It's to get more lenders bidding on HR's. ;) and get more HR's funded. :angry:

This will increase the already astronomical default rate of HR borrowers.

John

Improved bidding guidance for lenders

First off, I want to say this is a marked improvement over the associated Historical Experian Data guidance that was seriously misleading the uninformed lenders. This is great! As a result of this change, I expect that new lenders won't end up being taken to the cleaners anywhere near as badly as before. I also expect interest rates to rise to be more comparable with the existing risk. Good move.

The only thing better that could be done is if I could create my own risk assessment data crunch buckets by specifying my own parameters with variable dates (e.g. 1 year ago +/- 4 months, observed today). This would take a lot of work out of the lending process.

Q1: How often will the dates on these data crunches be updated? Daily? Weekly? Monthly?

Q2: Why does the "Estimated Loss" shown in the bidder assist, not match the "Net Defaults" shown in Marketplace Performance?
See this loan here, which shows -41.60% Estimated Loss rate:
https://www.prosper.com/secure/lend/place_b...925&role=lender
does not match the Net Defaults rate listed in the Market Performance data here of -50.59%?
http://www.prosper.com/lend/performance.as...0&sn=&tg=0&vb=0
I have specified the same date range & automatic funding only. The same applies to AA Autofund onlys for the same specified data ranges.

Q3: I am concerned with the date range age bias of including the unmatured loan pool, specifically the inclusion of loans that have not yet matured for close to a full year. Is my observation correct or has prosper included some math wizardy that compensates for the inclusion of unmatured loans?
This might be an extreme example but, if we take the prosper basket of loans from 2/1/06 to 7/30/06 observed on 10/30/06, this younger basket of loans show a much lower default rate, show here:
http://www.prosper.com/lend/performance.as...0&sn=&tg=0&vb=0
than if we change the observation date for the same basket to 10/30/07 as seen here:
http://www.prosper.com/lend/performance.as...0&sn=&tg=0&vb=0
There appears to be a huge discrepancy in the default rates, especially as the credit grades get lower. Accounted for? How?

In the usual way.

Chrissf,
I outlined this issues in my post here:
http://forums.prosper.com/index.php?showto...ndpost&p=395609

If you need a specific example, prior to this, a lender like reagan32 who is having trouble with his portfolio can ask for help, here:
http://forums.prosper.com/index.php?showtopic=31861
and can get detailed assistance from several lenders such as this post from Mercurio here:
http://forums.prosper.com/index.php?showto...ndpost&p=394725

Now, when a lender such as researchedloans post asking for help on what he/she is doing wrong here:
http://forums.prosper.com/index.php?showto...ndpost&p=395611
All we can do is speculate or tell him to go pound salt since we can't see why he has problems.

This peer-lender effort, is an educational experience not just for the questioning lender, but for all who read through those threads. If any lender posts some false assumptions, other lenders can step in & correct them on their bad assumptions. No one knows it all, not even prosper. This is a group effort here and we will suffer without each other's help, shared knowledge & experience.

I hope that answers your question.

This post has been edited by onthefence on Oct-30-2007 07:32 PM

My big concern about this is the interface.
If you take this loan and ask a novice user,
"If this loan completes in 3 years and does NOT default, what will your ROI for this loan be?"

a) -4.5%
b ) interest rate
c) interest rate -service fees.

I'm willing to bet a that a disturbingly large number will answer " a)-4.5%"

and that's not a good thing.

That's a far better situation than the lender assuming that the loan will NOT default or that the Experian Historical Default data applies. This tool is great for the novice lender. More educated lenders (if we can still produce them), will probably assess it differently.

First of all, I and the other upset lenders do not "trash" Prosper -- we point out its (many) flaws, along with many suggestions for improvements (which are mostly ignored). And we also provide an enormous amount of (free) help to newbies, both borrowers and lenders, with the workings of Prosper. You may not find that valuable, but I have a large stack of posts, emails and PM's from people who did (and I'm sure the other regulars do as well).

