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Prosper seeks Hedge Funds as lenders

wiseclerk 2 Comments

Prosper.com is actively promoting it's marketplace to hedge funds.

Prosper is America’s largest peer-to-peer marketplace with over 600,000 members,” stated Kirk Inglis, CFO of Prosper. “As credit markets experience unprecedented changes, institutional lenders, including hedge funds, are using Prosper to diversify portfolio returns without the lack of transparency and fees associated with structured consumer debt products.

(via ProsperousLand)

Another recent Prosper related topic was the concern raised by lenders that in select states Prosper stops any collection activities on small loans, if the borrower sends a Cease-and-Desist letter (the example given is a 2,500 US$ loan in Texas). The author of the blog post argues that the risks for lenders rise, if this example really shows overall practise.

Moreover, they won't pursue legal action to recover small loans. So all small loans are now risky since the borrower has an easy method to halt payment, collections and legal proceedings. Prosper simply seems unwilling to go after small borrowers.

Finally, even for larger loans, it seems unsafe to lend, since Prosper will only sue in select states. I don't recall Prosper saying anything about selective enforcement in my many lender agreements, but before I put another penny into Prosper, you can be damn sure I will ask them what states they will take legal action in and what the minimum loan amount is for which they will sue.

 

 

Review – Smava after year one – Lenders satisfied

wiseclerk

German p2p lending service Smava.de launched one year ago. Since the launch of Smava 393 loans were funded for a total loan volume of about 1.7 million Euro (approx. 2.6 million US$).

Lender’s viewpoint

In a february survey 33% of lenders answered to be very satisfied with Smava and 63% were satisfied. 48% said their ROI met expectations while 19% said it exceeded expectations.

So far a 7% ROI is realistic. Only 3 loans have defaulted and 11 are (less then 30 days) late. In the past Smava cured the majority of late loans. The Anleger-Pool mechanism spreads the losses of a default across all loans of a credit grade. Therefore when 1 in 100 loans in credit grade X defaults, the lenders invested in the defaulted loan still receive 99% of the principal, while for lenders in the current loans returns are lowered by 1%.

Technically and on the process level Smava functions as promised.

Borrower’s viewpoint

Provided the borrower has a credit grade of at least ‘H’ (95% of the German population have credit grades between ‘A’ and ‘H’ so about 5% are excluded) and he has a sufficient income, chances for obtaining a loan through Smava are good. About two third of the listings were funded. The fee of 1% of the loan amount that Smava charges borrowers is low.

Marketplace development

Smava’s growth has picked up in the last month (see chart).


(Source: smava loan stats, Wiseclerk.com, 03-21-08)

So far Smava has not reached a broad appeal. While press release state 25,000 registered users, only 650 have invested money and roughly 450 wrote a loan listing. Looking at the distribution of lenders by amount invested, the top 50 Smava lenders funded about 700,000 Euro (or about 40% of total loan volume). Currently lenders are limited to a maximum of 25,000 Euro investment.

Attracting new borrowers has been the bottleneck for Smava’s growth so far. An increase of money supply by lenders with no matching demacnd increase led to slightly falling average interest rates in the last weeks (see chart). Before rates increased, especially for credit grade ‘F’ caused by sharpened risk awareness following several late payments.


(Source: smava loan statistic, Wiseclerk.com, 03-21-08)

Smava charges borrowers a fee of 1% of the loan amount. There are no fees for lenders. Total revenue of Smava in the first year therefore was 17,000 Euro (1% von 1.7 million Euro). Prosper, Lendingclub and Zopa have much bigger p2p lending volumes per year. Boober‘s loan volume in the Netherlands is about the same size as Smava’s but in a market with only one fifth the size (by inhabitants). First priority of Smava must be to accelerate growth.

Boober director Guus Drijver leaves company

wiseclerk

Guus Drijver, director of Dutch p2p lending service Boober.nl, will leave the company on April 1st. The new director Ilse Smulders cited different opinions on how to further develop the company as cause for the departure.
According to unconfirmed blog sources, Boober failed to reach the forecast numbers in 2007.

Unrelated: Recently Boober searched to fill the position 'Financial Manager'.

Zopa loan volume

wiseclerk 2 Comments

As there is no Zopa loan statistics site, it is not possible to track the Zopa growth daily. You have to wait for the instances where Zopa announces milestones.

Today Zopa – in an announcement to celebrate it's third birthday, said:

Since we launched in March 2005, £20 million in unsecured personal loans have been arranged at Zopa in the UK. More recently growth has been boosted by the global credit crunch which is driving unprecedented demand for P2P personal loans as banks become less competitive and tighten their lending criteria. All of this has also pushed up returns to Zopa lenders to an all time high.

At the current exchange rate that is approx. 40 million US$.

 

Zopa to launch in Japan

wiseclerk

P2P lending service Zopa – already present in the US, the UK and Italy announced it will launch in Japan.

Zopa Japan will be led by Chairman Takashi Yoneda and Managing Director Tatsuya Kuboi, both highly experienced and distinguished technology-based financial services professionals. Zopa Japan further strengthens Zopa´s position as the leader in its field. Zopa will continue its track record of firsts, as it will be the first social finance offering in Japan.

Takashi Yoneda, Zopa Japan´s Chairman, says: "We are very pleased to be part of the expanding Zopa worldwide operations, and we look forward to offering innovative financial solutions for the Japanese market. We will draw from the Zopa´s experience across the globe and introduce a social lending platform that is tailored for the Japanese culture and regulatory environment

Zopa tomorrow celebrates it's third birthday – it launched in March 2005 in the UK market. 

Other sources: Techcrunch UK