Prosper Secondary Market
October 15th, 2008 | Investing, News & UpdatesProsper just suspended lending in order to create a secondary market for loans. (Essentially an exchange where you can buy/sell loans without waiting for maturity). The details for the new market place are found in an old blog post here.
- “Prosper intends to charge all selling Lenders a nonrefundable resale listing fee of $0.25 per Note being listed for auction sale, or $0.50 per Note being listed for auction with an automatic sale feature.”
- “Prosper also intends to charge the selling Lender a resale transaction fee equal to 1.0% of the sale price, subject to a minimum fee of $0.50, which will be deducted from the sale proceeds at the time a Note is sold to a subsequent Lender.”
Long term I think this is a great move by Prosper. The only problem I see is the ridiculous fees Prosper is charging the lender to sell notes. We’ll see how this works out when it comes out, but for now lending on Prosper will be dead for a few months. (Just when rates started to get attractive too.)
Random market thoughts:
- Feels like we’re in a secular bear market.
- Has anyone checked out the 1929 crash? This is a mirror of it up to this point.
- Don’t panic. Markets tend to overshoot on the way up and the way down. (Today was not panic)
- Don’t gamble. If you have lost control in the casino you will lose control in the markets, it’s the same psychologically.
October 15th, 2008 at 6:55 pm
Finally!!
My initial thoughts are there are probably quite a few jaded Prosper folk who will dump all of their holdings at a low cost at their first chance.
October 15th, 2008 at 7:05 pm
Micskill: Pretty sure savvy buyers can pick up some very good loans at pennies on the dollar. However with the recovery rates I been seeing lately (essentially 0$) for loans 4+ months late, it will be tough to find any buyers unless its something like 0.01$ on the dollar.
Then there is the question of recovery… Since I have no faith in the collection ‘efforts’ I have seen so far. Essentially unless the delinquent notes are obviously below fair value I wouldn’t touch them. What would be interesting is if desperate lenders who need cash or are jaded will liquidate their healthy portfolio at less then par value. (There would definately be value if that happens)
October 16th, 2008 at 7:56 pm
The collection efforts have sucked. I’d love to be able to buy the rest of the people out of the loans I’m in and pursue the borrowers directly, or assign the debts to collection agencies I know will get results.
Or better yet, be able to bid on loans that are strictly local to me, preferably in the same county. If that happened, I could batch 50 or 100 loans at a time and use an attorney efficiently to get default judgemetns and then pursue garnishments.
I’ve asked prosper for this, but they’re determined to sell the loans as one giant lump — because it’s simpler for them. Disastrous for the lenders, but simpler for prosper.
October 17th, 2008 at 12:50 am
it seems to me Prosper has lost its leader position in the P2P lending market place, and companies like Lending Club and Loanio are taking over while Prosper is trying to catch up on the SEC registration that they should have done years ago.
Now Lending Club is ahead with a more solid offering (lower defaults and secondary market), and Loanio will serve a new segment of the borrowers (co-borrowers).
October 28th, 2008 at 6:52 pm
Has anyone else been getting tons of old loans charged off today? I have been getting emails for hours from Prosper charging off dozens of loans that are four+ months overdue. Looks like my Prosper portfolio is taking as much of a hit as my stock portfolio!
November 3rd, 2008 at 1:26 pm
Prosper recently charged off 4+ Month Late loans. The original model for Prosper was to sell the delinquent loans off however due to the current market conditions there are absolutely no buyers. As a result, Prosper is moving these loans into the ‘charged-off’ status. (Essentially writing them off as defaulted)
November 19th, 2008 at 10:12 pm
Best guess is.
2-3 months short
6 months on the long end
January 1st, 2009 at 5:10 am
hi…
wow…
January 9th, 2009 at 3:01 am
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March 24th, 2009 at 8:22 am
par value…
This is both interesting and thought provoking. As a lurkette, I want to say that most of the time I just don’t have anything to say of interest that furthers the conversation. Maybe I’m scarred from too many inane letters to the editor (inane is t…
March 25th, 2009 at 9:01 pm
loans for anyone…
Can point me to other similar posts on loans for anyone? Really appreciate it. Thanks….