Second, although I realize you are desparate to defend Prosper, as always, what possible monetary gain do you think I have by pointing out Prosper's many problems? Do you think I have some secret inverse options, by which I've essentially sold Prosper stock short? Or do you really think that I am trying to be as negative as possible in order to keep interest rates high? Considering that I only bid a snickers on each loan I bid on, that would be a pretty nifty trick -- keep just enough lenders around to make sure the loans get funded, but no more to bid the rates down. Give me a break. I would love nothing more than for Prosper to be a well-oiled machine, run by competent management. If that were the case, my investment here would be several times what is is.

When the Hidden City change was first implemented, I did a text search on the Borrower's Forum and was unable to find any borrower who expressed any "privacy concerns" over his City appearing on the listing page.

It was obvious at the time that this was a change that no one was asking for, but reviled a vast majority of the lenders and motivated some to quit lending altogether.

Is this deja vu all over again? 91% of the lenders hate this change out of 102 votes, and there are numerous postings of lenders saying that they are quitting lending on Prosper in protest.

Are borrowers really asking for their previous listings to be hidden?

If so, where are the forum posts where borrower ask for Prosper to do this?

If not, why make a change that neither borrowers nor lenders want?

It's ironic to encourage lenders to do this. We already have to suffer the invasion of our privacy by having our portfolios shipped off to anyone who wants to download them. LOL!

The Us vs Them aroma in here stinks.

My relationship to Prosper: no stock options.


The lack of history is of concern, however, and I hope a good solution is put forward that results in a happy compromise. If lenders don't understand the internal tug-o-war Prosper faces between privacy and transparency... just try to look at it from the company's perspective.

I doubt Prosper is "out to get lenders." Stop playing the victim, it is off-putting. Black Friday, P----r, Freedom of Speech crusades, come on. It is almost childish. Move on. And if you are going to withdraw all your funds and leave, just do it, don't talk about it forever and then never leave.

With that said, I think some of these changes are good. Others need work like the history issue. But lenders wouldn't be this combative if it weren't for something going on. The sense of community is what made Prosper, and the forums, so thrilling in the early days. Prosper: seek to cherish this above all else. Be open. Communicate. Often! And please, please give us a hint that our feedback is being listened to. Communicate: more often! A visit over a year ago to the Zopa website impressed me in the amount of communication, a very regularly updated blog right on the main page. What happened to this?

Keep up the hard work Prosper. And listen to the critics, underneath they are the most ardent supporters. If they didn't care, they wouldn't fight for things to be better.

AlexBey
Member since Feb 06

poof

I'm a group leader. I can still see the ended listings of borrowers in my group, even if I didn't place a bid on them as long as I'm logged in. I believe this is by design.

I can't see the listings of borrowers in my group from prior to when they joined my group though. I suspect this is also by design.

When a borrower submits a listing for review, I suspect that the previous listings will be available even if the listing isn't available for bidding by lenders and they weren't in my group.

Andrew - Does the DTI on 2nd prosper loan applications include their existing prosper loan?

I would expect it should, but since other loans are not included in the DTI, I could see that not happening.

ROFL, Chrisfs.

It's obvious. Many lenders have extremely low, or even negative, ROIs here. Despite that, many are still passionate about Prosper, and have stayed here through changes that negatively impact our ability to evaluate listings and fraud. I, as a lender, am biased in favor of the following: (1) receiving full payment on the loans I've made already; (2) having enough information to feel comfortable about continuing to lend; (3) having changes ENHANCE my ability to achieve 1 and 2.

The changes have slowly resulted in my losing all confidence in the accuracy of information available to me as a lender. This last change, allowing people to take out second loans without repaying the first lenders, is the end for me. I've explained why in other posts, and will be happy to repost my thoughts here if you'd like me to.

As far as the information lost to us? Well, we can't always know all of the detail that may be relevant later. For example, I might want to ask someone with computer skills to run a late/default list of those who do and don't identify cities and list in California. Or, someone might do a further analysis of those who cite their religious views in their listings. In addition, as others have posted, I sometimes do retrospective reviews of the portfolios of others to see what I can learn from them. The point is, it's just another tool that lenders have used that Prosper has taken away... with no discussion and no real reason.

