Archive for March, 2010

Half of all Commercial Mortgages to be Underwater

Wednesday, March 31st, 2010

Elizabeth Warren, chairperson of the , says
that by the end of 2010 about half of all commercial real estate mortgages will
be underwater.  “[The mortgages] are [mostly] concentrated in the mid-sized
banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have
these dangerous concentrations in commercial real estate lending.”  As a result,
the economy will face another “very serious problem” that will have to be
resolved over the next three years, she said, adding that things are unlikely to
return to normalcy in 2010.  Speaking on troubled mortgage lenders, Warren said
it’s time for the government to “pull the plug” on mortgage lenders Fannie Mae
and Freddie Mac.  “I’m one of those people who never liked public-private
partnership to begin with. I think what they did was use public when public was
useful and private when private was useful,” she said. “And I think we’ve got to
rethink that whole thing. There is no implicit guarantee anymore,” she added. “I
don’t care how big you are, if you make serious enough mistakes, then your business
can be entirely wiped out.”

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Prosper Closing in on $200 Million in Loans and Series D

Wednesday, March 31st, 2010

Prosper Enters Into Letter of Intent with New and Existing Investors to Raise $13.3 Million to $15.8 Million; Releases February Metrics

, the world’s largest peer-to-peer lending marketplace with nearly one million members and over 32,000 funded loans totaling over $193 million, today announced that the company entered into a Letter of Intent with new and for a Series D round in the range of $13.3 million to $15.8 million.  Prosper expects the closing to happen no later than April 15, 2010.  Prosper has raised a total of $43 million to date.

Prosper maintains approximately two-thirds of the U.S. peer-to-peer lending market and, according to , Prosper is the largest peer-to-peer lending marketplace worldwide. has forecasted that the peer-to-peer lending industry will “soar at least 66 percent to $5 billion of outstanding loans by 2013.” Prosper crossed the $1 billion mark in consumer loan demand in March 2008 and is now up to $1.8 billion in demand.

Prosper released statistics for February 2010. In February, the average borrower credit score on Prosper was 724 with 40% of loans going to borrowers with credit scores of 760 or higher, and 26% of loans going to borrowers with scores between 720 and 759. Debt consolidation remains the overwhelmingly most popular use case on Prosper, accounting for 56% of February loan volume.

“As peer-to-peer lending enters the next stage of its evolution, it is clear that the industry will become a third way of banking,” said Chris Larsen, Chief Executive Officer and Co-founder of Prosper. “A way of consumer lending that is more durable and transparent than the now discredited Wall Street securitization schemes; more opportunistic for lenders; and fairer for borrowers compared to credit card companies in particular.”

Larsen continued, “With the persistent disruption of the traditional banking system, there is a world of opportunity to continue to drive great loan assets to our lenders. Our approach to the risk/return tradeoff is disciplined and being honed by Prosper’s world class risk and analytics leadership, and the richest, thickest set of peer-to-peer lending data available. The result is dramatically improved lender performance.”

 

Prosper February 2010 Statistics

Prosper Rating Borrower Rate Lender Yield Estimated Loss Rate Estimated Return Average Loan Amount Loan Volume % of Funded Loans
AA 9.23% 8.23% 1.31% 6.92% $6,613 $416,589 24%
A 9.63% 8.63% 2.10% 6.53% $5,399 $502,148 29%
B 15.65% 14.65% 5.00% 9.65% $8,296 $199,100 12%
C 20.77% 19.77% 7.20% 12.57% $2,862 $191,725 11%
D 27.15% 26.15% 10.00% 16.15% $4,212 $248,480 14%
E 32.32% 31.32% 14.27% 17.05% $2,971 $50,501 3%
HR 33.86% 32.86% 20.41% 12.45% $3,225 $109,653 6%
All Funded Loans 16.22% 15.22% 5.48% 9.74% $4,813 $1,718,196 100%

 

Prosper Peer-to-Peer Borrower Loan Purpose

Loan Purpose Funded Loans
Debt Consolidation 56%
Business Use 11%
Home Improvement 10%
Education 3%
Auto / Vehicle 4%
Other Use 16%

 

About Prosper

Prosper is the world’s largest marketplace with approximately one million members and over $193 million in loans. Prosper pioneered peer-to-peer lending, which allows people to invest in each other in a way that is socially and financially rewarding. Prosper’s auction model provides an open and transparent way to get a personal loan or invest in loans on terms that are favorable to everyone involved in the transaction.

People and institutions list and bid on loans using Prosper’s online auction platform. Borrowers can list loan requests between $1,000 and $25,000 on Prosper and set the maximum rate they are willing to pay an investor for the loan, and tell their story. People and institutional investors register on Prosper as lenders, then set their minimum interest rates, and bid in increments of $25 to $25,000 on loan listings they select. In addition to criteria commonly used by institutional lenders, such as credit scores and histories, Prosper lenders can consider borrowers’ personal stories, endorsements from friends, and community affiliations.
Once the auction ends, Prosper takes the bids with the lowest rates and combines them to facilitate the funding of one simple loan to the borrower, and then issues what are called “Notes” to all the winning bidders. Prosper handles all on-going loan administration tasks including loan repayment and collections on behalf of the matched borrowers and investors. Prosper members are then able to trade Notes with other members on the Folio Investing Note Trader platform, provided by Foliofn Investments, Inc. Follow Prosper on twitter

Notes offered by .

Definitions
Borrower Rate: The interest rate borrowers pay on their Prosper personal loan.
Lender Yield: Yield percentage is the lender’s effective yield net of servicing fees, based on the borrower’s interest rate. The funding forecast graph (found on every P2P loan listing) will let you know the likelihood that a loan will be fully funded.

Estimated Loss Rate: Estimated average annualized loss rate is based on the historical performance of a portfolio of similar Prosper loans.

Estimated Returns: Lender yield minus estimated loss rate. This does not factor in late fees or uncollected accrued interest on defaulted loans. Actual performance may differ from estimated performance.

Loan Purpose: Borrowers who post listings in the Prosper marketplace are asked how they intend to use their peer-to-peer lending . The loan purpose reflects borrowers’ statements of intended use of loan proceeds and is the percentage of total dollars funded for the month. Prosper does not verify or confirm after funding how loan proceeds are used.

Prosper Press Contact:
Tiffany Fox
Prosper Vice President of Communications
(415) 593-5416
tiffany@prosper.com
Twitter:

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