zcommodore

I haven't been paying much attention but I just realized that exactly one year and one month ago today, my group got it's 5-star rating.  It lasted a little over 2 months when the first of my now-defaulted borrowers went past 15 days late.  He never paid another dime and subsequently several others stopped paying as well.  As of now, half the loans in my group are late or defaulted, with several in bankruptcy and little hope for recovery.

Oh well.  So much for that idea.  At the time, I thought I was doing pretty well picking the good HR's from the riff-raff.  Even when some of them went late, I thought some might be able to get back on track eventually.  As I said earlier, oh well.  Not much I can do about it now.

Apparently there are still a few lenders out there still lending.  I approved the first listing in my group in a long time a little while ago and within minutes it had more than a dozen bids.  This is a big change from the previous time that the same borrower had a listing up a couple of months ago.

The only difference in the credit data between the last listing and this one is the amount of time the borrower has been employed.  However, Prosper made a big change in their bidding guidance segments and now this borrower is in the top segment of the C grade loans.  Previously this same borrower was in a segment that Prosper suggested might have a 12+% loss to factor in when bidding.  Now the lender guidance suggests a loss of only a little over 3% including the 1% lender fee.

In the earlier version of Prosper's segments, they focused a lot on number of delinquent accounts whereas now they focus more on DTI and loan size for C grade borrowers.  Since there are a few non-zero numbers in the extended credit data where one would like to see zeros, it is nice to see that there are other factors being used so that she has a better chance to get a loan this time around.

This post is probably looking like a "loan pimp" and it is but since this is my blog, I can post what I want.  :-)  I do believe this borrower will continue to improve her credit and financial situation with a loan on Prosper.  After all, since last May, her credit grade has moved up from an E to a C.  Getting more training in order to get more income seems like a good idea, right?

Most mornings, especially when I'm expecting to receive payments in my account as I was this morning, I check my Prosper account.  This morning while I was checking my account, I noticed the amount of payments pending in my account had jumped significantly so I went to investigate.  I expected one of my current loans must be making an extra large payment or something to that effect.  However, to my surprise, no less than 4 of my 11 loans in various stages of lateness had initiated manual payments.

Of the loans making payments, one of them who happens to be in my group had passed 1-month late earlier this week and is listed as in "Bankruptcy".  I'm guessing that if this is really a bankruptcy case, it's a Ch. 13 since she had been involved in a Ch. 7 only a few years ago.  I had hoped this one would recover but since she hasn't responded to any of my inquiries I figured it was a lost cause.  That one will certainly make me happy if it gets caught up.

Another of the ones catching up is one that went late on his first payment and is officially "Late".  Previously he had had two payments pending but they both failed.  I had contacted him asking why there were two and he said there was a mistake made where Prosper initiated an automatic attempt and he made a manual payment about the same time.  Hopefully this one will go through and everything will be fine after this.  Yes, I know.  I'm just too much of an optimist for my own good.

The other two that are catching up are both <15.  One just caught up from over 1-month late earlier this week and appears to be catching up the rest of the way.  The other has been late at least as often as she's been on time so seeing her catch up is not really a surprise but still nice to see.

I'm still frustrated with how the official forums on Prosper are being run but it's nice to see something positive to talk about as well.

I got the following message today from Prosper:

Dear [zcommodore],

Happy anniversary and congratulations on your 1st year with Prosper!

Thank you for being a valued member of our community and for helping to make consumer lending more financially and socially rewarding for everyone. If Prosper has been helpful to you, please send us your story at stories@prosper.com and we'll include it on our success stories page.

We trust you've enjoyed a rewarding relationship with Prosper and look forward to helping you get the great rates you deserve for years to come.

Best regards,
Your friends at Prosper

P.S. If you have family or friends who also want to take advantage of our great rates, refer them now and earn money if they borrow or lend!

They asked for my story but I don't think they'd really be interested in it so I thought I'd publish it here.

I first found out about Prosper from reading this article by my favorite financial columnist.  I saw the interest rates being offered and was immediately interested.  (How many times have I seen that since then?)

I started with 5 loans in the month of August, 4 of them are current and the one that is late made 9 on-time payments before going AWOL.  The first of those 5 went late a few times but has been on-time since late February.

The last time all my loans were "Current" was in early January--somewhere around January 9th.  The first of my 4+ month lates first went late then and I haven't seen a payment since then and I don't expect to.  The borrower made only one payment but is a homeowner so maybe when it is sold, I will get a little more on the default sale.

I've made a total of 24 loans, one is paid and seven are in some stage of late.  Three loans haven't even had a payment due so in reality, more than one-third of my loans look like they may be going bad.  I still have hope for a few of them to come current though so all may not be lost on them yet.

I started a group a few weeks after I joined Prosper but I didn't really do much with it until late October.  The first loan in my group originated Nov. 6th and by the end of the year I had helped 5 HR borrowers get funded.  My philosophy was that I could sift and sort through the lower credit grades and find a few diamonds in the rough and that by believing in them, there would be extra incentive for them to stay current due to the peer pressure aspect that Prosper advertises so much.

What I didn't fully understand or consider was that peer pressure only works if there is money to pay and a desire to do so.  The last time all the loans in my group were "Current" was around May 8th.  Since that time my group has had between 1 and 4 loans in some stage of lateness.  My group lost it's first stars on June 5th and was reduced to a 1-star group on August 6th.

The problems the borrowers in my group are varied.  One borrower just decided he didn't want to pay his loan.  One borrower is just in way over his head with financial problems.  And two borrowers are going through divorce.

I have hope that at least a few of the lates in my group will get straightened out.  The prospects don't look great but I've been communicating with the late borrowers in my group off and on since they initially went late.  I have a desire to get back to having a 5-star group but if it ever happens, Prosper will probably have changed the ranking system a time or two by then so who knows how it would rank.

When I found Prosper, as I said earlier, I was attracted by the high interest rates.  I've learned that those rates are made of a lot of fools-gold.  I haven't given up on Prosper yet.  I keep trying to convince myself that I will do better the next time.  We'll see though.

This morning I got the following note from this borrower in my group:

Hello! I once again am behind, but I am not trying to steal from you or cheat you. I received an email from someone that was so discouraging and disbaraging(sic), that I did not feel I deserved. I know we have disappointed you in these late payments, but, we are not going to stop paying this loan. We are trying to get caught up again,  and it is a struggle, but we will accomplish this. Thank YOU for your understanding.

The loan switched to <15 late today but, based on the message above, I'm confident he'll get caught up again as soon as possible.

My point though is to be very careful contacting borrowers, particularly those who are late.  You certainly don't want to jeopardize the borrower's desire to pay back the loan if it is one of your loans and I'm sure none of the other lenders on a loan want one lender to violate Prosper's TOS and cause them problems either.

For what it's worth, I have been posting updates on late loans on my personal profile on Prosper for anyone interested.