
Name: Peter
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- With an ACH failure an email is immediately sent to the borrower.
- Make two more attempts at ACH payment, notifying the borrower each time there is a failure.
- Make regular phone calls to the borrower until they are able to get an answer. Try and work out some kind of payment on the loan.
- If after 30 days no payment has been made hand off borrower to the collection agency, Amsher.
- Amsher will send letters and continue to make phone calls. Amsher emphasizes the peer to peer aspect of this debt to try and persuade the borrower to pay back the loan.
- If Amsher is unsuccessful after 120 days past due the loan is charged off.
- The loan is then often handed to a different collection agency, IC System, where they continue to try and collect on the charged off loan.
The Collections Procedure at Prosper
August 29th, 2012When I was at Prosper headquarters earlier this month I sat down with Nancy, the operations manager, who is also in charge of loan collections. She walked me through the collections procedure they follow for all borrowers who become past due.
For a start she said that around 98% of borrowers are on an automatic ACH withdrawal so Prosper is alerted immediately if there is not enough funds to make the loan payment. Here is the procedure they follow when that happens:
The collection process at Prosper is not set in stone. They are always working to try and improve their success rate. Right now Prosper is testing manual phone calls rather than using an auto-dialer. This is less efficient but results in fewer hang-ups. They are also testing different wording in their collection letters.
More Loans Means More Choices for Investors at Lending Club
August 27th, 2012For the first half of this year the number of available loans at Lending Club hovered between 700 and 1,000 loans. Occasionally the number went over 1,000 but it averaged somewhere around 800 loans available to investors at any one time.
But in the month of June this changed. By June 21st there was over 2,000 loans available on the platform, a previously unheard of number. In late July at one stage there was over 2,500 loans available – about triple the historical average. I just took this screenshot above this morning and we are at 1,842 loans right now, below the heady numbers from last month but still more than double the average for this year.
The LC Advisor Funds Investing Huge Amounts in the First Week
Why the big increase in available loans? Simply stated, it is driven by investor demand. For the last several months we have seen this trend where in the first few days of the month at Lending Club very large volumes of loans are issued. In the first week of August that number was the largest ever – over $30 million.
Roundup of Social Lending News – August 25, 2012
August 25th, 2012Every Saturday I bring you the latest news from the world of peer to peer lending. These are the best of the news articles and blog posts from around the web that I shared on Twitter this past week.
Everyone should check out the latest Prosper blog post below. Their July investor update shared this interesting tidbit: credit card delinquencies in the U.S. are the lowest on record, despite the fact that we still have high unemployment and a sluggish economy. Fascinating. There was also an excellent article this week on Kung Fu Finance by Larry from Investor Junkie, who frequently appears in these news roundups with his own blog. There were also a few Lending Club updates from bloggers. Enjoy your weekend.
Five Cent Nickel - Lending Club Update – August 2012
BBHart.com - Lending Club update – 10 months later
Kung Fu Finance - Adventures in Income…Peer-to-Peer Investing
Shareable - The Quickstart Guide to Peer to Peer Lending (my guest post)
Troy Davis - EXAMINING BORROWER PRIVACY IN PEER-TO-PEER LENDING
Prosper - July, 2012 Investor Monthly Update
Random Thoughts - Lending Club Loan Amount: Defaults for Credit Grade B Loans
Wall Street Oasis - WSO CDO Update August 2012
Questions and Answers: Prosper Edition
August 22nd, 2012Last week on my trip to San Francisco I sat down in the Prosper offices and met with many people on the management team. We covered a range of topics and I brought many of your questions to the table. Here are their responses.
Q. Any movement on new states being approved?
There has been some movement in this area and we will be able to announce one new state coming on board shortly. What we are doing going forward is trying to reengage the state regulators in a broader conversation at a higher level. We made applications to many of the states several years ago and a lot has changed at Prosper since then. We want state regulators to be aware of these changes.
Q. Is there anything individual investors can do to help along this process?
Questions and Answers: Lending Club Edition
August 20th, 2012It was a great trip out to San Francisco last week where I spent some time with Lending Club and Prosper. Before my trip I wrote this post asking for questions that you would like to pose to the management of both companies. Thanks to everyone who posted a question in the comments and for those who emailed me directly.
I ended up with a list of over 60 questions. Now, I didn’t have time to cover every single question but I tried to hit the most important ones.
Q. What efforts are being made to open up for investors in new states?
Lending Club indicated that they are expanding their legal team and will be putting more effort into this in future. They also said that some states have very challenging requirements and it will be nearly impossible to get approved in all states as things stand right now. However, while they made it clear this is not imminent, in the event of a Lending Club IPO there is a “blue sky exemption” that would allow Lending Club to open for investors in all 50 states when they are a public company.
Q. When I make an ACH transfer deposit at Prosper my money is available INSTANTLY for investment. At Lending Club I have to wait 4-5 days before I can invest. Why is that?
Roundup of Social Lending News – August 18, 2012
August 18th, 2012Every Saturday I bring you the latest news from the world of peer to peer lending. These are the best of the news articles and blog posts from around the web that I shared on Twitter this past week.
