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Messages - Xenon481

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Investors - P / Re: No more info on loan investors and bids
« on: March 08, 2013, 06:21:28 AM »
Theoretically once the new API is released I can modify my site to allow people to register their Prosper API name and password (which is supposed to become different then the normal name/password for the website) and download this information on an individual user basis.

Wouldn't that also allow you to make bids (via the API's Bid method) on behalf of any/all users that registered their API user/pass with you? I would highly suggest that users not share their API user/pass (that allows bids) just as they wouldn't share their website user/pass.

Investors - P / Re: No more info on loan investors and bids
« on: March 07, 2013, 10:12:00 PM »
And just to add evidence of my claims, here is Prosper's most recent S-1 as filed with the SEC:

The S-1 specifically mentions how the Prosper platform works as it is a material part of providing investment information.

These bids are also shown on the listing page for all lender members to review, as shown below.

In addition to the applicant’s requested loan amount, listings include:


the amounts and dates of all lender member bids;

As of this change, Prosper is now specifically out of compliance with the statements made in their SEC registration.

Here is information about how you are investing in Prosper and not utilizing Prosper to invest in borrowers.

All Notes will be special, limited obligations of Prosper Funding.

[...] holders of the Notes do not themselves have a direct security interest in the corresponding borrower loan or the proceeds of that loan.  Accordingly, in the event of a bankruptcy or similar proceeding of Prosper Funding, the relative rights of a holder of a Note may be uncertain.

In the unlikely event that Prosper Funding receives payments on the borrower loans relating to your Notes after the final maturity date, you will not receive payments on your Notes after maturity.

PMI, in its capacity as servicer, has the authority to waive or modify the terms of a borrower loan without the consent of the Note holders.

PMI faces a contingent liability for securities law violations in respect of PMI Borrower Loans sold to its lender members from inception until October 16, 2008.  This contingent liability may impair its ability to perform its obligations under the Administration Agreement.

Prosper also notes in the S-1 that note purchasers will not have explicit right to have influence upon Prosper as a corporation.

Purchasers of Notes will have no control over Prosper Funding or PMI and will not be able to influence their corporate matters.

Here's an interesting set of quotes:

Applicants supply a variety of information regarding the purpose of the loan, income, occupation, and employment status that is included in borrower listings.  Neither Prosper Funding nor PMI verifies the majority of this information, which may be incomplete, inaccurate or intentionally false.

All listings are posted on the platform without Prosper Funding or PMI verifying the information provided by the applicant, including the borrower’s stated income, employment status or occupation.

Lender members should not rely on an applicant’s self-reported information such as income, employment status, or occupation in making investment decisions.

Investors - P / Re: No more info on loan investors and bids
« on: March 07, 2013, 08:46:49 PM »
We're clients of the platform and not investors and since they're a private company they can give whatever info they want to better clients.

No, the S-1's and Prospectuses registered with the SEC clearly lay out the fact that so-called "lenders" are not lenders at all and aren't merely "clients of the platform".

You are purchasing investments (notes) which are obligations of Prosper and Prosper alone. The borrower has absolutely no obligation to you (the purchaser of an investment in Prosper) in any way, shape, nor form. You have absolutely no security interest in the loan to the borrower at all.

You are an investor in an SEC registered security, not a client.

Investors - P / Re: No more info on loan investors and bids
« on: March 07, 2013, 08:00:11 PM »
There will be some good news for Prosper investors coming soon. I know Michael from has been working with the Prosper API for some time and there will be a complete suite of functions for Prosper investors coming probably some time later this month.

I find it very odd that a company selling SEC registered securities sees fit to give some investors in these securities information about future investment platform changes (which often never get updated with nor approved by the SEC until months after they are implemented) without giving the rest of their investors such information.

Investors - P / Re: Prosper Originations Continue To Be Extremely Low
« on: March 01, 2013, 08:35:43 AM »
Of course it is almost a certainty that March numbers are going to be at the $10 million you've cited.................& possibly substantially higher in the $12-13 million range.

Do you have any evidence to support that claim? I'm not saying it will or won't, I'm just providing Prosper's own published numbers.

