Loan Descriptions Missing

[core]

I'm not sure the divergence, whether it be in philosophy or in reality is as diametrically opposite as you are suggesting it is.

Sure it is.  90%/10% vs 10%/90%.  I could be mistaken about Prosper's extremely low rejection rate as it's been a while.  Don't make me dig up their latest filings to verify that.  If Prosper screened applicants so carefully then there would be no need for the 35%+ interest rates we see over there.  It's a whole different ballgame; neither better nor worse.

Besides, though 90% rejection rate sounds good, I'm not sure what is says about the longer term viability of a company if it s in fact accurate. Correct me if I'm wrong, but in the history of history I can't think of a single company that has survived while consistently excluding 90% of its potential customers. Can you?

1. Hedge funds
2. "1%-er" type establishments
3. Uppity private schools
4.  American freaking Express

[DanB]

I'm not sure the divergence, whether it be in philosophy or in reality is as diametrically opposite as you are suggesting it is.

Sure it is.  90%/10% vs 10%/90%.  I could be mistaken about Prosper's extremely low rejection rate as it's been a while.  Don't make me dig up their latest filings to verify that.  If Prosper screened applicants so carefully then there would be no need for the 35%+ interest rates we see over there.  It's a whole different ballgame; neither better nor worse.

Besides, though 90% rejection rate sounds good, I'm not sure what is says about the longer term viability of a company if it s in fact accurate. Correct me if I'm wrong, but in the history of history I can't think of a single company that has survived while consistently excluding 90% of its potential customers. Can you?

1. Hedge funds
2. "1%-er" type establishments
3. Uppity private schools
4.  American freaking Express[/b]

Wrong on all counts, I'm afraid.
Please! What 1% type establishments specifically? Give me names.
Hedge Funds do not exclude 90% of their potential customers...........i.e. customers who meet their general requirements & apply. On the contrary they accept 90% or more that meet the minimum requirements whatever those requirements are. 
 "uppity" private schools don't reject 90% of applicants who meet their minimum requirements.  If you meet their general requirements & have the money, you're pretty much in. I attended one of  them for a year in Britain (Battle Abbey) Besides, uppity private schools aren't real businesses. They operate largely through endowments.
Amex DEFINITELY does not reject 90% of their applicants today nor did they even do so in the past when they were actually exclusive. Today anyone with even marginal credit can get one. Trust me, I would know.

Finally I believe you are also wrong about Prosper rejecting only 10% of applicants. Please do tell me where this number comes from.

[core]

Dan, you just proved my point.  You used the following phrases in your post, in order:

"who meet their general requirements"
"meet the minimum requirements"
"meet their minimum requirements"
"meet their general requirements"

You used those phrases to contradict what I said.  On what basis do you think LC rejects 90% of its applicants?  Wrong "kind of person"?  Because they are communists?  No, obviously they don't meet LC's requirements.  By LC setting its requirements as it has (including the application process), LC has excluded 90% of its potential customers.  Same as all the rest of the entities I listed.  They have excluded a large percentage of their potential customers because of their minimum requirements.  With the exception of Amex, which was more of a joke because they didn't see fit to give me one.

As for the Prosper numbers I don't have them in front of me.  I will try to locate some up this evening.

[DanB]

Dan, you just proved my point.  You used the following phrases in your post, in order:

"who meet their general requirements"
"meet the minimum requirements"
"meet their minimum requirements"
"meet their general requirements"

You used those phrases to contradict what I said.  On what basis do you think LC rejects 90% of its applicants?  Wrong "kind of person"?  Because they are communists?  No, obviously they don't meet LC's requirements.  By LC setting its requirements as it has (including the application process), LC has excluded 90% of its potential customers.  Same as all the rest of the entities I listed.  They have excluded a large percentage of their potential customers because of their minimum requirements.  With the exception of Amex, which was more of a joke because they didn't see fit to give me one.

As for the Prosper numbers I don't have them in front of me.  I will try to locate some up this evening.

Core..........For starters I never said I believed the 90% number, you did. Secondly, I don't think LC quotes the 90% number anymore. Why? Because its not reality today (if it ever really was at all imo).  LC has in the past said they reject 90% of APPLICANTS, not 90% of people who theoretically could apply for a loan. LC has definitely not excluded 90% of its potential customers nor have they excluded 90% of anything for that matter. Where you've come upon this rather curious notion is way beyond me.

What I said is that I know of no company in the history of the world that has survived despite consistently rejecting 90% of their potential customers/applicants or whatever word you prefer.............. but IN REALITY, not in a theoretical sense. 

The teenaged son of an unwed mother who is working weekends at Taco Bell isn't applying to get into uppity (your word not mine) Marymount High School in LA at $29k a year.  Imo he is not a potential customer of that school regardless of whether he looks at the brochures or not. The girl who works at the mall for HDOS Enterprises (Hot Dog on a Stick) making minimum wage isn't applying to transfer her life savings of $650 into a hedge fund.  She isn't a potential customer for the hedge fund. The guy with a 540 credit score isn't a potential customer of LC regardless of whether he visits the website or not. These people are NOT potential customers of those entities & therefore don't count in the numbers. You have said nothing to disprove my assertion that no long standing company has ever rejected 90% or even 80% of their potential customers.

[core]

I see.  So in your mind a "potential customer" is one who has already met the minimum requirements and wants to be a customer on the given terms.

