Thursday, August 31, 2006

A Good Listing on That You Should Check Out Immediately

This loan request has a fixed rate of 24.9% on a D Rated individual. It will likely get funded with less than 3 hrs of total list time.

Loan 35836

The person has a military background and is currently located at an Air Force Base (AFB). The person requesting the loan is not clear on his employment and pay. It can only be inferred that:

- If the person has been in the military for 16.5yrs, then they likely have a minimum household income of 40k with full medical benefits for his family of 5.

By the way, "USAA" is just an insurance company. He notes that he's been a member of USAA for 10 years. It's not that big of a deal; however, USAA offers alot of good financial services at decent rates.

Warning: I don't know this person any more than you. Bid at your own risk.

Sunday, August 27, 2006

I Just Joined My First Group on

Previously, I blogged about the formation of my own group on I have since changed my mind due to my work schedule w/ the Navy. Instead of leading a group, i've joined PsychDoc's group.

Unlike others, PsychDoc is also a lender. I've seen so many other group leaders manage a group and collect group rewards but do very little bidding.

Joining his group was an easy decision for me since 24% of all loans i've funded to date are sponsored by his group (a relative majority of my loan portfolio).

Thursday, August 24, 2006

Ten Ideas to Make Better

I've made several prior posts on this topic. Here's a few more ideas.

(1) Enable lenders to have a watch list. Much like Ebay, a lender can select particular borrowers from their searches and save them for a temporary watch list. This is a useful idea in that people don't always have money in's ZERO PERCENT INTEREST RATE ACCOUNTS. They need a way to more easily track listings they prefer between their deposits.

(2) Add a "bid now" feature that allows bidders to bid based on a line of credit or margin account. would make money in margin interest between the time of the actual bid and the time that funds are deposited w/

(3) Modify the minimum $ amount required for fund transfers. Given that people are frequently getting interest payments deposited that don't add up to $50, people need a way to fund accounts with the exact amount required to supplement interest income in order to meet minimum bid requirements... For example, if somebody has $7 in interest income, then they may only want to deposit $43. At a minimum, should drop the minimum for incoming transfers to $25 and match their minimum requirement for outbound transfers.

(4) Allow people to set up a variable universal life plans. Prosper could make a little more money in fees and people could get life insurance coupled with self directed management of their tax sheltered money. Generally, variable universal life plans are bad investments; however, this might be a good medium if Prosper keeps the fees downs. Additionally, if doesn't go public via an IPO, they could get bought out or merge with an insurance company who wants to test out this idea and diversify their income streams.

(5) Get the bank transfer time down to 2-4 days as advertised. As it stands, Prosper is falsely advertising the observed time periods for bank transfers.

(6) Offer jobs to lenders to run "PROSPER MUTUAL FUNDS." Prosper would have to:
a) Observe over time those lenders that have the best lending track record
b) Offer a interview opportunity to the lender. If well-suited, based on interview, resume and track record, offer the person a job.
c) Prosper would then share the new income stream from Prosper Mutual Funds with the actual money manager.
d) Money manager employment would be conditional on maintaining a return track record at a predetermined rate above averages.

Some ideas from my prior posts:

(8) Add IRA options.

(9) Advertise on radio and TV. Right now people learn about it via word of mouth or free advertising (newspaper and magazine articles).


Wednesday, August 23, 2006



LOAN #33657

The person requesting funds is willing to pay lenders a fixed rate of 18% (auto fund loan request). She's a librarian and lives in Houston, TX. Her account is not yet verified; however, i'm willing to wait for verification.

Disclaimer: I don't know this borrower any more than you... bid at your own risk.

A Freaky/Funky Quirk With Money Transfers

I just transferred some money into my account. I then left my computer to do something and came back to the prosper fund transfer complete screen and refreshed it.

I typically refresh different prosper screens every now and then after i've been working other applications just to check for new messages and prevent being logged out.

In this case, I found that automatically transferred a duplicate amount of money. I found this odd b/c it did this without me ever clicking a second time on the "I agree with the authorization to debit account above."

User beware... Good luck prospering.

Tuesday, August 22, 2006

Adapting the "I Buy Ugly Houses" Strategy to Lending

Have you ever seen the sign "I Buy Ugly Houses?" The signs actually look a little funny. Anyways, there's a way to adapt this strategy to prosper lending.

Find those loan requests that match your desired lending profile (credit risk, lender rate, etc), but have very little or no loan request description.

What you then have is something similar to a house w/ good bones but a less than desirable loan request description that will get past over by others.

Once you find one of these, you've found a loan request that will probably give you a 0.5-3% (or higher) interest rate than comparable "nice looking" loan requests. What you then have to do is send one or two emails to get answers to the items you would have otherwise been looking for in the "nice looking" loan requests.

Chances are, a good portion will come back w/ decent answers... and voila, now you have a loan to bid on that has a good risk vs. reward for you, the lender.

Sunday, August 20, 2006 Borrowers: A Good Example for Pictures to Use at the Top of Your Loan Request

Take a look at this listing. The person is requesting a moderate sum and it's now over 4 days from closing.

The person writing this add could have done a slightly better job writing the "description" section. However, he did a fabulous job with what people see first (his pictures). All of the pictures are tastefully done and include his whole family. Additionally, he added a black and white picture to the mix.

I think that his picture selection alone will get him 0.5 to 1.25% better interest rate on his loan request.

I suspect his loan will close at a rate around 16%... A pretty good rate of a "D" credit rated individual.

