Mine is an NC. And the way I understand it, an NC doesn't have any other debt. So, we should be the only one bugging her. So, if she really gets a call every day, why the hell doesn't she pay the damm bill when only owe us $400 (that was a $3,000 loan and is currently 3 month + late) when she claimed to make $35,000 per year (Prosper checked that. Right ? Right ? Right ??? Somebody, please could somebody repeat "Right" ... phu ... here you go)

Ok, so if a NC doesn't pay her electricity bill, rent whatever, and that goes to a collection agency, which then reports to the credit bureau, the NC is no longer a NC, it's comething more like a HR or an E. Right ? Right ? Right ??? Somebody, please could somebody repeat "Right" ... phu ... here you go

Would that mean that we can bug the borrower ???

... appart from the prosper agreement. I mean does the law actually prevent us from contacting our lovelly borrowers 3 times a day (appart from the fact that the prosper agreement is legally binding)

If the borrower has not used credit in the past six months, the credit grade would be NC because the credit scoring algorithm doesn't have sufficient information from which to calculate a credit score. That is the case, whether or not there are collections for unpaid regular bills (utilities, rent, etc.).

Time for an update...
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_2007_01_29.gif)
Net collected keeps going up but total cured and its components languish at a total 8.14% cured. Prosper has not explained this discrepency. It is a mystery.

Is the increase in net collected a positive sign of an increased level of activity at Penncro? ...or is it just a relatively useless increase in partial collections which will allow the loans to default anyhow? Prosper seems to be deferring default past 4 months late when there is hope of payment. That coupled with increased partial payment collections might be positive. Or is this all an illusion? The sum of all these little facts is ... unclear.

NCI stats look similar, although the small number of loans sent to NCI makes their stats irrelevant for now. There's a hint that they can do at least as good as Penncro, but we need more loans sent to NCI to really learn what they can and will do.

Generally Prosper's collections performance is still scandalously bad. Improved collections performance is needed. I hope those of you going to Prosper Days will insist on some answers.

From time to time someone pipes up here with the opinion that its impossible to collect Prosper payments because they are small. Well...

Yesterday there was an article in the (online) Wall Street Journal about just this. Subscribers can read the entire article at http://online.wsj.com/article/SB1170558536...pj_main_hs_coll

For the rest of you, here's an excerpt...

Remit $0.49 Immediately
By ANNE KADET
February 4, 2007

These days, even the most responsible among us are finding it impossible to avoid collection agencies. That's because they're increasingly chasing the smallest, peskiest debts: Think parking tickets, overdue video fees and highway tolls.

One agency, Unique Management Services, specializes in collecting overdue library fines for 800 library clients. Cities ... are turning over everything from dog-bite fines to ...

If we owned our debts we could sell them at bid4assets.com

Be Prosperous
Ms. Ava

This article was also in the Sunday business section the WSJ provides to local papers.

From the data available, it seems that the "Ammount Collected" is the percent of funds collected:
If $100,000 is sent to the collection agency and they "cure" $25,000 then the stat will be 25%.

"Accounts brought Current" is the percent of accounts collected:
If 50 loans are sent to Pencro and they "cure" 5 of them then the stat will be 10%.

The discrepency you mention is that the accounts are of different sizes. It very well could be the case that only 10% of the accounts are cured, but 25% of the money is collected (ie the bigger accounts are being cured more often than the smaller accounts).

Olwagner:

Federal law prevents you from attempting to collect from a borrower. Any attemps to do so will generally result in an unfavorable outcome for you unless you are licensed collection agent. Unfavorable can range from monetary penalties to prosecution against you for a plethora of potential infractions. There are borderline infractions in some of these writings that I am surprised to see Prosper leave unedited. If the thought of losing money is that personal to you or others perhaps this is not the venue for your investments.

Reading this gives me a migraine. Five months ago the sky was falling and Prosper was negligent in their collection pursuits (according to those with no collection experience or understanding). If getting someone to pay within 30-60 days was easy they would not be in collections in the first place correct?

Performance is steadily improving as any collection model would have predicted.

Here's an update. I update this chart at irregular intervals. Not much has changed lately. The big jump up in collected $ (without corresponding jump in loans cured) seems to be holding.
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_2007_02_17.gif)

Hate to tell ya this ,but the sky is falling for prosper if collections don't get better. Sooner or later lenders will realize "geez only making 4%" here after defaults isn't such fun as I thought, duh.... Right now new lenders still coming in so nobody really has to worry about collections. That said when money starts drying up prosper will be wondering what they could have done.

