The number of active lenders on Prosper took the first dip ever in September. (A lender is active if he/she made a bid in that month.). If your an active lender on Prosper this is probably good news for you since it means less competition. On the other hand the number of active borrowers in September took a dip again. This means fewer listings to bid on for lenders.

As a lender I would like to see the number of active borrowers go up month after month. Hopefully we’ll get a pop going into the end of the year. You can check this out yourself on the Membership Growth page.

I was playing around with the customization on the lender profile pages and came to the conclusion that the best credit grade to invest in is C.

How did I come up with this conclusion?

1) C credit grade of lender portfolio’s seems to return the highest ROI.
2) AA, A, B borrowers tend to have their rates bid down too low.
3) D, E, HR borrowers have their rates capped under 30%, the rates may not be high enough to compensate for default rates.

A number of things have been added in this update. Here are the highlights:

• The Lender Breakdown page has been updated and renamed the Lender Overview page. You can use this page to get an overview of lender ROI.
• Added an “Active Lenders and Borrowers” chart to the Prosper Membership Growth page. (Steve)
• The “Customize” section found throughout the site has been updated to allow multiple credit grades and loan statuses to be selected. For example you can customize the Total Loans Funded page to show stats for AA and A borrowers only. (thisguy, Lazy Man and Money)
• Added Time Left column to the Borrowers Who Lend page, removed the Title column for space (FML)
• Updated the Active Lender Bids page to show lenders whose screen names start with numbers. (Eric)
• Fixed a caption bug on the group profile page for the bar chart. (Ron)
• Moved Repeat Borrowers from the Stats page to the Analytics page.
• Patched a bug on the Listing Picker page where multiple bids from the same lender were getting counted multiple times. (bolapara)

From the Prosper September 2007 Newsletter:

“Prosper is pleased to introduce our new VP of Operations, Doug Fuller. Doug brings 25 years of experience to the Prosper team and will be instrumental in helping our team crack down on delinquencies and ramp up our collections efforts. We are excited to have Doug on board; he will help us to continually make Prosper a safer and more reliable marketplace for all users. Doug is a huge asset to the Prosper team and we look forward to updating you on his systemic improvements in Prosper operations.”

This sounds like good news, hopefully it will translate into results as well. Penncro collection rates on Prosper have gone up recently from 12%ish to 13%ish. Hopefully the trend is up.

The Jobs Report today was the weakest in 4 years, instead of the expected addition of jobs we actually got a small reduction. If you add up all the pieces next year is not looking good.

1) Housing Downturn
2) Credit Market problems
3) Slowdown in job growth

http://biz.yahoo.com/ap/070907/wall_street.html?.v=25

Just got an email today that Prosper will be eliminating all group rewards for group leaders on future loans. I think this is a huge step in the right direction since under the old format groups were not providing any useful functionality at all except to increase costs for Prosper, borrowers and lenders.

This should actually increase the average ROI for lenders on all future loans and eliminate any sort of ponzi schemes based on community payments and group ratings. The email as originally received is copy/pasted below.

” At Prosper, we have been listening to your feedback regarding groups and group leader rewards.

The original philosophy behind Prosper Groups was to enable borrowers in close-knit communities to leverage the reputation and peer pressure of their group to attract more bids from lenders, resulting in potentially lower interest rates for borrowers, and lower default rates for lenders. We have found, after nearly two years of experience, that the strongest groups are comprised of close networks of friends and associates, where compensation is not the dominant motivation for the group leader’s services.

As a result, we are making changes to Prosper Groups. In the next month, Prosper will discontinue payment rewards on new loans for group leaders. Group leaders will continue to earn payment rewards on all eligible loans originating before the change. Group leaders can also receive referral rewards for referring borrowers or lenders to Prosper under our Referral Program.

We hope this change will encourage group leaders to grow their groups by inviting new members from their pre-existing social networks, turning Prosper Groups into a more powerful community development tool and making Prosper simpler for both borrowers and lenders.”