Last night we released some big changes to the Prosper site.

Nationwide lending at 36% interest rate cap

After a couple years of turning away Nevadans completely and forcing Pennsylvanians to set their interest rates below 6%, we are opening up the marketplace to borrowers in almost every state of the union, with a marketplace-wide rate cap of 36%. Learn more on our new legal compliance page.

Minimum instant transfer amount lowered to $50

For lenders who install Prosper’s Facebook application, we’ve lowered the minimum transfer requirement from $500 to $50. Additionally, the maximum instant transfer amount has been raised to 50% of your active loan value.

What this means is that with as little as $100 in active loans, you can instant transfer $50 to Prosper for that “must have” loan that you just came across.

Prosper’s Facebook application keeps your Facebook friends updated on your Prosper lending activity, and is a great way to share Prosper with your friends and family.

Second loan criteria updated

The requirements for borrowers who wish to take a second loan on Prosper have changed. The new rules for whether a borrower is eligible for a second loan are dependent on the borrower’s credit grade, and the factors taken into consideration include time since last loan originated, consecutive months of on-time payments, and whether the borrower’s credit grade has dropped or not.

See the full list of eligibility requirements.

Lender servicing fee for AA changed to 1% per annum

The lender annual servicing fee for AA borrowers has changed to 1%. Listings created on or after April 15 will be subject to this new servicing fee. Learn more about fees and charges.

Listing durations standardized at 7 days

Along with some other changes to the listing creation process, we have fixed the duration of all new listings to 7 days. This change is part of a larger effort to simplify the listing creating process, and help more borrowers create fundable listings.

Your tax forms are right here

If you are a lender who owned loans in 2007 or earlier, and are eligible to receive a Consolidated Form 1099 from Prosper, your 1099 is available from the “My Account > Statements” page. Learn more about tax reporting.

There are many other changes under the covers, and some not-so under the covers. We hope you enjoy the changes, and look forward to getting your feedback.  Please leave a comment.

—

Andrew is a Product Manager at Prosper.

It’s been reported that the median amount of credit card debt owed by American households is around $1,900, which is not bad at all. But there are 11% of American households that carry at least $8,000 in debt, a pretty heavy load to bear. Check out these statistics on those who struggle with credit card debt:

• More than a third — 36% — of those who owe more than $10,000 on their cards have household incomes under $50,000.
• 13% who owe that much have household incomes under $30,000.
• The percentage of disposable income used to pay debts is still near record highs.
• The median value of total outstanding debt owed by households rose 9.6% between 1998 and 2001.
• Bankruptcies set another record in 2003, with 1.6 million personal filings, the American Bankruptcy Institute reports.

For many, it’s a big challenge to avoid accumulating debt. I had a friend who once confided that she had $20,000 in debt while she made $18,000 a year, but didn’t seem too fazed about it. Part of the problem here seems to be that some of us do live with limited income, and find it difficult to pay for day-to-day living expenses. But we can also attribute our personal debt problems to not taking the debt issue that seriously, or to simply spending more than necessary.

Putting the cap on a spiraling debt problem does take some amount of discipline, self-control, patience and work, and by doing so, such problems can be reversed. In my mind, the best way out of trouble is to take the bull by the horns and tackle the problem head on. So why not try to oust your debt as aggressively as possible?

Here are a few tips on how to fight off debt aggressively (and perhaps quickly as well)!

#1 Cut your interest rate: talk to your credit card company.
How about giving your credit card company a call and seeing if you can be granted a lower rate on your card? It may be worth a shot. The credit card companies I’ve had have always been very cooperative, waiving fees and penalties I’ve incurred on occasion. This is how being a loyal customer can be a plus.

#2 Cut your interest rate: transfer your balance to a low-rate card.
Take advantage of special offers by credit cards that give you low to 0% rates. However, read the fine print and check on the transfer fees to make sure that doing a transfer makes sense. Avoid predatory offers that can get you into unexpected trouble. And most importantly, make sure you keep track of when the teaser rate offer expires as rates may jack up once the intro period is over. You’re in great shape if you can manage to pay down your debt before the low rate period expires. [Editor's Note: Applying for a debt consolidation loan from Prosper may also reduce your interest rate.]

#3 Apply more of your money against your debt.
Before you make any more purchases or think about building an emergency fund or investing in the stock market, pay down your debt first. Pay more than the minimum to chip at the principal. When you send off your payment, make sure to indicate that the extra payment should be applied to the principal, which will enable you to bring down your balance faster.