After looking at the stats my guess is all NCs and Hrs need to be banned. The ROI is -22%. Can that even be right?

If by "banned" you mean "You should personally decide to NOT lend to people with bad credit instead of imposing your will on all of the Lenders" then yes, I agree.

I get your point but if everybody knew before hand that HR's on average would return -22% ROI do you really think anybody would lend to them? Would it be too much to ask for new lenders to have that info up front? May be prosper could just give new lenders the ROI stats up front and just leave it up to the lender as to if they wanted to throw good money after bad. As it is now they use info that suggest a 22% rate on HRs will return a net 9.5% after defaults.... yea not exactly apples to apples here.

That "average" ROI is the point - some HRs have been very good to the lenders - paying on time, or early, every month. The idea is how to sniff them out. If you want to play the game, and think you've got what it takes, I think that should be your decision. Otherwise, you don't have to play.

I understand....now try to hear what I'm saying. How many new lenders fully understand the risk if prosper keeps putting up the info that ROI is 9% on HRs at 20% rates after defaults ??

SG40 has a point. THere is a dichotomy in the information Prosper makes available on the site. If you want to select loans, they invite you to select a %age of return and then they add the "risk premium" to that to come up with the suggested interest rate your lending should be at. They do this poorly. We've been complaining about that since before I joined this site.

Now they have an additional metric - loan ROI. If you select this, you don't get the ROI as indicated by the up-front search facility, you get the actual calculated ROI and it is substantially worse, esp in the E and HR grades where is is negative. That means despite whatever "average" rate HRs funded, they default in substantially higher numbers than that rate would indicate.

Prosper isn't wrong to put it, Lenders simply ignore them.

Prosper's ROI calculations can't tell if it is a "Social Loan". They don't take into account rate capped states(where GLs bent over backwards "vetting" to get them funded). They don't take into account the period when the caps were lowered and people just accepted HR loans at 22%.


That -22% hides a lot of trash that was caused by Lender irrationality.

First Source seems to have its first "cure" today.

An update.

(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_2007-03-08.gif)

The (very very slow way late) improvement continues. What happened in mid-January that got this started we wonder? Did somebody finally get kicked in the ass? Whatever it was, we hope it improves. If management is listening: double it.

I wish there were notes that were visible on our side "the lender" to give us a status of the loan and the collection process those little daggers piss me off. A written record for public or just lenders view would be great. At least we know if we need to give up hope or wait for more daggers and put that loan in our prayers for the next few nights.

Hallelujah!

Perhaps the kick in the arse was knowing that they would get grilled at Prosper Days a month later? (A representative from Pencro was on the "Collections Overview" panel).

Is it collections improvement or tax refund checks?

During a PD forum, Prosper Andrew said (bad paraphrase here, the event was a few weeks ago now) that he doesn't like talking about much around as a simple average statistic.

I asked him in front of everybody that if that was true, why collection statistics are presented in one nice little summary? That's the next real change I want to see to the site: I want to see collections stats broken down by credit grade, hopefully searchable like the performance page.

As astein suggested, I expect it's tax refund checks. This is prime debt collection season. If you ever want to be a debt collector and have a great first couple of months, start in January. Then quit in April.

Wow, you managed to make 4%? How did you do? can you share your secret?

I would be very lucky if I ended up breaking even.

Update...
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_2007_04_05.gif)
You can see that the "net collected" curve has hopped up or down several times now. That doesn't make sense. My theory is that there is a bug in Prosper's calculation of this number, and it is sometimes calculated one way and sometimes another way.

Meanwhile, collections results are still scandalously bad.

Pninen,

Is this really the fault of collections, or the fault of lenders funding uncollectable loans to begin with?

Yep, par usual it's the lenders fault for making the loan, not the borrowers who should be held accountable. How dare we expect to be paid back. Those poor borrowers just got in over their heads and lenders knew better.... Geez

Come on.... I can go to the lending page of Prosper and search for fully funded loans that are endind soon, and pick out approx. 10 loans that shouldn't have funded just on the first page.

If you give collections garbage.... that's what you get.

No, you come on. Its up to the people who sign the contract to know if they can live up to it. The way I see it they signed on the bottom line they should be held accountable. They might have to get an extra part time job but that's not the lender's problem. Everytime you excuse a deadbeat two more are born. The only people we can blame for non payment are the deadbeats that aren't worth their word.

I'm not excusing the deadbeat..... and I'm also not willing to lend them my money either....

