Friday, October 31, 2008

Prosper.com - the lawsuits are not going well

In January of this year, Prosper initiated a test program to bring suit against a small set of nonpaying borrowers. 66 very late loans were selected, and Prosper turned these loans over to the law firm of Hunt & Henriques to go after the nonpayers, and try to recover some funds.

Almost 10 months have passed, so it is reasonable to ask the status of the cases in this test program. Unfortunately and amazingly, Prosper does not report any of this status to the lenders whose money is invested in these loans. (They told us they would report to lenders monthly, but they have not.)

I wrote about this earlier here.

Lets review the timeline:

01/15/08 -- Prosper sent many lenders an email message asking them to "opt in" to this project to allow Prosper to sue borrowers on the lenders behalf. I opted in.

02/17/08 -- Prosper repurchased the loans from lenders, to simplify court proceedings. Prosper didn't pay anything to the folks who opted in. Payment will come later, depending on success in the lawsuits.

02/25/08 -- First suit filed. In Riverside county. Prosper vs Cline
04/08 -- Lots more suits filed.

So its now >6 months after the suits were filed. Its time to see what happened.

Although Prosper doesn't tell us anything about the status of these cases, we can look some of them up on the public web sites of various courts. All 66 cases were in California, and several large California counties have excellent web sites that provide status of civil cases. I've visited these court websites, and retrieved status of each case I can see. I've simplified the legal language. If you want to see the details you can visit the court web sites and retrieve the same information directly from the source.

Los Angeles Superior Court
Case Number: 08C00921
PROSPER MARKETPLACE, INC. VS. BROWN, HOLLY
Case filed 2/25/08.
Proof that summons was served on Holly Brown filed on 4/25/08.
Case dismissed 5/12/08. Prosper lost.

Case Number: 08C01750
PROSPER MARKETPLACE, INC. VS. RABOTEAUX, VALENTINO
Case filed 4/21/08.
Summons was apparently never served.
Case dismissed 10/10/08. Prosper lost.

Case Number: 08E04908
PROSPER MARKETPLACE INC. VS WEST, JAMES
Case filed 4/28/08.
Summons was apparently never served.
Case dismissed 10/16/08. Prosper lost.

Case Number: 08C01411
PROSPER MARKETPLACE, INC. VS. BARBOZA, RICARDO
Case filed 4/01/08.
No indication that summons was ever served.
Case dismissed 9/24/08. Prosper lost.

Case Number: 08C01437
PROSPER MARKETPLACE INC. VS. MOFFETT, CRYSTAL
Case filed 4/01/08.
Summons served on Robert Moffett. Proof of service filed 5/8/08.
On 8/11/08 the court clerk rejected Prosper's request for summary judgement. Sounds like some piece of documentation was missing from Prosper's request. I presume they'll try again.
In process.

Case Number: BC388361
PROSPER MARKETPLACE INC VS SHI LI PARK
Case filed 4/02/08.
Summons served and proof of service filed 6/19/08.
Plaintiff (prosper) asked for default judgement on 7/16/08.
Proceeding held on 10/29/08, and "continued" to some future date.
In process.

Case Number: 08K08483
PROSPER MARKETPLACE INC VS COLLET, LOUIS
Case filed 4/02/08.
No indication summons ever served on defendant.
Case dismissed 10/27/08. Prosper lost.


Case Number: 08K08484
PROSPER MARKETPLACE INC VS RIVERA, ROBERT
Case filed 4/02/08.
Summons served and proof of service filed on 7/07/08.
Court clerk rejected Prosper's request for default judgement 9/23/08. Doesn't say why. I presume this is another documentation problem, and that Prosper will resubmit, although a month has gone by and they have apparently not yet done so. In process.

Case Number: 08C01110
PROSPER MARKETPLACE, INC VS. CARR, CHRISTOPHER
Case filed 4/01/08.
Proof of service filed 7/07/08.
Court entered judgement against Carr for PRINCIPAL $ 13478.11 . ATTORNEY FEES $00.00 . INTEREST $ 2692.39 . COSTS $ 350.00 . TOTAL $16,520.50 .
Writ of execution issued to Los Angeles County on behalf of Prosper 9/12/08. (Legal thing telling law enforcement that you can take assets.) Prosper won!

Case Number: 08C01456
PROSPER MARKETPLACE VS. WOKE, CHINYERE
Case filed 4/01/08.
Proof of service filed 10/7/08.
In process.

Case Number: 08C01458
PROSPER MARKETPLACE VS. DELGADO, CARLOS
Case filed 4/01/08.
Proof of service filed 5/19/08.
The court clerk rejected prosper's paperwork on 9/08/08. The clerk's writing is terse, and best I can figure it seems that he believes that prosper filled out the paperwork wrong, asking for more interest than they were due.
The court clerk again rejected prosper's paperwork on 10/30/08, this time he seems to be complainng that some declaration was missing.
In process.