#4 Work on a debt repayment and consolidation plan.
If you can do this yourself, you can save yourself some money. All it takes is some determination and dedication to your goal of wiping away your debt. Start by paying down the smallest bills first in order to get the psychological boost of retiring your debts early. But for the most efficient way to challenge your debt, pay down the debt with the highest rates first, even if it may take longer.

#5 Hire a loan consolidator or debt negotiator.
When debt becomes overwhelming, it’s easy to feel paralyzed and unable to take action. In this case, hiring a debt counselor may help. There are financial professionals out there who have experience in consolidating loans, negotiating your debt for you or even helping you create a payment plan that will keep you on track with your bill payments. They may be able to negotiate better terms for your credit card debt, which can potentially reduce what you owe by a significant amount — a 60% to 80% cut in your debt is not entirely impossible to work out.

~ooOoo~

By applying these strategies, you may just be surprised by how quickly your debt diminishes; it may take a few years but by staying focused, making your financial goals a priority, and executing your anti-debt program, all the misery of debt can soon become a distant memory.

—

The Silicon Valley Blogger (SVB for short) is behind the The Digerati Life, a blog that covers personal finance, business, investment and real estate topics along with the occasional Silicon Valley tech story sprinkled in. SVB is a married mother of two young kids who juggles a nine to five job in the IT industry along with raising a family and various entrepreneurial pursuits.

I’ve just returned from my monthly visit to AmSher.  I’m very impressed with how quickly they have come up to speed on working Prosper accounts.  With three business days left in the month, we have already achieved our second best month ever in terms of total dollars collected, dollars collected per collection account and percent cured.  For example, through 3/26, we had collected $50.58 per collection account.  Those who were at Prosper Days may remember that the record was set in January at $52.27.  My expectation is that we should have a record setting month in at least two of the three metrics.

I’m even more encouraged in that I am confident that next month will be better than this month.  We’re still working through some system interface issues, but have most of the kinks worked out.  We did find that implementing two commission structures for AmSher would require significant system work on our end.  As such, we will be handling the difference in commissions by doing periodic refunds to lenders.  The first refund should be posted by the end of April.

On the legal test, the vast majority of the cases have been sent to the courts.  Since this is a new asset class, the law firm did not have the pleadings set up in their automation system and are having to create each complaint manually.  Of the 66 accounts, there are five cases still in the production stage.  Additionally, there are four disputes that arose in the last three weeks which we have to answer before filing suit.  In next month’s update, I’ll have new figures on the number on whom we’ve obtained service — and hoping the first flood of post filing payments.

We will be doing another debt sale in the future.  We are waiting to see if AmSher can shake some money out of the older accounts.  While not a large number, AmSher has secured payments from 12 accounts that were at 121+ days in approximately six weeks.  This compares with an average of 2.2 payments per month previously.  A second reason for waiting is the current large amount of “inventory” in the debt market.  Basically the market is swamped by the large issuers scrambling to make quarter end numbers.

—

Doug Fuller is the Vice President of Operations at Prosper. 

This is a guest post from Prosper Lender David Makes Cents.

I was just reading an article that I found on Stumble Upon that made me mad! Well ok not really mad because I am a pretty mellow person, but lets just say I didn’t agree with it. The name of their post is pretty much the opposite of mine it was: Why I think P2p lending is a bad idea. So in this post I will try to prove to you otherwise and tell you about my positive experience with p2p lending sites.

Quick p2p history

Ok, so if you haven’t heard of p2p lending I am going to try to catch you up real fast because this is not really the point of the post. Peer to Peer (p2p) lending is essentially people with a little extra cash helping out those who need a little extra cash by giving them better interest rates than they would other wise get from a credit card.

Why P2P lending helps borrowers.

1. Borrowers can get credit that they would not have otherwise been able to get. With the credit crunch as it is, it is becoming increasingly hard to obtain credit. Many ordinary folks with good to decent credit are no longer able to obtain credit. I know you may be saying to yourself, “Credit is bad, these people would be better off without credit.” Well I disagree. Currently the market is looking pretty rough, some people would not be able to put food on their table without credit. If enough people had credit, the economy would get a boost and then they would have jobs to be able to pay back their loans.
2. Borrowers can get lower rates than they would from credit cards. Even though the Fed has been dropping rates left and right, credit card rates have stayed high. This is due to a dry up of credit. It is getting hard for common people to get credit anymore. Prosper and other p2p lending sites’ rates have been holding steady. This is because there is still around the same supply of people lending on these sites and the popularity of p2p throughout the blogosphere.