Saturday, August 19, 2006

Ten Lending Tips

Here's a run down of a few tips I think the beginner should consider when bidding on loans at

(1) Let others do the dirty work... Don't bid on non-automatic funding loans greater than 4 days from the loans closing date. You ask why? Picture yourself with your typically bidding increment (only enough for one loan). You find a loan that you like at 7 days from closing... you bid on it. But you then find an even better loan that's 2 days from closing. Unfortunately, most prosper money transfers take four or more days to complete... And thus, you won't be able to bid on the better loan. Ideally, you would have bid on the loan 2 days from closing, then transferred more money in to bid on the loan closing in 7 days if the interest rate is still to your liking.

(2) Don't keep significant amounts of money in your account. Prosper, hasn't gone out of its way to give you any interest income on your deposits. Don't let them and their partner Wells Fargo make interest off of your funds if you can avoid it. I recommend keeping a minimum of one bidding increment in your account for the weekend. The weekend is the funding dead zone. Prosper doesn't deposit money in accounts during the weekend. This creates what I believe to be one of the few periods where you get less competition bidding on loan applications.

(3) If you're not on a fixed income, don't worry about the loan applicants credit grade. In my opinion, credit grades are static and are an indication of the past, not the future. I think it's best to look at the actual credit characteristics: "debt-to-income ratio (DTI)," "current delinquencies," "delinquencies in last 7 yrs," "public records," and "number inquiries in last 6 months."

I GENERALLY stick with loan applicants with:

a) DTI less than 40%
b) Current delinquencies equal to zero, sometimes one if they have a good explanation
c) number of inquiries in last 6 months less than 7 and prefer those that have 3 or less.

(4) When searching for loans to fund, USE THE ADVANCED search feature, specifically the "auto fill" rates field. I typically use 3 searches.
a) any loan funded to 51%
b) any automatic funding loan with a 13% risk adjusted return, 33% funded and a few other settings
c) a 13.17% risk adjusted return screen, then modify the DTI to read 40%, the "current delinquencies at 0 to 0," and "o to 7 inquiries in last 6 months."

(5) I generally don't recommend bidding on business loans where you feel that the loan interest rate is greater than the owner's profit margin.

(6) I generally prefer to bid on group sponsored loans where the group leader bids on the loan. This can be a good indicator as to whether or not the person who vetted the loan applicant feels that the applicant offers a suitable risk-reward proposition for lenders. Additionally, I had once did an analysis of delinquent loans and found that roughly 75% of delinquent group sponsored loans did not receive a bid by the group's leader.

(7) I personally avoid those loan applicants that plead or ask emphatically for help, are looking for charity or asking in so many words for somebody to bail them out of a particular situation.

(8) Automatic Funding loans are my preference, they tend to be the best for people that don't like keeping their money in's zero % interest bearing accounts. When bidding on these types of loans, recommend you put zero % interest as your minimum interest rate that you'll accept. applies the reverse dutch auction bidding style to these types of loans too. I know it's absurd, but i've been outbid before on an automatic funding loan (fixed interest rate loan), simply because I entered the fixed interest rate and somebody came behind me and underbid the interest rate.

(9) Check out the site called Eric's Credit Community. Some pages take a long time to load; however, you can look at current late loans and lenders portfolios and determine trends where people may have an increased likelihood of paying late and a few other interesting tidbids.

(10) If a borrower has made multiple listings, read all of the prior listings. This seems like common sense. Borrowers may completely change the reason for their loan request between listings or include only in one listing details on their income and delinquencies.

Once you've looked at all the prior postings, don't hesitate to ask questions of the borrower. Frequently, you'll get more information than what you asked for.

Finally, consider checking out the borrower's group leader's website (if they're sponsored by a group and it has a website). These sites sometimes provide even further details that can help you make an informed decision. Here's an example of some group leader commentary.

Thursday, August 17, 2006

Reasons why I bid on my last HR (29%) loan

I just bid on an instant funding loan which has one of the highest interest rates of any loan I've funded to date.

Typically, I won't touch loans that have any "current delinquencies."

Here's the one I bid on: Listing 31250

This lady is persistent and holds one of those very stable jobs (Federal Government). Additionally, the lady's group leader is both bidding on the loan and blogging about the loan applicants financial profile. Here's the group leader's posting about listing 31250.

Thunderbucks Entry

At first glance, everything appears on the up-and-up. I bid my typical cheapskate $50 increment.

Good luck on prosper. Please bid at your own risk. I neither guarantee returns on loans I blog about nor personally know this loan applicant.

If you want, you can look at my prosper portfolio here.

Tuesday, August 15, 2006

My first bid on a "no credit" NC rated individual on

Today, I made my first bid on an individual rated "NC" on NC stands for no credit history.

Here it is: listing #31406

Prior to bidding on this, I've filled 51 other loans. So far, none have been late, and one was paid off early.

Monday, August 07, 2006

A Potentionally Low Risk High Return Prosper Loan Request (Considering Doubling Bid Amount for 1st Time)

This will likely be the first loan I double my bidding increment on. I perceive that it has great potential as a low risk-high reward "" listing.

Loan Listing 28339

My reservations are:

(1) The person requesting the loan has had 10 credit inquiries in the last 6 months.
(2) The person owns California real estate.
(3) The person owns California real estate AND has negative business cash flow YET appears very confident that he'll reach positive cash flow within next 90 days.... Intriguing, perhaps crazy still.

Here's my bidding strategy:

200% of normal bid increment down to 23.25% lender rate
175% of normal bid increment between 23.25 and 21.25% lender rate
150% of normal bid increment between 21.25 and 19.25% lender rate
**normal bid increment on anything else.

So far, I have made 44 loans w/ an average rate of 20%. None of the loans are late in payments. Here's a reasonably close breakdown of my loan portfolio.

My loan portfolio