The most interesting article of the week in my opinion was the Lending Club blog post. It is good to see Lending Club putting more effort into their blog after letting it languish for most of the past year. This article discusses research done by famous bond market guru Bill Gross and his opinion on where the bond and stock markets are heading – good news for p2p lending. We also have new offerings for investors coming for P2P Analytics and Prosper to Retire. Lots of interesting things happening for p2p investors. Enjoy your weekend.
BBC Radio (UK) – Fixing Broken Banking
Prosper to Retire - NumberWhale.com – P2P Investing Tool
Learn Bonds - How Ken Earns 16% Investing in Prosper Loans
Funding Knight (UK) - Crowdlending: A better name for peer to peer lending?
Lending Club - The Death of Equities and the Growth of Lending Club
Prosper to Retire - July 2012 | 21.89% Effective | 7.06% Overall ROI with Prosper
Random Thoughts - Lending Club Loan Amount: Defaults for Credit Grade A Loans
P2P Analytics - SO HOW DOES THE LENDING CLUB ALGORITHM WORK? (LENDING CLUB STRATEGY)
Everything Finance Blog - Peer to Peer Lending: Cautions and Considerations
A Big New Investor Using the Lending Club Retail Platform
August 15th, 2012For a few weeks now I have been noticing this. I login and browse available loans at Lending Club and see many brand new loans that are about 75% funded.
Take a look at the graphic above. I took the screen shot this morning when this loan had been on the Lending Club platform for about 20 minutes. Already it was 75% funded by one investor.
There are Caps in Place for Large Investors
I spoke with Scott Sanborn, the Chief Marketing Officer at Lending Club, about this. He was aware that there are a small number of large investors using the retail platform. But he explained that these large investors must adhere to certain caps that limit how much they can invest per loan. This limit appears to be 75% because when I went through the new loans today there were a handful that were right at 75% funded with just one investor.
Sanborn made it clear that Lending Club wants a level playing field for small and large investors alike and they make sure that no one investor can fully invest in a loan that takes it off the platform immediately. So far it seems to be working. I have been watching these loans closely over the last 24 hours and all of the loans that this large investor has chosen (assuming they are all the same investor) are still less than 90% funded.
Even with the huge increase in investor funds recently almost all loans at Lending Club stay on the platform for at least 24 hours and the majority for at least a week. But once a loan is over seven days old the LC Advisor funds can take over and loans can be fully funded very quickly. This happens to a large extent in the first few days of every month.
Do You Have Questions for Lending Club and Prosper?
August 13th, 2012Later this week I am visiting San Francisco for meetings with Lending Club and Prosper. I have a number of issues I want to discuss with them but I thought I would use this opportunity to see what you wanted to know.
I will be meeting with many people in the management teams at both companies, so this is your chance to have your voice heard. You can send your questions to me privately by using my contact form or just let me know in the comments below. I will do my best to get an answer for you. Next week, I will report back on what I found out.
Photo credit: davidyuweb via photo pin cc
Roundup of Social Lending News – August 11, 2012
August 11th, 2012Every Saturday I bring you the latest news from the world of peer to peer lending. These are the best of the news articles and blog posts from around the web that I shared on Twitter this past week.
We have an excellent variety of articles for you this week. It was kicked off by Fred Wilson, a principal at Union Square Ventures (a VC investor in Lending Club and Funding Circle in the UK) who discussed Ron Lieber’s article in the New York Times last weekend. On the international front this week marked the launch of a new p2p lender in Australia and we also saw coverage of the great month experienced in July by UK p2p lenders. Lending Club did their first blog post in almost five months when they announced the addition of their new “Approved” status filter and Prosper penned a post about collaborative consumption. Enjoy your weekend.
Mortgage News Daily - On-line Peer Lending Turns to Real Estate Loans
PYMNTS.com - Visa, Morgan Stanley Vet Takes On Tech At Lending Club
Prosper - The Collaborative Consumption Movement
P2P By Design - Peer-to-Peer Lending: Gaining Legitimacy as an Investment Vehicle
Prosper to Retire - P2P Lending 103 – Why spend the time?
This is Money (UK) - ‘I know where every pound is used’: Bank savings exodus delivers record-breaking month for social lending
P2P Analytics - ON LENDING CLUB DEFAULTS (AND THEIR EFFECT ON YOUR PORTFOLIO)
Random Thoughts - Lending Club Loan Amount and Credit Grade
Society One (Australia) - Australia’s first fully compliant p2p lender is here
Lending Club - Help Put Your Money to Work Faster with the “Approved” Review Status Filter
AVC - Bypassing Wall Street
Some People Think P2P Lending is a Ponzi Scheme
August 10th, 2012In the past couple of weeks I have had two emails and one conversation on Twitter about Ponzi schemes. Some people have the idea that with the returns claimed by Prosper and Lending Club p2p lending must be a Ponzi scheme.
Really?
It seems that in the era of Bernie Madoff and Allen Stanford people are more suspicious. In this low interest rate environment anyone claiming fixed interest returns of 8% or more must be viewed with skepticism. And 10%, well, there is no other explanation other than some kind of fraud must be at work.
No. No. No.
According to the SEC’s website a Ponzi scheme is “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.” For p2p lending to be a Ponzi scheme new investors, not borrowers would be providing the returns for existing investors. This would imply that all or most of the loan applications that are on the platform every day are fictitious.