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Author Topic: Nice WSJ article on LC & Prosper  (Read 6680 times)

Fred93

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Xenon481

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Re: Nice WSJ article on LC & Prosper
« Reply #2 on: August 07, 2013, 06:36:16 am »

Quote
"I WOULD RATHER GIVE UP MY ASSETS BEFORE I MISS PAYMENTS!" he wrote in his online profile. He made six payments over nine months, then defaulted.

JackFlash

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Re: Nice WSJ article on LC & Prosper
« Reply #3 on: August 07, 2013, 06:38:49 am »


 This blurb appears to be protection against deadbeat borrowers:


"The loans are issued by Web Bank in Salt Lake City, in an arrangement
with Prosper and Lending Club, and the slices sold to investors are
technically securities issued by the lending platforms"



 It appears the new p2p lending structure is that you centralize the lending so that
"technically" Prosper is the one making the loans, which gives it the legal footing to
sue deadbeats. Whereas previously the individual lender made the loan, which meant
the individual was the only person who had claim to sue in court. But without access
to the confidential information of the borrower, their chance of a lawsuit was nil.

 So it appears now the system is setup in which the individuals lend money to Prosper.
Prosper lends money from their account to the borrower, so if the borrower defaults,
prosper can chase them down and not the individual.  
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ira01

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Re: Nice WSJ article on LC & Prosper
« Reply #4 on: August 07, 2013, 12:31:27 pm »

It appears the new p2p lending structure is that you centralize the lending so that "technically" Prosper is the one making the loans, which gives it the legal footing to sue deadbeats. Whereas previously the individual lender made the loan, which meant
the individual was the only person who had claim to sue in court. But without access to the confidential information of the borrower, their chance of a lawsuit was nil.

So it appears now the system is setup in which the individuals lend money to Prosper. Prosper lends money from their account to the borrower, so if the borrower defaults, prosper can chase them down and not the individual.  

Bwahahahaha.  You must be a newbie here -- apparently you are unfamiliar with Prosper's history and the legalities involved. 

First, in the original (P1.0) incarnation, the legal documents assigned all servicing rights, including the legal right to sue delinquent borrowers, to PROSPER, so it was always Prosper, not the "lenders," who had that right.

Second, and more importantly, Prosper had a pilot program many years ago in which it hired a supposedly very experienced and competent collections law firm to sue about 60 defaulted borrowers in California.  Prosper and its law firm claimed that they carefully cherry-picked those 60 loans to select the ones with the greatest likelihood of success -- they made sure the loan documents were in order, and that the borrowers had assets so that Prosper would be likely to be able to turn a judgment into cash.  And although not necessary, just to be on the safe side, to make 100% certain that the loan slice assignments to "lenders" didn't cause any legal issues, Prosper first repurchased ALL of the slices on those 60 loans, so that Prosper once again was the owner of the full loan on those 60 loans.  (Lenders had the choice of opting into the test program for no cash up front but a pro-rata share of the eventual recoveries, or opting not to participate, in which case Prosper repurchased those lenders' slices for immediate cash at the amount that they would have received had Prosper sold the loans to a Junk Debt Buyer (as Prosper was legally obligated to do under its legal agreements)). 

So after carefully cherry-picking the absolute best of its defaulted loans, under the absolutely most favorable circumstances possible, you might wonder how successful Prosper and its expert law firm were.  Do you think they won 50 out of 60?  40 out of 60?  30 out of 60?  Don't make me laugh.  Although Prosper never gave the participating lenders a full accounting of the program, as it was legally obligated to do, as best as we were able to determine (several of us were able to identify the real names of more than half of the defaulted borrowers in the test, and we followed the progress of the court cases on the courts' dockets all over California), Prosper and its "expert" law firm basically struck out 100%.  It's possible that Prosper managed to win literally a few cases, although IIRC we discovered no evidence of that, certainly Prosper's success rate was miniscule.  That was for a number of reasons disclosed in the court files, including that Prosper failed to serve the defendants, Prosper failed to file the necessary default paperwork for defendants who were actually served (often after the court clerks sent notices to Prosper of its failings and gave it more time to do what it was supposed to do), etc. 

There are several threads about this whole fiasco here, including all of the gory details.  They also include a dissection of Prosper's completely bogus "explanations" for its failures, made on its blog.  Search for "New Agency Test," or "NAT," which is what Prosper called this program (which I guess sounds better than "we're complete fuck-ups who pretty much can't do anything right").   :ninja:
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NewHorizon

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Re: Nice WSJ article on LC & Prosper
« Reply #5 on: August 07, 2013, 12:52:28 pm »

So it appears now the system is setup in which the individuals lend money to Prosper.
Prosper lends money from their account to the borrower, so if the borrower defaults,
prosper can chase them down and not the individual. 

I was going to write that for reasons only known to Prosper, they appear to need a lot more than this to chase down deadbeats.  But ira01 beat me to it and did a far far better job of it.  Well, except for the "Bwahahahaha" part.

BTW, in a couple months, LendAcademy will supposedly publish an article outlining the new management's collection strategies - including whether or not debt sales will be re-instated.  Might be an interesting read.
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msava

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Re: Nice WSJ article on LC & Prosper
« Reply #6 on: August 07, 2013, 02:41:47 pm »

We all know P1.0 failed miserably with collections. Are there any stats on P2.0 collection efforts? Are the new lenders succeeding with Prosper?
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NewHorizon

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Re: Nice WSJ article on LC & Prosper
« Reply #7 on: August 07, 2013, 03:21:51 pm »

I've been away for a while and lost track: does "P2.0" mean the SEC-approved Prosper or Prosper recently under new management?
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JackFlash

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Re: Nice WSJ article on LC & Prosper
« Reply #8 on: August 09, 2013, 07:39:50 am »



 What years encompass P1 and P2?
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