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Author Topic: Prosper Stops Assessing Late Charges When Loans are Charged-Off  (Read 142704 times)

mothandrust

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #15 on: August 05, 2012, 07:07:32 pm »

The point of legally "accelerating" a note in the event of default (and this is true for any type of loan, from credit cards to 30 year mortgages) is so that the lender can then demand the full remaining principal balance (by whatever collection means warranted, including legal action) as due.

It's a bit nuanced, perhaps, but, from a legal perspective, you can't say "it's all due now" and at the same time "you owe me last month's fee".

Effectively, a lender throws out (trades off) any amortization schedule(s) for the right to declare the debt fully and immediately due to be repaid.

Ah, that's a good explanation.  Thanks, NA, I think I understand it now. 

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bamalucky

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #16 on: August 05, 2012, 07:34:34 pm »

Quote
I think they made the right decision (and not just in this one case, where I got paid in full, plus interest, rather
than accepting the 2008-era junk debt buyer offers of - what - a penny on the dollar?).  

Except none of my charged off loans have ever paid another penny. I'll take the pennies on the dollar that were promised me as was stated in my contracts.

11/25 defaults.. A far cry from the one loan nonattender is championing. http://www.ericscc.com/lenders/Bamalucky/loans
« Last Edit: August 05, 2012, 07:39:03 pm by bamalucky »
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ira01

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #17 on: August 06, 2012, 01:14:41 am »

The point of legally "accelerating" a note in the event of default (and this is true for any type of loan, from credit cards to 30 year mortgages) is so that the lender can then demand the full remaining principal balance (by whatever collection means warranted, including legal action) as due.

It's a bit nuanced, perhaps, but, from a legal perspective, you can't say "it's all due now" and at the same time "you owe me last month's fee".

Effectively, a lender throws out (trades off) any amortization schedule(s) for the right to declare the debt fully and immediately due to be repaid.

Ah, that's a good explanation. 

No it isn't, it is complete horseshit -- because Prosper had no legal right to "charge-off" any of the early loans.  Prosper just made all that up on its own.  Its legal obligation to us lenders was to sell the late-4 loans to JDBs, as it repeatedly promised us it would (and as we believed it would when we lent on Prosper 1.0). 
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xraider

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #18 on: August 06, 2012, 06:35:18 am »

It's also complete horseshit because Prosper hasn't done anything to collect, whether accelerated or not.  If E & R didn't want to pay his loan off, NA and you wouldn't have received payment on the loan.  You'd be in the same situation as you're in with your other non-performing loans (I don't want to say other deadbeats, because E & R did pay off), and you would have received the same amount -- nothing -- whether the loan was charged off, continued to be charged interest, accelerated, poofed away or whatever else Prosper wanted to call it.  As I said in my first post on this topic, lipstick on a pig, since Prosper breached its agreement with us and has been remarkably ineffective in collections.

Prosper's business model:  Let's make as many loans as possible, and if borrowers don't repay, there are always new borrowers and new lenders.  
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havastat

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #19 on: August 07, 2012, 02:32:07 pm »

I think this is closer to the mark. I think Prosper 1.0's problem wasn't that it intended to defraud people, it's just that like many dot-com/dot-bomb companies,  management's big, big plans sounded very nice at the beginning, but it wasn't actually able to execute very well on them because operating a business in the real world is a lot harder than just setting up a web site and watching the money roll in.  They hired a collections person; they started collections, but things fell apart and they didn't really end up doing very much.  I suspect they were every bit as naive and incompetent, and every bit as over-impressed with and blinded by the rush of their own sense of genius and how they were going to change the world, as the managements of many failed dot-com startups were.

Given how low the offers they were getting from debt buyers in 2008 were compared to what they were getting in 2006 and 2007 and what they were expecting, I don't think the decision to try doing collections on their own was some sort of fraud. I think it may even have been a reasonable strategy, if they had been able to execute on it competently. it's quite possible that if they had accepted 3% on the dollar, someone would now be complaining that since they had gotten five or ten times that the previous year, failing to go for more would itself be a breach of duty to the investors.

Lawyers get to look at things in hindsight. But one has to see things as they were on the ground at the time. If things had gone the other way -- Prosper had taken debt buyers' offers of 3% or less, and you had evidence that other peoples' in-house collections teams have been able to rake in considerably more if only Prosper had had the sense to try it -- would you have been happy?
« Last Edit: August 07, 2012, 02:33:40 pm by havastat »
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bamalucky

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #20 on: August 07, 2012, 04:11:03 pm »

Quote
Lawyers get to look at things in hindsight.

