates of 6-14% isn't misleading?

That's not for me to say, but what I will say is that my return from loans made in 2006-2008 is hovering
within that range, and my portfolio consists almost entirely of very high risk loans (that I hand selected)
from the "bottom of the credit quality barrel".  I wasn't going for a steady-state return, so, I'm not your
normal case, but, given that credit qualifications to list for a loan have gone up (practically none of the
loans that I made could even be made today, since a 640+ FICO is necessary to borrow anything), and
given that LendingClub, which launched with similar credit standards (but does not allow its lenders the
ability to price the rates on loans), is claiming an average lender return of like 9% (though, their market
data is not transparent like Prosper's, so we have to take their word on that), I don't think it's "far out".

Naturally, there will always be a distribution of returns in any marketplace, so, if I go eat up risky loans,
chasing higher returns, and get my ass handed to me, that doesn't mean some other guy won't do fine,
which, really, is always the case with a market.  That said, lots of "risky" loans are now off the menu...

More bullshit from you.  There are about 13,400 lenders with >20 loans and an average loan age >2 years (730 days).  Of those, there are exactly 327 with an ROI of at least 6%.  That is a mere 2.4% of such lenders.  To claim returns of "6-14%" when only 2.4% of your lenders actually achieve that result (and when, in fact, the majority of your lenders actually have negative ROIs) is fraudulent, plain and simple.
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112233

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Re: Is this a bad sign?
« Reply #73 on: March 11, 2010, 08:52:54 am »

Do you really think advertising lender rates of 6-14% isn't misleading?

That's not for me to say ..

.. I don't think it's "far out".

Naturally, there will always be a distribution of returns in any marketplace, so, if I go eat up risky loans,
chasing higher returns, and get my ass handed to me, that doesn't mean some other guy won't do fine,
which, really, is always the case with a market.  That said, lots of "risky" loans are now off the menu...

..


I thought this was your position on the matter

Rigor matters.  Context matters.  Nuance matters.  To not provide it is to mislead by omission.
« Last Edit: March 11, 2010, 09:04:01 am by 112233 »
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nonattender

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Re: Is this a bad sign?
« Reply #74 on: March 11, 2010, 04:28:14 pm »

You're talking "legally", I'm talking "functionally".  I'd rather it just worked - and not quibble - but I will! :)

I guess you forgot the several times that Traveler caught Prosper helping themselves to excessive fees from lenders, and that despite Prosper promises to repay the money in a stated short time period, it actually took many months, and a complaint to regulators before Prosper did so.

Sorry, that was 3-4 years ago, and I remember zero details about the incident, but it was fixed, right?

Quote
And how about Prosper's unilateral and legally unauthorized switch from Penncro to AmSher on existing loans.

The way I remember it happening - again, this was what, 3 years ago? - is that an alternative agency
was enlisted in an attempt to improve collections, since many people, including Prosper, I'm supposing,
thought PennCro was not doing a good job, or at least wanted to test out another agency to see if it
could do any better.  So I think the way they had it written into the LRA was such that the collection
agency was sort of "hard coded" into the agreement (ie, they'd not left themselves room to move the
collection efforts to another agency, without running up against the agreements).  I didn't care - and
neither did most people, as AmSher's performance was not something anyone wanted to hang on to...
It pretty much turned out that PennCro didn't do much of a better job since the loans were fairly hard,
so, when they call up some broke guy with an ("old") NC or High Risk or even AA, not much leverage...

Quote
For example, how about the "New Agency Test" (Prosper's test litigation project), in which Prosper induced lenders to "sell" their loans back to Prosper for $0.00 and a pro rata share of the net recovery by making various promises, such as that the NAT would be conducted diligently and that Prosper would provide the opting-in lenders with a monthly accounting of the project.  We all know how that turned out (the NAT was a complete cluster-fuck, and Prosper still hasn't provided a single "accounting").

Lenders were offerred a choice of taking the last JDB offer (highest price was like $.02 on the dollar,
and that was only for loans to homeowners, since the JDB's were already seeing awful performance,
and were catching on to the fact that the junk debt market was flooded even though they still held
out some kind of hope for their own ability to be selective as they were offering like a penny for the
loans that prosper lenders had made to non-homeowners - and DOUBLE that price for homeowners!),
OR opting in to a legal test initiative that Doug Fuller was going to run where he'd cherry pick some
loans where he thought he could sue and get a recovery (ie, there was something there to recover).

I think it wound up being like 66 loans, and, I don't know, but I suspect that for a couple of reasons,
like maybe to comply with the LRA's (which had JDB's "hard-coded") and to shore up legal "standing",
they needed to buy the loans back from lenders, on paper, at $0, for those who opted against $.02.

You'll get no argument from me that Fuller promised (with much bluster) way more than he delivered,
though, I don't think this was malice aforethought on his part, just "out of his domain of experience".
Had he been working with traditional loans from a traditional old-school lender, it may have worked...
For whatever reason, it didn't, and you'll also get no argument from me that the guy didn't admit it...
Though again, I think there were probably some mitigating factors that were out of his control there.

Still, functionally, no money was no money and no updates were no updates, and yeah, that sucked.

Quote from: Ira01
Chris Larsen was still giving media interviews claiming a 2.x% (then a 5.x%) default rate, using a completely bogus methodology long after it was obvious to everyone with any knowledge that those claims were nothing but a fraud.

As the default rates went up on the bucket of loans he was talking about he revised them upwards?
I don't think you're going to get an indictment for "Not only did he tell the truth, he kept it current!"

(I do understand that your real complaint is that he mostly talked about higher credit quality loans.)
(I just don't think it makes any sense to fault the guy for essentially encouraging less risky lending.)

Eh... this is mostly sour grapes on memory lane.

-t
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