Prosper's changes have been, for the most part, a slap in the face to lenders, a finger toward transparency and a stepstool to fraud. However, I think Prosper has made it clear that since most of the lenders don't bother with things like forums, that lenders and their money are fungible.

I'll close by wishing you happy bidding. At least I'll be able to check out your portfolio on Eric's next year, even if I can't check out the listings of your lates or those who have defaulted on you.

Uh, I think many could if they/we were permitted to withdraw our funds. Unfortunately, we're here for 3 years. In my case, I hadn't bid in several weeks, found one listing I wanted to bid on, got thinking about bidding again and boom!, this. But, I can't cancel my bid (although I think the borrower is good for the money) and can't get my money out of my portfolio in any event.

However, I agree with your point that the lenders really do want to help improve the platform. I've posted that myself many times.

As occurs with all healthy rants, I was letting off some steam and I feel better. This was not aimed at anyone in particular, I wanted to make that clear. Carry on.

I wish I could. Unfortunately I'm stuck in Prosper until all of my loans are paid, defaulted, or repurchased, so I'll be in the forums until then.

If/when the secondary market is operational, just watch how fast I unload my loans.

Heck, if I could, I would give away my loans and just take the hit just to be quit of Prosper.

I'll make a deal with you. I'd be interested in buying out your portfolio (price to be determined). You can simply delete your bank account info from your Prosper account and send me the userid/password.

I do not see that it stores any other sensitive information (such as SSN) that cannot be changed. SSN isn't displayed anywhere....

After some more thought after writing this, I'm really disappointed that Prosper is unloading this on us as it would seem that the "second loan" idea was in the works from the get go. As in, once growth has slowed down to X%, we then open up the market to borrowers who want to double dip. That's a quick jolt to boost your revenue. But it's also really screwing with the initial lenders. They were given no warning, no heads up, nothing in writing whatsoever about the possibility of a second loan being an option. In fact, the exact opposite was in writing on the website (that borrowers could only have one loan at a time!).

And to think that a borrower in a group can parlay that group's success -- without the permission of the group leader -- into getting another loan through someone's misinterpretation of "denial of requesting credit" is a bit ridiculous.

There are myriad ways to grow this site without having to resort to bait and switch with lenders. Have you at all considered a competent marketing campaign designed at bringing in quality borrowers?

Yeah, right, keep my SSN on the account so that I'm responsible for paying the taxes on the interest that you're earning. I don't think so! :P

OTOH, if you can persuade Prosper to just transfer all of my loans to your account as is, I would be up for that (seriously).

From the SEC filing, it sounds like Prosper is actually making some progress toward a secondary market. When it's available, I'll be putting my loans up for sale.

So I am having a hard time trying to understand why this is a bad thing....

A borrower can always go out and get a new loan anytime he wants without any input from Prosper lenders at all. This option just allows the Prosper community see if enough improvments have been made to warrant another loan to the same borrower. Seems like a win win to me. We can see improvments and bid or not.

The risk to the original borrowers remains the same, the borrower could always change thier debt structure without input or agreemtn fromt eh existing lenders. So how is this different? You are maybe assuming the borrower is so bad that they can't get a loan anywhere else so this is the only place they can come. But if that is the case then they may not ge thte new loan anyway.

So again why all the hate mail?

Now on the other hand the removal of the historical information is a huge no-no. And will prove to be one more reason that Prosper will not be able to differenciate itself from teh competition and will lose....

:(

You are right, the second loan thing is a positive change for lenders' portfolios.

Consider a borrower that consolidated his credit cards with a Prosper loan (that you're a lender on) and cut them up. Six months in, he's feeling pinched. Sure, the Prosper payments were lower at first, but paying off 2.5%/month of the credit card balance means that the monthly payment gets lower as time goes on. But the Prosper payment stays constant, and the borrower is living paycheck-to-paycheck.

Christmas unexpectedly happens and nothing was budgeted for gifts, and then the can breaks down.

As a lender on the first loan, would you rather have the borrower go late on you, or be able to access additional capital to pay bills and stay current on the first loan for maybe another 6-12 months.