In order to get a LC loan (and be labelled a "potential borrower" in your eyes) then you must:
- Meet the creditworthiness requirements
- Be willing to pay the origination fee and interest rate
- Have the patience to sit through 15 minute phone interviews and whatever else they ask
- Want the loan

Using that definition of potential customer then it would seem LC approves 100.00% of potential borrowers who apply.  Not 10% as I previously misstated.  I'm glad we got that settled.

[DanB]

I see.  So in your mind a "potential customer" is one who has already met the minimum requirements and wants to be a customer on the given terms.

In order to get a LC loan (and be labelled a "potential borrower" in your eyes) then you must:
- Meet the creditworthiness requirements
- Be willing to pay the origination fee and interest rate
- Have the patience to sit through 15 minute phone interviews and whatever else they ask
- Want the loan

Using that definition of potential customer then it would seem LC approves 100.00% of potential borrowers who apply.  Not 10% as I previously misstated.  I'm glad we got that settled.

No, I would say that true potential customers are ones who meet the minimum credit requirements, as you well know ...........& as I believe you pointed out that I had said over & over again 2 posts ago. It is the one essential thing that must exist. This is a rather comical argumentative tact you're using though. Ask anyone else here what you need to get a LC or Prosper loan & the first & often ONLY thing they'll say is that you need to have a minimum credit score of whatever. Ask any semi lucid person what one needs to get into a private high school (using your example) & they'll say "money". It's quite simple really.

But above & beyond this, what I've tried to point out to you is that if you apply the same definition to both LC & Prosper (regardless of whether its a liberal or conservative interpretation ) then the disparity between the 2 is not going to be that diametrically opposite one that you claimed..............which as you stated was a 90% rejection rate for LC as compared to a 10% rejection rate for Prosper. After all, common sense (if nothing else) should tell you that 2 companies with the same basic business plan operating in the same country & targeting similar credit demographics are highly unlikely to have such hugely divergent numbers regardless of whether we are talking about rejection rates, default rates or whatever else. But I'm confident that you know this & are just trying to yank my chain here.   

[nonattender]

<distributes OCD meds>

[core]

Dan, I think we are simply arguing over what the definition of "is" is.  You must be a Bill Clinton fan?   (Errr... given your colorful background perhaps that's a name I shouldn't have brought up.)

But I'm confident that you know this & are just trying to yank my chain here. 

Curses, foiled again.  Well it was good fun for a page and a half.  But do tell me why Prosper has these nosebleed interest rates then.

[DanB]

Dan, I think we are simply arguing over what the definition of "is" is.  You must be a Bill Clinton fan?   (Errr... given your colorful background perhaps that's a name I shouldn't have brought up.)

But I'm confident that you know this & are just trying to yank my chain here. 

Curses, foiled again.  Well it was good fun for a page and a half.  But do tell me why Prosper has these nosebleed interest rates then.

No, not a fan of either Clinton...........but like Bill, I have an appreciation for the merits of precise definitions 

Because that subgroup literally can't get a loan anywhere else? That'd be the obvious & probably correct answer. But then what percentage does that subgroup represent compared to all Prosper borrowers. Not that big, correct? So I'm not sure how much that would skew the numbers.

Hey, I've always believed that the average Prosper borrower especially within the higher risk grades was a more "challenged" individual than his LC counterpart. In fact I was the one who coined the phrase "serial debt consolidator" to describe the actions & attitudes of most their repeat borrowers. But I digress.

But then isn't the gap only about 4-5%, in the nosebleed interest numbers? You know how it is, most people think in terms of how much it costs them in terms of monthly payments, rather than a 25 or 30% number. 

[neals384]

So here is what Prosper was actually thinking. I just spoke with Aaron Vermut about this change. Prosper found that one of the most common places where borrowers abandon their loan application was on the page where they enter a description. Even though it was optional many borrowers would abandon their loan application at that point and never come back.

Has Aaron considered the possibility that a large percentage of those who abandon when asked for a description do so because they have no good reason for applying...or they have something to hide...

If this change lets more applicants through the funnel I won't be surprised to see an increase in defaults down the line.

By the way I had a list of keywords that meant "no invest" if I saw them in the description..."need", "help", "bankrupt", etc.  Oh well.

[MarinBB]

I hate that they got rid of the descriptions. The number of spelling mistakes in a listing was the single strongest adverse indicator that I have ever found. Truth be told, its significance declined in 2012 and 2013 as the average length of the description declined (and many applicants wrote nothing at all). Unsurprisingly, the number of complete sentences was a very good positive indicator.

Like you said, words like "bankruptcy" or "divorce" were strong adverse indicators.

[nonattender]

Ah, I always wondered how you managed such nice returns, Marin...  Your name would come up near my nonattender account whenever I
was comparing my returns with other Prosper investors (back when that was possible).  I've fallen a bit, at around 17% (with seasoning).

[SeattleSun]

I funded a loan yesterday (9/19) that came up with a full discription filled out.

No it wasn't one from weeks ago but a new posting on 9/19 unless of course something weird happened and it sat somewhere for weeks in someone pending box?

[agd]

Even though these listings didn't start until after the change, the listingcreation date from the API denotes that they were created prior to it.  Such listings are very rare just 15 since 9/16.

[crayfish111]

i liked using the loan description as a final barometer on buying into the loan im  not sure that it will change my lending with prosper but i would prefer that it at least be put back as optional to fill out.