Comments on: More on Prosper.com http://jutiagroup.com/2007/02/04/more-on-prospercom/ Market Jitters & Political Critters Sun, 22 Nov 2009 02:27:02 -0500 http://wordpress.org/?v=2.8.6 hourly 1 By: Stephen Oakes http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-780 Stephen Oakes Sun, 11 Feb 2007 16:13:27 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-780 Ahh, the high risk/return scenario. I will post soon in regards to what I have dug up. I did make my first two loans last week, one to an "A" and the other to a "B" rated borrower for an average ROI of 17%. Both had decent debt to income ratios around 30%. The auction has ended for both, but there is still time left to shake out the greedy hands...so we'll see how the cards are dealt! Very exciting. One question that you may be able to shed some light on is whether or not the bank account and/or real estate property verification process counts as collateral in the event of default. Obviously the lender is willingly taking risks, but any liquidation of assets could certainly help to pay off the debt to lenders ;) Ahh, the high risk/return scenario. I will post soon in regards to what I have dug up. I did make my first two loans last week, one to an “A” and the other to a “B” rated borrower for an average ROI of 17%. Both had decent debt to income ratios around 30%. The auction has ended for both, but there is still time left to shake out the greedy hands…so we’ll see how the cards are dealt! Very exciting.

One question that you may be able to shed some light on is whether or not the bank account and/or real estate property verification process counts as collateral in the event of default. Obviously the lender is willingly taking risks, but any liquidation of assets could certainly help to pay off the debt to lenders ;)

]]> By: ku4a http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-715 ku4a Wed, 07 Feb 2007 18:02:42 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-715 Actually, Stephen, what I would like for you to do this weekend is figure out a strategy for C, D, E, HR and NC borrowers in which we are guaranteed to never lose money ;-) Actually, Stephen, what I would like for you to do this weekend is figure out a strategy for C, D, E, HR and NC borrowers in which we are guaranteed to never lose money ;-)

]]> By: ku4a http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-714 ku4a Wed, 07 Feb 2007 18:00:59 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-714 Ah, I realize now an important point that I missed: Loans are not made unless/until they are 100% funded. If the auction ends with less than 100% funding, no loan. If 100% funding is reached before the auction ends, lenders bidding lower interest rates will knock out higher rate bidders. Note, also, that a minority of loans are listed as "automatic funding". For these, the "auction" ends as soon as they are 100% funded. In other words, if you bid, you get that rate, assuming 100% is reached. Ah, I realize now an important point that I missed:

Loans are not made unless/until they are 100% funded.

If the auction ends with less than 100% funding, no loan.

If 100% funding is reached before the auction ends, lenders bidding lower interest rates will knock out higher rate bidders.

Note, also, that a minority of loans are listed as “automatic funding”. For these, the “auction” ends as soon as they are 100% funded. In other words, if you bid, you get that rate, assuming 100% is reached.

]]> By: Stephen Oakes http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-712 Stephen Oakes Wed, 07 Feb 2007 15:25:43 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-712 You answered my question just fine. So what you are telling me is that you have to win the bid and then wait until the borrower's asking amount is 100% filled before earnings any interest... I'm just waiting for cash to be moved over myself before I begin the bidding process. I think I will stay closer to borrowers within a group who arew considered to be prime (AA,A,B). Maybe this weekend I'll look into strategy! You answered my question just fine. So what you are telling me is that you have to win the bid and then wait until the borrower’s asking amount is 100% filled before earnings any interest…

I’m just waiting for cash to be moved over myself before I begin the bidding process. I think I will stay closer to borrowers within a group who arew considered to be prime (AA,A,B).

Maybe this weekend I’ll look into strategy!

]]> By: ku4a http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-711 ku4a Wed, 07 Feb 2007 14:52:19 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-711 Not sure I fully understand your question but let me give it a shot. You earn no interest on the money sitting in your account waiting to make bids. That kind of sucks but it is the way it is as of now. Also, transfers in and out of your account take several business days. So, cash management is kind of tricky. When you place a bid, the amount of your bid is "locked up" until you either get outbid or the listing is cancelled. If the listing closes fully funded, if you are a winner of some amount of money (all or part of your bid), the loan begins earning interest. You will see each payment made broken down into interest, and principal reduction. Not sure I fully understand your question but let me give it a shot.

You earn no interest on the money sitting in your account waiting to make bids. That kind of sucks but it is the way it is as of now. Also, transfers in and out of your account take several business days. So, cash management is kind of tricky.

When you place a bid, the amount of your bid is “locked up” until you either get outbid or the listing is cancelled.