Why P2P lending helps lenders

1. Much Better rates! Right now the stock market is way down. Most analysts predict it to be going down or making small gains for the next few years. Investors need a place to put their money. P2P lending is an excellent place to put this. If you invest in the people with decent credit scores, you will get pretty good rates of return.
2. Good diversification. With most of the major p2p lending sites like Prosper , you can invest as little as $50 per person. If you are investing a few thousand dollars, you can have your money spread out amongst 100s of people. All the major investors praise diversification.
3. Helping others. This is a big part of the reason I lend on p2p sites. I mainly bid on loans that are looking for debt consolidation. With these loans, borrowers are allowed to pay off all their credit cards and put all of their debt into one single, lower payment. The rates are always lower than they would to be to the credit card banks. I am letting them keep more of their own money.

Summary

One of the points that the author of the post I am responding to said was that the only reason people are promoting p2p lending is for referrals. Well in this post I HAVE USED NO REFERRAL LINKS. I would hate to be discredited by something as stupid as that. I have been investing in Prosper for a while now and have no defaults or late payments. Every one I have lent to has paid me back on time. I am currently putting another $1k into my account because I like it so much

The only reason I would put in the referring link is so that potential new lenders could receive the $25 dollar bonus that Prosper offers if they want to sign up. I am not going to put a link in my post but I will have a banner on my sidebar that is an affiliate link. If you read this and are interested in signing up consider finding a referral banner to sign up so that you will receive the $25 bonus.

*If you liked this post please check out this and other posts at http://www.davidmakescents.com

Market Commentary By Prosper Co-founder and Chief Executive Officer, Chris Larsen

As we have previously reported, Prosper’s mix of “well priced” loans – loans with an attractive risk-return tradeoff – has dramatically changed from the same period last year with approximately a 200% increase in the percentage of “well priced” loans and a six-fold decrease in “low priced” loans – loans with an unattractive risk-return tradeoff. Part of this positive trend is attributable to the introduction of portfolio plans and performance guidance from the Prosper Marketplace – changes introduced last October. These changes continue to drive better overall performance of the market.

In March we saw further evidence of this with portfolio plan performance improving. For example, the Conservative portfolio plan – one of four model portfolio plans Prosper has provided as templates that can be used by lenders – consists of five credit slices. Looking at all the credit slices across all four plans, 18 of 21 slices improved or remained constant. This is quite positive considering the continuing credit crunch occurring in so many traditional financial markets and should lead to both better rates for borrowers and better performance for lenders.

We are also seeing a healthy start of custom portfolio plans, which lenders can create from scratch or modify from an existing Prosper model plan. These plans can be easily shared with friends or family. In March, approximately 1,800 custom plans were created that spawned over 18,000 bids.

Definitions

Portfolio Plans: A portfolio plan is an automatic bidding tool that enables lenders to create their own bidding strategies and have bids placed automatically on listings that match the lender’s desired lending criteria. Prosper lenders can create portfolio plans consisting of multiple slices of credit attributes.

Since Inception: November 1, 2005 through March 31, 2008. Prosper’s by invitation only “friends and family” launch began on November 1, 2005 and Prosper launched to the general public on February 13, 2006.

2008 Year-to-Date: January 1, 2008 through March 31, 2008.

2007 Year-to-Date: January 1, 2007 through March 31, 2007.

Prosper Select Index: The Prosper Select Index return is the estimated average annual return on principal, based on actual delinquency performance to date. The Prosper Select Index includes AA - E credit grade loans for borrowers whose credit reports at the time of application indicated zero current delinquencies, three or fewer credit inquiries, and a debt-to-income ratio of 40 percent or less. The annual return period reflects loans originated in the twelve month period ending one month prior to the observation date of March 31, 2008. Prime Select includes AA and A credit grade loans (credit scores of 720+). Near Prime Select includes B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime Select includes E credit grade loans (credit scores between 560 and 599).

Average Borrower Rates: Average Borrower Rates are the weighted average borrower rates on Prosper Select Index loans with loan amounts between $5,000 and $10,000. Rates shown are interest rates, not annual percentage rates.

Mix of Funded Borrowers: Prime includes all AA and A credit grade loans (credit scores of 720+). Near Prime includes all B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime includes all E and HR credit grade loans (credit scores below 600).

N/A: = Not available; no loans met these criteria.