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Author Topic: New Collection Agency - Amshare  (Read 92179 times)

traveler505

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Re: New Collection Agency - Amshare
« Reply #75 on: January 30, 2008, 12:13:30 pm »

Unless a majority of lenders object (highly unlikely), all of Penncro's loans will be switched over to Amshar.

Has anyone considered that Penncro fired Prosper as a customer?

If I remember correctly, they were operating at a loss to gain the lions share of Prosper's business, hoping it would grow to infinity and beyond. They might have grown tired of bleeding red on the Prosper account.

I wouldn't be surprised to see penncro off the list once the collections switcharoo happens...

(just a theory)

Prosper was fired by one of the original collection agencies, and it simply switched all of the loans over to a new agency.  The fact that they are using an opt-out process with a virtually pretertermined outcome this time around - rather than just announcing the change - suggests that either (a) Prosper has become more sensitive to the contractual compliance issues, and at least wants to present a plausible claim that lenders consented to modification of the contract, or (b) Prosper is making this change by choice, not by necessity, and as a result believes its legal position is more tenuous this time around, so it has to cover its arse a bit better, if still imperfectly.

(a) doesn't make any sense to me, since if Penncro fired Prosper, then there wouldn't be any contract compliance issues for Prosper -- staying with Penncro would have become impossible, so of course there would be a switch.

I've always been told that contracts are supposed to be written in anticipation of everything that could go wrong, and provide mechanisms for resolving the potential impasses.  Many contracts have an "acts of God" clause that releases one or both parties from their obligations if performance becomes impossible.  It would have been simple enough to include an "acts of Penncro" clause which created a process for Prosper to switch collection agencies as needed. 

But Prosper didn't, and, in the absence of such a clause, I don't think there's a meaningful difference in their legal position depending on whether Penncro fired Prosper or vice versa.  (Suppose I contract with a talent agency to supply Britney Spears for a concert, and the agency fails to include the usual "acts of God" clauses.  On the day of the concert, Britney is locked up somewhere, so they send me William Hung instead.  Does the fact that it was impossible for them to perform as agreed relieve them of liability for breach of contract?)

None of this changes the fact that, given Penncro's performance thus far, I think this change will be beneficial to lenders.  (And, as I said early in this thread, AmSher looks like a good fit at first glance.)  As such, I have no interest in challenging the switch on technical grounds, but am merely speculating about why Prosper does what it does in the way that it does it.
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"Trav, you can always take up another hobby..." -- BigGulp

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Fred93

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Re: New Collection Agency - Amshare
« Reply #76 on: January 30, 2008, 12:15:47 pm »

I read your blog, but under your entry dated 12/30, your graph (Prosper/Penncro brought current function) still shows cure rates at just below 16%.  16% is a far cry from 6%, but it still isn't 20%.  Why does your math say one thing, and your graph say another?

The chart is a graph of the "lifetime" statistic that Prosper has provided.  Unaltered.

The 20something% is something I calculated, as an estimate of recent collections performance.  It is the recent collections performance that is required to make the lifetime curve slope up at the right end the way it does.  The calculation is described in the blog.

Fred93

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Re: New Collection Agency - Amshare
« Reply #77 on: January 30, 2008, 12:20:51 pm »

I've always been told that contracts are supposed to be written in anticipation of everything that could go wrong, and provide mechanisms for resolving the potential impasses.  Many contracts have an "acts of God" clause that releases one or both parties from their obligations if performance becomes impossible.  It would have been simple enough to include an "acts of Penncro" clause which created a process for Prosper to switch collection agencies as needed. 

