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


  1. This guy on org told us a story about following a drunk driver once. Every time the driver swerved into other lanes he honked and flashed his lights thus helping the person stay in a straight line and reducing the danger to people around him. Eventually the cops came and stopped this person from wreckless behaviour. Your journey with prosper reminds me of this person and his experience that night.

  2. Hi Fred,
    Thanks for posting this information. I've been looking at your posts for a few months now and waiting to see if my proper loans start to follow these curves.

    I made seven small loans ($400 total) between Dec. 07 and Feb. 08 really as an experiment to see if I could make any money. To date, 2 of 7 loans were paid in full and the other 5 are current. Dumb luck? Or just not enough passage of time?

  3. I made the same assumptions, thinking E-Loan was an excellent reference.

  4. Why don't you ask Bernake to buy the loans for 100% of face value?

  5. This is going to, yet again, ruin our chances of getting anyone to lend to us. We are honest, hard working Americans and have put our children through college without student loans but, that's another story.
    We want to buy a home here in California now that the craziness is bottoming out and our children are educated and back on their feet. But, because we had to use our credit cards during our son's tours in Iraq and Afganistan AND to bring him and his family home to California after being screwed yet again by the military AND having to pay higher fees for the private Nursing school our daughter had to attend. (Because we are white and American citizens and no programs help white or American citizens these days) We need a consolidation loan first before we can get the house and then tie in the consolidation.
    I am tired of being screwed because of what a handfull of crooks have done. I have found that most of the crooks in the housing situation were Illegal immigrants from south of the boarder and India who couldn't afford an outhouse let alone a half million dollar mansion, yet, there they were and here we are with college degrees and 100K+ jobs, good credit, never late, no bankruptcies and we can't get a house. OR a loan. Go figure!!!!!

  6. >>no programs help white or American citizens

    Welcome to Obama's America.

  7. Have you given up on your reports, Fred?