At some point this borrower is going to financially collapse; the question is, does it happen on the first loan (yours) on year 1, or can he stay afloat until year 3 or 5.

There is also the chance if the total amount is less than 25K that the borrower will "refinance" his first Prosper loan at a lower rate and pay you off completely. Remember how borrowers like the simplicity of "just one payment".

Hey It appears the 20 minute timer has been fixed!?!?!?!?!

If so YAAAA!!!!!


:P

is the easy thing to do to allow borrowers to control whether their old listings are hidden? a little toggle on the profile page or something?

-t

Yeah, that will work as well as the city information defaulting to hidden. The vast majority of borrowers don't know to change that, as shown by the not insignificant number of borrowers with the city hidden but who nevertheless disclose it in their listing description.

In any event, much of the value of non-hidden past listings is for lender education, fraud detection, and the like -- and borrowers should not have the option of preventing that. Most of the listing information is already archived on the third-party sites, so there is no "privacy gain" from hiding that information here -- Prosper just makes it harder to access and less useful to use. And the rest of the information, which is not currently available on the third-party sites (extended credit info and Q&A) was already restricted to registered lenders, so there is no good justification for hiding it now from us.

On another site I frequent, a borrower asked if we would bid if she lists for a second loan, and provided the URL to the listing of the existing loan.

Well, without being able to see the listing (since I am neither the borrower nor did I end up being on that loan), I cannot see that listing.

All I could post to the borrower is that we cannot see the listing so we cannot provide any feedback on whether or not we would bid on a new listing.

Also, not knowing the borrower's Prosper ID, I cannot look up the payment history. Oops, I have bookmarked another two borrowers' Member Page and the loan history there no longer shows the payment history, just the current status of the loan. I hope payment history would reappear when there is an active listing or we will have no idea on a listing for a second loan whether or not the payments were made in a timely manner, other than the two most recent payments.

I think we can still see repayment history for the life of the loan, not just the last 2 payments.

Changes made to ------- before these last, as well as changes in my personal life, have led me to stop putting new money into -------, but this latest change just underscores the direction ------ is heading (whether on purpose or under duress, as they claim).

It is a direction I don't feel comfortable being taken, and while I will continue to bid idle funds I can only pray for a speedy implementation of the long promised secondary market.

As always, Andrew, thank you for keeping us informed and for listening to our bitching. I'm glad to see you didn't get suspended after having to poof your own thread a while back. :P

umm....the upgrade to allow 2nd loan should be seriously considered a system FLAW. I can already see folks saying in their 2nd listing that they want to refinance their first listing....then taking off with both balances. BAD BAD idea!!!!! You guys are opening a whole new ugly can of worms for yourself, IMO. Are the originations so bad that you need those same borrowers to take out a 2nd loan????

That very well could be a new scamming strategy for borrowers starting Oct 31 (trick or treat?) which once again require lenders to demand higher rates to bid, and Prosper raised the cap to accomodate that.

But loans ALREADY IN PROGRESS are less vulnerable, because borrowers did not know that this second loan thing was an option when they took out their first.

If they have been paying for 6 months solid they are probably a real person who wants to make good on the loan--and the access to additional capital means they can ride out the rough patches and refinance if they choose to.

If you're a lender who has stopped lending and has a portfolio that you're nursing along, you should like the Second Loan change.

One nice option would be a clickable field when creating a listing that says the money would be used for refinancing the first loan, and then when the money is distributed, the first part would pay off the first loan, and only the excess to the payoff amount be sent to the borrower. (A side effect would be to allow the second loan to go up to the state maximum since, after distribution, the total of the loan amounts wouldn't exceed the state maximum because the first loan would be paid off.) Then let some field or icon show on the listing that the first part of the loan would indeed pay off the first loan.

Having the Description say it is for refinancing the first loan isn't good enough because Prosper doesn't enforce that the use of money would comply with the Description.

This is a fantastic idea Mark. I am going to post this in petri and see if it generates a response.

while higher rates are nice, ...let's be realistic here.... there are NOT that many loans that are say over 18 months(half way through paying) that have 29% rate and are still paying. What good is the high rate if it can never, or almost never be had?

