@Juan: there’s a comment there about how appropriate it is to compare Prosper loans to the S&P.

I then flipped sides and tried it from the borrower side. Everything I was looking for in a listing I made sure I included. I ended up getting $4,999 @ 6.something %

(Don’t worry I was productive with the money. I used part of it as a downpayment on our duplex which is cashflow positive)

Well then it all kind of went down hill. The defaults started speeding up and then the quiet period. I started pulling money out saying I wont invest anymore here, then the quiet period came and went.

Now I want to give it another try because I think the new model will create less risk for lenders. Unfortunately for me I live in Ohio which isnt a licensed state.

So my question is this? Does anyone know the progress of these unliscensed states? I want to get back in the game?

So far I have had 56 loans and 1 default. All others are paying so far. I assure you that my performance is not typical and I should feel “lucky.”

I have my own strategy for picking loans which includes quantitative and qualitative analysis on my part. I have only invested a small amount for now as a “hobby” to see if over time I am a good loan picker. I will invest more if I can see a good return from it. I reinvest all payments I get into new loans.

Prosper is a form of entertainment and a hobby for me. I have the potential make a return on this hobby which is an added bonus. It is not for everyone but if you are truly interested in finance and lending it can be a good fit for some. You won’t get rich off it but it can be a good alternative asset if managed correctly.

- Foo Finance (Bobby)

I had 88 loans through Prosper. NONE of them defaulted for the first 11 months. I’ve now had 23 defaults (26%).

I truly DO hope Lending Tree works better for you than Prosper did for me, but keep your eyes wide open… At 6 months I was bragging to my co-workers about how well I was doing!

“Technically” I wouldn’t have lost anything because I wouldn’t have sold yet. However, if you compare “roughly” the time I made the loans to roughly the average time they were charged off, and compared that to buying/selling an S&P Index fund, yes, you’re correct… I would have lost close to $2,500.

Haha! SEC oversight? Yeah that is one ‘sharp’ agency. Best and brightest, I’m sure.

To date, about 25% of my loans have been charged off due to non-payment and/or bankruptcies. I realize some of this may be due to the current state of the economy, but even Lenders who have been with Prosper from the beginning have said the default rate on loans before the recession were about the same as I experienced. (Ironically, I’ve found the credit score of borrowers seems to be absolutely no indicator of their likelihood of defaulting on the loan!)

Another common complaint among lenders is Prosper’s lack of incentive to pursue late or delinquent payments. As a result, they have a very poor track record of recouping losses for lenders.

To make a long story short, I’m in the process of pulling my money OUT of Prosper. Since loans are for a 3-year term, I have about 1 more year to go. In the end, I will have lost probably between $1K – $2K on a $9K “investment”. The only “bright spot” is that that loss isn’t too bad in the current economy! LOL