zcommodore

Since group leader fees disappeared in mid-September, I had posted a couple of times about how the number of borrowers with listings in groups had gone down quite a bit.  Well, with the recent change that allows borrowers to get second loans that trend has changed dramatically.  I had noticed that no-group listings had increased up to ~87% of all listings on Prosper.  I just checked a few minutes ago and noticed that no-group listings were down to ~76% due to all the 2nd loan requests, even from otherwise closed and/or inactive groups.

I think one of my earlier posts had a comment from someone who pointed me to a graph on wiseclerk.com that shows a graph of this activity.  You can see how in-group listings dropped dramatically in September and now are on the rise on this page.

I've noticed a lot of the requests for 2nd loans don't seem to be going anywhere.  Many of the borrowers are people who only received their first loan due to "pump & dump" support from their group leaders.  Now they may be current on their existing loan and want to come back for more but can't seem to get funded since group leaders have no incentive to pump & dump anymore.  I wonder if many of these borrowers even understand what is going on such that they are having trouble getting funded.

One more thing: keep an eye on this blog because I intend to post some interesting information I've noticed recently about lender activity later this week.

It's been more than a month since Prosper decided to eliminate group leader fees and it looks like Prosper is doing just fine.  One group leader started a thread presumably to document the slow death spiral that Prosper was entering into by removing these fees.  His methodology seemed a bit off since he was checking daily how many listings were fully funded compared to how many were available and how many groups there were.  At any rate, this would completely miss all autofund loans that filled and many listings that only filled in the last few hours.

I decided to do some checking of my own by seeing how many loans originated each day and used the performance tab to go back a few months to get some historical data as well.  Here is what I came up with:

The graph was a bit noisy looking at each day so I added the 10-day average line to smooth things out a bit.  Note that the average is over 10 business days which usually corresponds to two weeks except when a holiday occurs.

The change happened on the night of September 11 so all loans from listings that started on September 12 or later were without group leader fees if the borrower was in a group (unless the group leader had a listing under review that was approved and funded from prior to the changeover.)

Looking at the graph, it looks like there was a temporary low right after the change but since that time, the number of loans approved has been on a slight upward trend.  Obviously it's still a relatively short period of time but in my opinion it is anything but a death spiral for Prosper.

There are literally thousands of groups on Prosper, most of which are 0-0-0 (0 members, 0 listings, 0 loans).  In a post by LoanChimp a short while ago, he indicated he got a notice that Prosper is closing his inactive group.  He started it to bring a couple of friends to Prosper but they didn't need to go that route so they never showed up.

I guess this is just the next step for Prosper to make as they move away from the group model.

A couple of weeks ago, Prosper made a bunch of changes related to groups so that "groups" would be more likely to just be people with outside connections rather than simply random people who were "harvested" from those already on the site.  The number of listings, percentagewise, that are now not in a group has increased significantly since then.  When the change was first implemented, roughly 70% of all listings were "no group".  This morning, I checked again and it had risen to 82%.

Last month, a lot fewer loans were created as well.  I'm not sure how much of this was due to the recent change.  There were a number of factors at play.  I'm going to do some more research and will probably blog about it further soon so watch this blog for some more graphs related to that.

I think there may be several group leaders who post information about the late borrowers in their group at least somewhere but since I have a late loan with this group, I thought I'd blog about it.

Lend2 is one of the largest lenders on Prosper.  He started a group at one point and one of the things he mentioned on his group page was, "I said I wouldn't do it but I started a group anyway." or something to that extent.  Later, he closed his group for personal reasons although I'm thinking he may have seen the hand writing on the wall--that his group wasn't performing up to his expectations.

Anyway, he still maintains contact with the members of his group who are late, or at least attempts to.  He has this website that he updates with information he has received from the borrowers who are late.

My late borrower, missouri_veteran, says among other things that she was hoping to make a payment by the end of the month (in August) but she's now a month late and rapidly headed towards 2 months (payment due on the 12th).

It is nice to know some information but frankly, unless a payment is attached, I don't hold out much hope anymore for borrowers who are more than a month late.

I know, because I have several borrowers like that in my own group.