December 2012 Business Days: 20    Average Daily Origination Rate: ~$480k/day
January 2013 Business Days: 21    Average Daily Origination Rate: ~$468k/day
February 2013 Business Days: 19    Average Daily Origination Rate: ~$474k/day

The average daily origination rate has been fairly stable over the past 3 months regardless of the fact that Worth-Blanket2 re-entered the market in late January.

March of 2013 has 21 business days just like January of 2013.

If the daily origination rate continues to average around $474k/day like it has for the past three months, then an estimate for March 2013 would be ~$9.95million.  If the daily origination rate averages closer to ~$500k/day (a 5.5% increase over the rolling 3-month average), then March 2013 originations would be on the order of ~$10.5million (in the approximate range of my original estimate). Even a full 10% increase in the average daily origination rate to ~$521k/day wouldn't even break ~$11million ($10.9million).

In order to reach $12million in originations, Prosper would need to average ~21% higher daily origination volume this month than they have the past 3 months. To reach $13million, they'd need to average ~31% higher.

For comparison, the largest month-over-month origination growth rate that Prosper had in all of 2012 was ~10.6%.

Also, even if the $12-13million range ends up being correct, that would still put 2013 Q1 origination fees revenues ~20% lower than 2012 Q3 numbers (the most recently available from the SEC).

Investors - P / Re: Prosper Originations Continue To Be Extremely Low
« on: February 28, 2013, 10:26:17 PM »

Per Prosper's 2012 Q3 SEC 10-Q quarterly financials filing, they averaged ~4.5% of total originations as their originations fees revenue source across the first 3 quarters of 2012.

Originations Fees Revenue:

2012 Q1: $1,382,455
2012 Q2: $1,756,891
2012 Q3: $2,083,196

Extrapolating out the ~4.5% to 2012 Q4 gives an approximate $1,666,000 originations revenue. This puts 2012 Q4 top-line revenue significantly down from 2012 Q3 which had a net operating loss of ~$4million.

We are only two months into 2013 Q1, but even if we estimate March originations at ~$10million (higher than any of the past 3 months), that still extrapolates to an estimated 2013 Q1 top-line originations fee revenue of just ~$1,300,000.

Investors - P / Prosper Originations Continue To Be Extremely Low
« on: February 28, 2013, 10:04:57 PM »
Even with Worth-Blanket2 back in the game, Prosper's origination rate continues to be extremely low compared to historical numbers:

$ of Loans Originated (by month originated):

Jan 2011: $3,301,421
Feb 2011: $3,656,521
Mar 2011: $4,513,931
Apr 2011: $5,013,591
May 2011: $5,600,451
Jun 2011: $5,606,303
Jul 2011: $6,004,565
Aug 2011: $6,869,661
Sep 2011: $7,361,183
Oct 2011: $8,706,068
Nov 2011: $9,003,672
Dec 2011: $9,500,643
Jan 2012: $10,826,709
Feb 2012: $11,001,656
Mar 2012: $11,235,816
Apr 2012: $11,644,207
May 2012: $12,810,214
Jun 2012: $13,555,137
Jul 2012: $14,925,140
Aug 2012: $14,309,578
Sep 2012: $15,839,746
Oct 2012: $15,332,861
Nov 2012: $12,086,224
Dec 2012: $9,607,832
Jan 2013: $9,821,395
Feb 2013: $9,008,608

February 2013 is the lowest month for originations that Prosper has had since November of 2011.

Prosper's primary revenue stream is from taking a percentage cut of all originations, so this kind of massive extended cut in originations rate is going to have a huge negative impact to Prosper's top line revenue numbers for 2012 Q4 and 2013 Q1.

Here are the late loan curves for Prosper 1.0 before the SEC registration.


Investors - P / Re: Where are the loans?
« on: February 18, 2013, 10:22:27 PM »
Perhaps the loans are there, but being gobbled up quickly because of the reentrance of high$$ investors?

Not per Prosper's Performance page:

Looking at the most recent rolling month window; there were ~71% more loans originated in the 1/19/2012-2/18/2012 time period (1548) than there have been in the 1/19/2013-2/18/2013 time period (907).

