Friday, January 2, 2009 - 01/01/09 late loan stats update

Here's the January 1, 2009 update to to my late loan statistics charts.

These charts show statistics for the performance of all loans. Each curve represents the set of loans that were created in one calendar month. The vertical axis is the fraction of those loans that have "gone bad", in other words are 1 month late or worse (up to and including default). The horizontal axis is the observation date. All data comes from's performance web page.

Click on the chart to see a larger clearer version.

Here's a chart of the same data in which each curve has been slid to the left to a common origin. The horizontal axis is now days since loan origination month.

Explanation of methodology can be found in my prior postings in this blog, and in forum discussions on the old prosper forum, now archived at

While the press bemoans the credit crisis, there is no such event visible in this data. There's simply nothing special about the last few months. loans continue to go bad at about the same rate as in earlier months. "Credit crisis" is no excuse. These loans simply form a very low quality portfolio, going bad at around 20% per year.

Loans originated after late 2007 look a little better, because Prosper raised the credit score cutoff, chopping off the worst borrowers, and thereby raising the average quality of the portfolio.

Meanwhile, there has been no improvement's collections activities. This appears to be a competely dead area, with no effort being expended on lender's behalf. In fact, Prosper has removed the collection statistics of their main collection agency Amsher from the Prosper web site. Lenders can no longer directly observe how bad collections are.

I'm sorry to notice that Prosper has removed the ROI calculation from their performance stats web page. Unfortunate, because it was the best ROI calculation around for these loans. It actually used the cash flows, instead of doing a hack calculation using "average loan age" as the 3rd party web sites do. My guess is that Prosper's damn lawyers once again advised them to provide even less service to their customer base (of lenders). Its a shame.

The best discussion among lenders takes place on


  1. Thanks for the update, Fred93!

    Your closing comment strikes me as the conflict between what Prosper doesn't want to disclose and what the SEC would consider part of the basic disclosure that they would want available to investors ("purchasers of the Notes", a.k.a., "Lenders"). I don't see how any of this could go well for Prosper Marketplace, Inc.

  2. Yes, it appears as though collection activity has completely stopped. Makes me wonder what Lenders are getting for their lender fees.

  3. I just would like to say "thanks" - I'm one of the loan recipients whos loans HAVEN'T been late. Fred93 helped me with my first loan back in June 2006 (as the lender, "Crossborder" [1st loan that helped me start my growth was paid off]). Despite economic challenges, some of us still do our best to continue to pay on-time and fulfill our commitments....

    I continue to learn by reading your blog, and -- the views on both have been a rich source of education for me (as a start-up) through the years. I'll keep reading - thanks!

  4. I tried to access the but what came up was a rather cryptic message saying that the site was down. Is the site down permanently?

  5. is up. They're having a little trouble with some of the software that runs the site, so there is a short message on the home page, and three links you can click on. Just click on the "forum" link to get to the discussion forum.

    Be sure you type the "S" in