mothandrust's blog

This is likely my final blog entry; the idea of lending to borrowers whose friends/family/co-workers/etc. know them and will put up their own money to loan (which "strangers" can match) is a worthwhile idea.

However, Prosper's latest incarnation requires that lenders not only have confidence in the borrowers but also in the financial soundness of Prosper itself. Lenders make the loan TO PROSPER and so even if you pick your loans perfectly, Prosper might go bankrupt and you could lose your entire investment.

The Social Collateral Screen has taken a few hits but is still viable.

118 loans pass the screen:

-Originated between 2/12/07 (start of the extended data) and 9/1/09
-0 current DQs
-2 or more bidding friends
-Friends bidding $300 or more in aggregate

Obviously one would not want to bid on loans where a bidding friend pumped-and-dumped the listing, but there is no way to weed out these loans from the performance utility.

Of these 118 loans, 27 are paid-off, 16 were charged-off, 4 are late and 71 are current.

Late-Or-Worse Loans made 2/12/07-9/1/09

28% = All Prosper Loans
23% = Prosper Loans with 0 current DQs
17% = Social Collateral Screen