If the listing closes fully funded, if you are a winner of some amount of money (all or part of your bid), the loan begins earning interest. You will see each payment made broken down into interest, and principal reduction.

]]> By: Stephen Oakes http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-695 Stephen Oakes Tue, 06 Feb 2007 18:58:23 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-695 I have another question for you as well. When you give money to the borrower do you begin making interest immediately or is there a waiting period until the full asking amount of the loan is serviced by other lenders? Thank you so much for sharing your experiences with Prosper ;) I have another question for you as well. When you give money to the borrower do you begin making interest immediately or is there a waiting period until the full asking amount of the loan is serviced by other lenders?

Thank you so much for sharing your experiences with Prosper ;)

]]> By: ku4a http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-693 ku4a Tue, 06 Feb 2007 17:28:41 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-693 I have not gotten involved with the groups on Prosper. The site seems to indicate that group membership by a borrower is preferable, but I am not convinced of that. So, I don't pay much attention to group membership when evaluating loans. I never really gave much thought to lender groups, but there might be some value to that as I think about it. I think I've had 3 loans default. One was "bought back" by Prosper itself for full value. I never heard the reason for this. The other defaults went out at 20-25 cents on the doller. Of course, a lot of loans are late. Sometimes the get caught up. When I first started on Prosper, it occurred to me that it would be easy for a borrower to blow the lenders off. The lenders are a bunch of nameless, faceless people a long way away, and each one of them has a very small stake in the total loan. It would be interesting to know, however, how the loan performance of a Prosper portfolio compares to a similar portfolio held at a bank or other lending institution. Maybe it is better :-). I have not gotten involved with the groups on Prosper. The site seems to indicate that group membership by a borrower is preferable, but I am not convinced of that. So, I don’t pay much attention to group membership when evaluating loans. I never really gave much thought to lender groups, but there might be some value to that as I think about it.

I think I’ve had 3 loans default. One was “bought back” by Prosper itself for full value. I never heard the reason for this. The other defaults went out at 20-25 cents on the doller.

Of course, a lot of loans are late. Sometimes the get caught up.

When I first started on Prosper, it occurred to me that it would be easy for a borrower to blow the lenders off. The lenders are a bunch of nameless, faceless people a long way away, and each one of them has a very small stake in the total loan. It would be interesting to know, however, how the loan performance of a Prosper portfolio compares to a similar portfolio held at a bank or other lending institution. Maybe it is better :-) .

]]> By: Stephen Oakes http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-689 Stephen Oakes Tue, 06 Feb 2007 15:51:05 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-689 Do you join lending groups or do most of the lending by yourself? If you do not mind me asking...how many people or percentage-wise default on the loans you make to the borrower? Do you join lending groups or do most of the lending by yourself? If you do not mind me asking…how many people or percentage-wise default on the loans you make to the borrower?

]]> By: ku4a http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-688 ku4a Tue, 06 Feb 2007 14:29:04 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-688 I think I originated my first loan on Prosper within a month of their opening. I bid $100 per loan. I have 76 active loans, with an average interest rate of 13.29%. I decided early on that I was going to stay in the "prime" area (AA, A and B). I have seen people invest in the sub-prime area, generally doing "extra" research (such as interviewing the borrower, etc.). I am always interested in hearing other lender strategies. It has easily been one of the most enjoyable investment experiences I have had. You see the good, the bad, the ugly and the bizarre. Good luck to all who are active on Prosper.com! I think I originated my first loan on Prosper within a month of their opening. I bid $100 per loan. I have 76 active loans, with an average interest rate of 13.29%.

I decided early on that I was going to stay in the “prime” area (AA, A and B). I have seen people invest in the sub-prime area, generally doing “extra” research (such as interviewing the borrower, etc.). I am always interested in hearing other lender strategies.

It has easily been one of the most enjoyable investment experiences I have had. You see the good, the bad, the ugly and the bizarre.

Good luck to all who are active on Prosper.com!

]]> By: ku4a http://jutiagroup.com/2007/02/04/more-on-prospercom/comment-page-1/#comment-674 ku4a Mon, 05 Feb 2007 14:54:36 +0000 http://jutiagroup.com/archive/2007/02/04/323/#comment-674 Stephen: I am back to work after being away awhile due to illnesses. I will take a look at your analysis of the stocks I mentioned as time permits. Also, I have been lending on Prosper.com since it began, and will comment when I get a chance. It's good to be back. Stephen: I am back to work after being away awhile due to illnesses. I will take a look at your analysis of the stocks I mentioned as time permits.

Also, I have been lending on Prosper.com since it began, and will comment when I get a chance.

It’s good to be back.

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