Thursday, March 5, 2009 03/01/09 - late loan stats update

Here's the March 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

A milestone was reached this month when one cohort, the loans issued in October '06, have hit 40% bad (ie 1 month late or worse). Well actually only 39.97%, but that rounds to 40%.

Oh my god. How can anyone make money off loans that go bad at this rate? Prosper never implemented proper fraud control, collections, legal practices, etc required to operate a successful lending business. How could that have happened?

I now believe my trust in's founder Chris Larsen was misplaced. I based that trust on the fact that he had created the successful (I thought) loan company E-loan. Now I realize that E-loan wasn't really a loan company at all. It was yet another marketing front, part of the giant machine that gathered up borrowers and stuffed them into securitized loan packages, to be owned by someone else. Somebody else's problem. Who cares if they pay the money back. E-loan was part of the problem that drove our economy to disaster.

After buying E-loan from Larsen, Banco Popular gave up and shut it down. It is now just another chapter in the history of the mortgage fiasco.

The best discussion among P2P and lenders always found on