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Breaking News: Prosper Closes Again

wiseclerk 2 Comments

Less than 2 weeks after reopening the p2p lending platform Prosper.com has closed down again, not accepting new lenders and borrowers.

The website currently displays the following message:

Prosper is Currently in a Quiet Period

We have been overwhelmed by the outcry from potential investors around the country who want to participate in peer-to-peer lending. Thank you for your support and your letters to us.

After much consideration we have decided to voluntarily shut down our operation in order to complete our SEC approval for a nationwide peer-to-peer lending platform. As a result, due to regulatory concerns, and in the interest of working toward getting our registration statement effective as soon as possible, we are discontinuing our California intrastate offering at this time.

If you’re an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you’ll be able to track and monitor your loans; and you’ll be able to withdraw funds from your Prosper account.

If you are a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process.

We want to assure you that Prosper is looking forward to being able to offer a transparent, durable and participatory lending institution very soon.

As a result of this decision, we will not be accepting new lender or borrower registrations or loans, or new commitments from existing lenders effective immediately. Until this process is complete, we are required to be in a quiet period and will be unable to respond to press, blogger or other inquiries related to our SEC registration process, even though we would like to.

We sincerely apologize to the Prosper community members for this inconvenience or disappointment our decision may have caused. We want to thank those of you who demonstrated your support through your active participation whether by investing with us again or referring friends to our site.

Thank you in advance for your understanding, support and patience once more. We look forward to serving the needs of the community in the hopefully not too distant future.

What a mess.

Education Microfinance – Vittana funds students worldwide via p2p lending

wiseclerk 1 Comment

US based non-profit Vittana.org wants to use the power of p2p lending to bring student loans to the developing world.

It works like Kiva. For as little as 25 US$ a lender can hellp to fund a loan. Vittana partners with local MFIs who evaluate students for past academic achievement, commitment to success, and ability to repay.

All 3 listed loans in Paraguay are already fully funded, but I intend to fund loans as soon as new loan applications are listed.

Prosper Reopens for California Lenders, Nationwide Borrowers

wiseclerk 2 Comments

Prosper.com has restarted offering p2p lending to customers after an SEC imposed 6 months stop (quiet period).

Prosper chief executive Chris Larsen said the California Department of Corporations has authorized the company to resume raising money in California and then lending it out under a system that lets borrowers and lenders use bids to set the interest rates on loans. “I hope this leads to wider acceptance of peer-to-peer lending,” said Commissioner of Corporations Preston DuFauchard. He said the state’s experience with Prosper, prior to the SEC intervention, made it “comfortable” that its bidding system gives lenders the information they need to invest in loans wisely.

Prosper hopes to reopen for lenders from other states but it remains uncertain when Prosper will be allowed to do so.

Prosper raises the minimum credit score required to 640 (Grade C under the old rating). This applies only to new borrowers. Borrowers registered before the quiet period that have lower credit grades can still apply for second loans (example: loan listing of a HR borrower).

Besides “direct” p2p loan listings, Prosper offers “Open Market Listings“, which are described as following:

Open Market loans are existing loans that were underwritten by financial institutions that are credit experts in areas such as auto loans, small business loans or social impact loans. The loan seller describes the loan in an Open Market listing, and then sells and assigns the loan to Prosper.

Open Market loans may include existing consumer loans or retail installment sale contracts. They can be secured or unsecured loans, and may include small business loans, where the borrower is a business entity, not an individual.

Open Market listings describe the existing Open Market loan, owned by the loan seller, which is offered for sale on the Prosper marketplace. Each listing displays information to assist the lender in making an informed bidding decision. Lenders can review the sale price for the Open Market loan, the yield percentage that corresponds to the sales price, the remaining principal balance of the loan and the interest rate the borrower is obligated to pay on the loan.

In some instances on auto loans, you can even see the factory where the car was built. This is all part of the transparency Prosper brings to the marketplace so that you can make informed decisions on how to invest your money.

Prosper plans a secondary market which in future will allow lenders to trade notes.

(Sources: Prosper, San Francisco Chronicle)

Kiva Loan Matching Plans

wiseclerk

I am blogging this live while listening to the Kiva conference call. Kiva plans a loan matching program, where lenders and institutions can opt to automatically match loans made by other lenders.

Some statements/explanations from the conference call:

  • Today 6 or 7 people out of 100 that visit the Kiva website actually make a loan (conversion rate)
  • Lenders can select to match any loan, or select loans by criteria
  • Lenders can opt to match immediately or only if they have periods of inactivity
  • Minimum account balance allows to reserve some money in the account (only balance over this minimum is used for matching)
  • Donations to the Kiva organisation are mandatory(!) when using the matching feature

Kiva says the new feature allows to automate the lending process and hopes that it inspires others to lend more.

The matching program will probably be launched in summer 2009.

On terms of automation there are similarities to the autobid feature MYC4 has.

See the following presentation for more details on the plans.

Matching Presentation Con Call April 2009

On other issues, there was the message that chances are good, that the Ebony Foundation (a MFI) repays outstanding loans (approx. 40,000 US$).