SubscribeWhen Prosper Loans Go Bad…
In my previous post, I told you about some of the loans that were late in my lending portfolio. While on lendingstats.com I noticed something peculiar.
I started paying attention to the title of the loans that borrowers create when trying to attract potential lenders. It seems that hyped up titles can give clues as to the nature of the borrower.
I can’t tell you how many times I’ll received some type of bogus advertisement in the mail and everything just explodes off the page. One word immediately jumps in my mind — SCAM.
All the letters are capitalized, exclamation points are everywhere, and usually when something appears to be fluff — it is.
Here are some titles to the loans considered late in my portfolio:
–RELIST-PLEASE HELP-LOAN FOR GRANDDAUGHTER-SHOOTING VICTIM (C-credit)
–Firefighter wants to pay off debt & pay for son’s dental! (C-credit)
–Life Change!! (C-credit)
–Please help with Business Expansion!!! (B-credit)
Now, this may be just coincidence, but what if it’s not. I know this is not the case with every loan, but it may be wise to reduce your risk by paying special attention to titles with high risk of default.
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Comment by Mike on 31 August 2007:
I’ve had similar thoughts. The logical conclusion from this is that some software could be trained to look for patterns in likely to default loans. Sounds like an interesting research project.