Case Number: 08C01457
PROSPER MARKETPLACE VS. DAVIS, DIANA
Case filed 4/01/08.
Proof of service filed 7/02/08.
Prosper asked for default judgement on 8/11/08.
Court clerk rejected prosper's paperwork on 9/08/08, complaining about wrong interest rate.
Prosper filed again on 10/01/08.
Status conference 10/06/08, continued to 4/14/09. I don't quite understand that, but there are no details available.
In process (I think).

Orange County Court
30-2008-00065226-CL-CL-NJC PROSPER MARKETPLACE, INC. vs Mario Villanueva
Case filed 4/24/08.
Prosper filed proof of service of summons on 7/29/08.
Prosper requested dismissal of the case on 8/12/08.
Case dismissed 8/12/08. Prosper lost.

30-2008-00058684-CL-CL-HLH PROSPER MARKETPLACE, INC. vs Brandi Fitzgerald
Case filed 04/01/08.
No proof of service yet. If they haven't been able to serve the summons in 7 months, that's lookin' bad. Means they can't find the person. In process, but lookin' bad.

30-2008-00058438-CL-CL-NJC PROSPER MARKETPLACE, INC. vs Josephine Sharaba
Case filed 4/01/08.
No proof of service yet.
In process, but lookin' bad.

30-2008-00058436-CL-CL-NJC PROSPER MARKETPLACE, INC. vs Jermaine Massey
Case filed 4/01/08.
Summons served and proof of service filed 7/11/08.
Prosper requested default judgement on 8/12/08.
Court clerk rejected Prosper's paperwork on 8/19/08. Didn't give a reason.
In process.

30-2008-00058426-CL-CL-HLH PROSPER MARKETPLACE INC vs Teresita Spreen
Case filed 4/01/08.
No proof of service yet.
In process, but lookin' bad.

30-2008-00050023-CL-CL-NJC PROSPER MARKETPLACE, INC. vs Karen Rozier
Case filed 2/26/08.
Prosper filed proof of service "substitute" on 5/6/08. I don't know what that is.
Karen Rozier filed requests for waiver of fees and an answer to complaint on 5/14/08.
Prosper filed proof of service on 5/27/08.
In process.

So here are the totals, interpreting the facts that have been made public, of the cases that are easily visible:

Prosper won: 1 case
In process: 8 cases

In process, but lookin' bad: 3 cases

Prosper lost: 6 cases


Now it is entirely possible some of those "case dismissed" are not actually losses, but cases where the borrower coughed up money and got prosper to drop the case. However note that none of them say they were "settled". They just say "dismissed". It is just as likely that these are cases where Prosper discovered they were going after the wrong person, perhaps discovering that there was identity theft involved. Lenders have great interest in the possibility of identity theft, because Prosper has guaranteed our investments against identity theft, and in such cases, must pay off. Note that in several cases Prosper has been unable to serve summons. In other words they couldn't find the borrower to hand him a summons. Might mean that the borrower skipped town, but it might also indicate identity theft. We just don't know.

We just don't know, because Prosper has not made any of this transparent .

Not only has Prosper not told us investors/lenders the status or given us any information about these cases. Nine months after promising lenders a monthly financial accounting for these cases, it has delivered none.

I propose a more communicative approach. Prosper should keep Investors/lenders appraised of the status of their investments, and the actions prosper is taking on investors/lenders behalf.

The best discussion among prosper lenders is found at www.prospers.org . See you there.

7 comments:

  1. Please consider an RSS feed so I can keep up with your blog.

    ReplyDelete
  2. I believe you can get an RSS feed using the following URL:
    http://fred93blog.blogspot.com/feeds/posts/default?alt=rss

    ReplyDelete
  3. Good golly! I borrowed on Prosper, but would never consider letting my loan go bad. Having said that - it seems like walking away from a Prosper loan is a low risk situation for borrowers. Very uncool.

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  4. Just because the case was dismissed, doesn't mean Prosper lost.

    If the deadbeat voluntarily agrees to repay the money, the judge will often dismiss the case. It does not mean that the deadbeat is off the hook.

    A true loss would be entered as a "judgment for {the defendant} against {Prosper}" or some such.

    That said, since Prosper is not saying anything; we can assume the worst -- Prosper either really did lose or these are ID theft cases where Prosper is ignoring its "guarantee".

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  5. I think we need not look further than the confusing complexity in the loan process (as I outlined here) to see that it might be relatively simple to create such a large amount of confusion that the case might be dismissed.

    ReplyDelete
  6. I have 9 loans with the status "Charge-off
    In collections" and 1 with "Charge-off
    Discharged in BK". Instead of Prosper asking for the full amount, I would rather that allow the Collections company to offer the borrower a lower monthly payment plan than have them just not pay.

    ReplyDelete