So I asked the Prosper COO this exact question yesterday and while there are no guarantees when dealing with government agencies they are working through the issues that the regulators in WA want and expect to be back on board "soon". Now, they can't commit to a timeline because it is not up to them but I got the feeling it is only a matter of weeks.

Prosper being (or not being) registered to sell notes in the state of Washington has nothing to do with (from a legal standpoint) whether or not people who already own notes can sell them to other people who do not live in the state of Washington.

The fact that Prosper is not allowing these people to sell their notes is simply laziness upon Prosper's technical team.

Investors - P / Re: Bad News for Washington State Prosper Investors
« on: February 12, 2013, 03:36:55 PM »
As best as I can tell, the state of Washington isn't to blame. Nobody forced Prosper to implement the new arrangement. Nobody made Prosper fail to notify us properly. And I don't think WA has any problem with investors selling their existing notes.

Tony, you are absolutely correct. There is absolutely nothing in the Washington law changes which would prevent you from legally selling your notes (only purchasing other notes).

This is just another of many examples of Prosper neglecting their fiduciary duties to note purchasers.

However, Prosper's S-1 document registered with the SEC specifically states:

Quote from: Prosper SEC S-1 (Emphasis Mine)
Q: Will I be able to sell my Notes?

A: The Notes will not be transferable except through the Note Trader platform operated and maintained by FOLIOfn Investments, Inc., a registered broker-dealer .  There can be no assurance that a market for Notes will develop on the Note Trader platform and, therefore, lender members must be prepared to hold their Notes to maturity. See “About Prosper” for more information.

Prosper will likely argue that you don't have an inherent right to use Folio just because you hold a Note even though there is no law-based reason why you should be prevented from it. Even though the S-1 specifically states that there isn't guaranteed to be a market for your Note on Folio, it doesn't say that you can't try to find a market for your Note on Folio which is exactly what Prosper is preventing you from doing.

This is just one of the many things that negatively impact your risk assessment analysis when looking to invest in Prosper (your Notes are obligations of Prosper, not of the Borrower). Between broken promises, broken technology, failure to uphold fiduciary duty in various manners, the potential for Prosper to amend their registration agreements in a negative manner, possible future bankruptcy, and many other things, it is possible that you may or may not find that the interest rate offered is or isn't enough to cover the risks.

Investors - P / Re: My $25 lesson on bankruptcy
« on: February 04, 2013, 02:47:09 PM »
There have been documented cases in the past where Prosper has failed to challenge fraudulent bankruptcy inclusion and even where Prosper failed to submit themselves as a creditor in Chapter-11 BK's.

I suggest that you specifically request proof from Prosper that they submitted all filings properly and within the required time constraints for this BK.

Investors - P / Re: Prosper's new legal form
« on: February 01, 2013, 12:38:13 PM »
Another important thing to note is that it is Prosper's official stance that even if you don't approve the new agreement (and even if you specifically send them notice of disapproval), they will still hold the new agreement as the binding agreement between you and them.

I am guessing that is because they are transferring all existing notes into Prosper Funding as well as the new notes. So investors get bankruptcy protection whether they like it or not...

They have also used this reasoning for other things like failure to perform debt sales and also recently reducing the principal value of a Prosper 1.0 loan. A loan generated when the contracts between Prosper and Lenders specifically stated that Prosper expressly was denied the power to modify a loan's principal value.

Investors - P / Re: Prosper's new legal form
« on: February 01, 2013, 11:54:40 AM »
The important thing to note is that investors need to login to Prosper and approve that agreement before they will be able to invest. All Automated Quick Invests are suspended until people approve the new agreement.

Another important thing to note is that it is Prosper's official stance that even if you don't approve the new agreement (and even if you specifically send them notice of disapproval), they will still hold the new agreement as the binding agreement between you and them.

Investors - P / Re: Increase in late loans
« on: January 31, 2013, 05:40:38 PM »
Per Prosper's most recent SEC quarterly filing (2012 Q3), loans originated in the three most recent quarters (as of the end of 2012 Q3) seem to be going bad at significantly higher rates than loans originated in earlier quarters at the same relative ages.

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