But Prosper didn't, and,

Oh dear yes.  This is not the first such instance.  There have now been several situations where it is painfully clear that Prosper's legal agreements were not drafted with concern about things that could happen in the future, such as a need to change collection agencies, or a need to sue borrowers, or ...  Prosper should be fixing the agreements to include solutions to such issues.

ira01

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Re: New Collection Agency - Amshare
« Reply #78 on: January 30, 2008, 12:23:40 pm »

I've always been told that contracts are supposed to be written in anticipation of everything that could go wrong, and provide mechanisms for resolving the potential impasses.  Many contracts have an "acts of God" clause that releases one or both parties from their obligations if performance becomes impossible.  It would have been simple enough to include an "acts of Penncro" clause which created a process for Prosper to switch collection agencies as needed. 

But Prosper didn't, and, in the absence of such a clause, I don't think there's a meaningful difference in their legal position depending on whether Penncro fired Prosper or vice versa.  (Suppose I contract with a talent agency to supply Britney Spears for a concert, and the agency fails to include the usual "acts of God" clauses.  On the day of the concert, Britney is locked up somewhere, so they send me William Hung instead.  Does the fact that it was impossible for them to perform as agreed relieve them of liability for breach of contract?)

As a matter of fact, it probably would.  There's a famous case from a bazillion years ago involving the leasing of property that burned down after the lease was entered into but before the lease term began.  The owner was not liable for breach to the tenant, because it was impossible to perform.  Contract impossibility IS a valid defense to a breach of contract claim.  Of course, there are nuances, such as whether performance was really impossible, or just difficult.  But you get the point.
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ks6328

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Re: New Collection Agency - Amshare
« Reply #79 on: January 30, 2008, 03:26:09 pm »

I've always been told that contracts are supposed to be written in anticipation of everything that could go wrong, and provide mechanisms for resolving the potential impasses.  Many contracts have an "acts of God" clause that releases one or both parties from their obligations if performance becomes impossible.  It would have been simple enough to include an "acts of Penncro" clause which created a process for Prosper to switch collection agencies as needed. 

But Prosper didn't, and, in the absence of such a clause, I don't think there's a meaningful difference in their legal position depending on whether Penncro fired Prosper or vice versa.  (Suppose I contract with a talent agency to supply Britney Spears for a concert, and the agency fails to include the usual "acts of God" clauses.  On the day of the concert, Britney is locked up somewhere, so they send me William Hung instead.  Does the fact that it was impossible for them to perform as agreed relieve them of liability for breach of contract?)

As a matter of fact, it probably would.  There's a famous case from a bazillion years ago involving the leasing of property that burned down after the lease was entered into but before the lease term began.  The owner was not liable for breach to the tenant, because it was impossible to perform.  Contract impossibility IS a valid defense to a breach of contract claim.  Of course, there are nuances, such as whether performance was really impossible, or just difficult.  But you get the point.

But going back to Trav's statement:
I don't think there's a meaningful difference in their legal position depending on whether Penncro fired Prosper or vice versa.

IANAL but I think it would make a difference if Prosper fired Penncro because it would be Prosper's deliberate action which made it impossible for Penncro to continue acting as a CA for Prosper.  (Prosper failure to cover this situation in the Lender Agreement is just another instance of Prosper's many failures in that area.)

Whereas if Penncro fired Prosper within the terms allowed by their contract, then Prosper has no choice once Penncro is no longer acting as a CA for Prosper.
 
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xraider

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Re: New Collection Agency - Amshare
« Reply #80 on: January 30, 2008, 03:36:29 pm »

With Ira... doctrine of impossibility would allow Prosper to select a different collection agency if Penncro fired Prosper.

LOL over the basic failures of contract drafting we see again and again.  Maybe Prosper will try to impose, unilaterally, an attorney fees clause in the promissory notes to make the New Agency Test Loans suits that much sweeter for the lenders?
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lenderguy

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Re: New Collection Agency - Amshare
« Reply #81 on: January 30, 2008, 08:07:29 pm »

LOL over the basic failures of contract drafting we see again and again.  Maybe Prosper will try to impose, unilaterally, an attorney fees clause in the promissory notes to make the New Agency Test Loans suits that much sweeter for the lenders?

Why not add a clause saying that the borrower has to pay the CA fees too?
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