Lend Academy Network Forum

Prosper Discussion => General Prosper Discussion => Topic started by: qiosa on December 08, 2014, 09:46:12 PM

Title: Is there reserve fund in Lending Club or Prosper to protect investors?
Post by: qiosa on December 08, 2014, 09:46:12 PM
The P2P lending business model appeared first in the UK. Most platforms in the UK, such as Zopa, RateSetter,Wellesley and Lending Works, create reserve fund (with different names) to protect investors. Itís funded by a contribution from the fee a borrower pays when their loan is approved. If a borrower defaults, the reserve fund will be used to cover any missed or late loan payments.
But I donít find any fund like this in the US platforms, such as Lending Club and Prosper. Who knows the reason?
Title: Re: Is there reserve fund in Lending Club or Prosper to protect investors?
Post by: Fred on December 08, 2014, 09:55:53 PM
If a borrower defaults, the reserve fund will be used to cover any missed or late loan payments.

This is not the case for LC or Prosper. Lenders carry all the default risks of borrowers.
Title: Re: Is there reserve fund in Lending Club or Prosper to protect investors?
Post by: Kombinator on December 09, 2014, 11:31:30 AM
Well technically lenders carry the default risk of LC and Prosper SPV:)