The borrowers paying for 6 months means absolutely nothing. I have currently a couple that have paid for many months and suddenly stopped. Also, there seems to be a 12/16 month delay before some stop, so 6 months is not much at all.

2nd loan is a VERY BAD idea, and Prosper will figure it out in about 12/18 months when old and new will stop paying. Also, going into the current credit crisis, do you really want to have more exposure to the same borrower as a platform?

I'm also trying to figure out the logic behind extending the 2nd loan. If the total cannot exceed the max of $25K, then what is the point of the borrower getting 2 loans? They could have just asked for the right amount from the start. Unless the logic is that it's easier to say get 2 loans for $5K each as opposed to 1 loan for $10K. The obvious thing to do normally would be to get a loan for $5K, pay for a few months, pay it off with new cash flow, then take another loan for $10K say at a lower rate 6 months down the road. The 2 loan deal will only confuse some lenders who assume the borrower is only on the hook for the loan they are bidding on. It should be plainly stated to the lenders on the 2nd loan AT TIME OF BID, that this is LOAN #2 and loan #1 is for X amount and has made X payments, and was X times on time or X times late etc.

I don't know an easy way to get performance data for 29% loans versus, say 14% loans, but all other things being equal, I want the 29%.

Remember, we are NOT talking about HR's and E's here, but reasonable C-D loans.

It means that you've dodged a scammer who just took the money and ran and if your borrower stops paying on his $10K loan it is because something happened in his life--if he wanted to just scam you he would have made 0-1 payments.

If that borrower is deliberating bankruptcy or can't pay his bills and the credit cards are maxxed out--the second Prosper loan will give him 6-24 months of relief. If I'm a lender on the first loan I'm glad he has access to it.

"Reasonable C-D loans" and 29% is a contradiction in terms. Any borrower paying 29% is NOT a reasonable C-D (unless they are damn stupid, and if so, that itself bodes poorly for repayment). There is a strong correlation between risk and interest rates significantly higher than average for the credit grade. "Reasonable C-D loans" get bid way down if they start at 29%. If the rate doesn't get bid down a lot, it is because there are too many red flags.

What was reasonable C or D 3 months ago at 23% is now only reasonable at 28%.

We used to know what City the borrower lived in, could pick vetted listings for a modest fee, and the GL used to be able to compare PII from the borrower with what Prosper supplied.

When the climate got riskier, lenders should have responded by not bidding down a 29% listing to 28% but not down to 23% like before. And a lot get bid down below that, and then those same people wonder why they are losing money.

I do like the change where risk is shown to lenders. Trav has posted, IIRC, that the risk isn't accurate, but even what is posted should scare a lot of lenders off of the lower credit grades.

I am very interested in seeing whether that has any impact on funding and, in turn, results here.

That change is a huge positive.

Wow... so many changes all of a sudden...

The information and search tools have been stepped up a tad, which is unarguably good. Cheers and warm fuzzies for Prosper. :P

Everything else seems to have hit the fan once again though too. Just once, couldn't Prosper make changes that its members will unanimously agree with? There have been so many small and simple ones that go unnoticed in the Petri Dish (in addition to some of my rants :lol: ). I actually think my suggestion of Borrower Tools is a fantastic idea (wink, naturally he he). When could we see any kinds of changes like this.

Most good companies that are large enough with associable demand for customer input actually pay to conduct research for peoples' opinions on their products. Prosper gets great input almost every day, but they seem to not care one bit. How in the [edit] is this good business?

questions on multiple-loan dynamics:

Which loan gets to be the first ACH pull on monthly payments?

Let's assume that someone who takes out two loans goes late.
Which loan receives priority in the event of collections activity?

-t

I'm hoping it will forestall lawsuits. Some lemmder who never found the forums or ran the performance utility is going to sue Prosper because he lost his shirt bidding on 29% HRs with 50 DQ's. Now maybe he'll think twice.

I'm sure Prosper thought (wrongly) that these bells and whistles would make up for hiding the old listings.

The two loans are completely separate. Each gets its own pull on the appropriate date. No idea about which loan receives priority in collections, but given Prosper collections, I think the question is pretty much irrelevant!