Not a lawyer but we were pointing out BS/Flaws in real time to them. You guys keep trying to blame it on being a startup but we had EXPERT after EXPERT hired by Prosper as they promised we were in capable leadership hands.

Take a look at some of the BS Doug Fuller promised.
« Last Edit: August 07, 2012, 04:13:07 pm by bamalucky »
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ira01

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #21 on: August 07, 2012, 07:07:12 pm »

I don't think the decision to try doing collections on their own was some sort of fraud. I think it may even have been a reasonable strategy, if they had been able to execute on it competently. it's quite possible that if they had accepted 3% on the dollar, someone would now be complaining that since they had gotten five or ten times that the previous year, failing to go for more would itself be a breach of duty to the investors.

Yes, I would have been happy if Prosper complied with its legal agreements with me.  Prosper HAD NO RIGHT to unilaterally change the terms of its legal agreements on a retrospective basis.  Prosper was obligated to sell the Late-4s to the highest bidding JDB, and that is what it should have done.  Without unilaterally rejecting supposedly "unacceptable conditions," of course. 
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xraider

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #22 on: August 07, 2012, 08:50:36 pm »

Havastat, as Bama and Ira pointed out, my post wasn't 20/20 hindsight at all. It is plain and simply that Prosper didn't comply with the terms of my contract with it.  I never agreed that Prosper could unilaterally decide that it could do better on my behalf than even really low JDB sales.  Had Prosper bothered to ask me, I would have rejected it and insisted on Prosper's performance. 

I declined to sign the amended TOS in November 2007, even though I still had a good ROI. At that time, Prosper started its war on lenders.  I guess Prosper, in its dot bomb (great term) days didn't realize that lenders would expect Prosper to abide by the terms of the contract.  That's why manny of us are cheering on the class action.
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msava

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #23 on: September 12, 2012, 05:06:29 am »

I didn't sign the amended TOS either. I kept a hard copy of the original agreement. Why can't the courts make Prosper abide by their own contract?
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xraider

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #24 on: September 12, 2012, 08:33:36 am »

Because we didn't sue to compel it.  None of us had enough damage to make it worthwhile for any lawyer to take the case.
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ira01

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #25 on: September 12, 2012, 09:39:20 am »

Because we didn't sue to compel it.  None of us had enough damage to make it worthwhile for any lawyer to take the case.

Which, as you know, happens all the time.  That is why class actions are so vital, something that people need to keep in mind when they advocate getting rid of them (or severely restricting them).  Although there is room for improvement with class actions, especially with coupon settlements, class actions play a vital role in deterring defendants from even more egregious lawbreaking than they already do.  Unfortunately, this is something the U.S. Supreme Court ignored in its AT&T Mobility decision allowing anti-class action waivers in arbitration agreements.
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mothandrust

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #26 on: September 12, 2012, 10:34:41 am »

Because we didn't sue to compel it.  None of us had enough damage to make it worthwhile for any lawyer to take the case.

Because the lawyers have made the simple overly complex.  We had a contract, Prosper breached the contract. 

I guess we should be glad you guys aren't auto mechanics--if a brake light goes out it would cost $1500 to take the engine apart and the car would be in the shop for 3 months.
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ira01

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #27 on: September 12, 2012, 10:58:06 am »

Because we didn't sue to compel it.  None of us had enough damage to make it worthwhile for any lawyer to take the case.

Because the lawyers have made the simple overly complex.  We had a contract, Prosper breached the contract. 

Nothing is that simple, except to the simplistic.  As I'm sure you realize, Prosper would have a bunch of explanations about how they did nothing wrong. 
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artjunkie

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #28 on: September 12, 2012, 03:39:25 pm »

Because we didn't sue to compel it.  None of us had enough damage to make it worthwhile for any lawyer to take the case.

Because the lawyers have made the simple overly complex.  We had a contract, Prosper breached the contract. 

Nothing is that simple, except to the simplistic.  As I'm sure you realize, Prosper would have a bunch of explanations about how they did nothing wrong. 

Also, they could just lie to the judge.

Oh wait, they already did in one case - if my memory serves me correctly.
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lhsbandnurd

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Re: Prosper Stops Assessing Late Charges When Loans are Charged-Off
« Reply #29 on: December 19, 2012, 12:35:37 am »

I have three loans in "Charge off" purgatory. I sent an e-mail asking why they were never sold as per my lending agreement from March-07. Nothing will come of it, but I figure I should at least try to add to their workload.  :-\
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