Really... just go look at what some lenders are giving collections to work with.

Don't borrow the dime if you can't pay on time...

Deep subject.

The statistics don't place blame, so they can't answer your question.

Also, it isn't an either/or thing.

Whoever's fault it is, we gotta fix it.

Eventually we may have enough data to determine whether some lenders achieve significantly different roll rates (fraction of loans that go from late to default) than other lenders. That will be an interesting study. Meanwhile we don't have that data.

However, I can tell you that I have invested in mosty pretty high quality loans, and yet my experience is that once they go 1 month late, almost none recover. Therefore I believe we're gonna have to revamp the prosper collections process.

The present arrangement doesn't incentivize the collection agencies to work hard enough. The amount they can make by recovering one of these loans is tiny compared to the amount lenders lose if the thing goes to default. That's why the collection agencies aren't tryin' very hard. They aren't garnishing wages. They aren't getting judgements. Their fees are so small that all they can afford is an audodialer. Watch the collections video from Prosper Days. Stronger action requires a different financial arrangement I think.

One collection agency to stay far from: Pinnacle Financial Group

They service all the scam companies plus they use illegal collection methods.

Pninen,

Great response. I agree that whatever the problem is it needs to be fixed.

I look at what some people are funding... and just can't believe it. I definitely think there needs to be a new lending tutorial that does a better job explaining to new lenders the default risk associated with Prosper Loans. It's doesn't help that the Chris Larson is out stating that Prosper Loans only have about .5% default rate. People read this and rush in with their money.... only to find the real truth after it is too late.

If a loan goes to collections and is cured, and remains current from then on, does it continue to increase the net collected amount? That could explain the lack of a change for total cured but the increase of net collected (I skipped from page 2 or 3 to 6 so I might have missed something along the way). I assume we're still talking about less than 10 cured loans (maybe less than 5), net collected dropping back down kind of messes with my theory even assuming someone who had been cured became delinquent again.

Could the change in collections be the result of time, could it just take 60 days for collections to start reporting success?

Updated chart...
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_29592_2007-05-04.gif)
The blip of points above 20% on the net collected curve seems likely to have been caused by bad data.

On a related front, you may have noticed that the "past 12 months" and "lifetime" columns in Prosper's collections performance data continue to contain idential numbers, even tho Prosper is now well beyond 1 year old. I believe this is an error. I have asked Prosper to comment, but have not yet received a response.

Could this be attributed to the fact that Prosper didn't send any loans to collection agencies for quite a while, hence 12 onths have not yet elapsed since the CAs actually got to work?

Also, one of the collection agencies left Prosper. Perhaps that one got the bulk of the loans? And fled because of it? :)

I don't think so. My calendar says 12 months have definitely elapsed. Money the agency collected 13 or 14 months ago shouldn't be in the "last 12 months" column, per my understanding of common English. I interpret the column heading to refer to a period of time.

A more likely scenario is that the old data from 13 months ago was never entered into the database correctly. Remember in the early days of Prosper, the collection stats page was filled in with zeros, even tho we knew loans had gone to collections and some money had been collected.

Poof.

My emotions were running amock, my apologies.

...Gulp

I'm not to that point yet. That said if they don't do something by the next tax year I would be open to join a class action suit.

They may not sell the loans (can't force anybody to buy them...) but they should default them pursuant to GAAP. (Generally Accepted Accounting Principles.)

I'd chip in money to help with a lawsuit BigGulp.

Lawyers are very good at delivering Customer Feedback.

HollowOak has got the right idea. I don't think Penncro got an account until around May 10th.

Updated chart...
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_29592_2007-06-02.gif)
You can see that the red curve takes sudden jumps up and down. This indicates bad data. The actual net collected could not jump like this. There must be a bug in the process Prosper uses to calculate net collected. We may have to ignore this curve until they fix it. :(

7/02/07 update...
(IMG:http://img.villagephotos.com/p/2006-6/1187065/prosper-collections-rates_29592_2007-07-02.gif)
You can see that the "net collected" red curve has taken another big jump down. The "net collected" number prosper reports is obviously broken, and cannot be trusted (unless the most recent jump down is where they fixed it). These big jumps simply can't happen.

Meanwhile, the "cured" statistics roll along with essentially no change. There is no improvement in collections visible.

Thanks for the info.

I would have been a big time lender but after an investment of $10k and seeing the collection process, I am out of here.....taking cash out weekly...good luck to all. these guys have to fix the collection process..