A few weeks ago Catherine Muriel, CMO at Prosper announced Prosper TV commercials (Prosper TV Spots) and a new slogan: Let’s bank on each other™.

NetBanker covered the story (Prosper Kicks Off Nationwide Lending with New Slogan and TV/Radio Advertising):

From a branding perspective, I think they are extremely effective, doing a good job communicating the benefits to both borrowers and lenders. And Prosper positions itself as a smart bank alternative without getting overly negative (eg. Lending Tree’s $100-million “When banks compete” campaign in the late 1990s) or going so over the top (think WaMu) [...]

One thing I’m sure of: Prosper did a great job showcasing the ads on their website, including the very Web 2.0 touch of posting “behind the scenes” videos of the TV commercials.

Here are the behind the scenes videos NetBanker is referring to: Behind the Scenes 1 and Behind the Scenes 2.

Other interesting Prosper and Personal Finance recent blog posts…

Loan Chimp liked the nationwide rates (WebBank partnership) so much that the Warm and Fuzzy Index reached it’s highest score ever. (See Loan Chimp in the High ROI Video from Prosper Days 2008.)

Lazy Many goes existential in The Power of The Dream.

brip blap offers 10 Career Quotes and somehow manages to work in Boba Fett and Han of Star Wars.

Cash Money Life said, “No, I Won’t Accept Your Counter Offer” when it was presented after he turned in his resignation due to a lack of career advancement paths in his current position.

GenXFinance offers  Ten Steps To Take When You Are In Financial Trouble.

The Digerati Life reveals How to Increase Your Salary Without Increasing Your Work

Blogging Away Debt is Finishing Up a Not-So-Fun Task - Creating a Will

—

RateLadder is a Prosper lender and has been since July, 2006.  He has a passion for p2p lending.  He owns RateLadder — My Prosper.com Journey and other P2P Lending Adventures, P2P No Bank the P2P Blog Aggregate, and ProProsper — Professional Tools for Prosper Lenders featuring SQL access to Prosper data.

It doesn’t seem that long ago that our CEO Chris Larsen made the announcement at Prosper Days 2007 that Customer Support was coming in house to SF. It’s definitely been a challenging but fun 18 months for our department. We are a close knit team that strives hard to provide the best customer service to our community. As a result, we have built a solid foundation upon which we are continuously looking to improve. It’s no secret that with any start up company things can get pretty hectic. However, I feel management has been extremely supportive in dealing with any issues we’ve presented to them — which in turn only makes for a better user experience for all of you.

I’ve worked in support for several different companies in various industries and working here at Prosper has been one of my best experiences. In other companies I’ve worked at, the customer service departments were treated as outcasts which generated this feeling of irrelevance. Here at Prosper, other departments enjoy hearing our feedback. Seriously, why wouldn’t they? We talk first hand with you, the community. Confused about messaging you get or screens that perplex you? If you’ve emailed or called us about it, then we’ve brought it up to someone who’s listening.  (Contact Customer Support.)

Personally, I’m amazed at the improvements we made in such a short period of time. We could not have achieved this if no one was listening. For those of us that were here in Feb 2007, we now catch ourselves saying “Remember when we had to…” I expect a few months from now I’ll be saying that more and that’ll be music to my ears.

—

Terence Dela Cruz is member of the Prosper Support Team and looks forward to helping Prosper Members on a daily basis.  He highly recommends the Prosper Tutorials.

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

In April, we saw the supply of loan listings with an attractive risk-return tradeoff hit an all time high and approximately double compared to the prior month. At the end of March, the supply of loan listings with an attractive risk-return tradeoff was approximately $5 million; and at the end of April the supply increased to approximately $11 million and has remained at that level into May.

This significant increase in the supply of loan listings with an attractive risk-return tradeoff is attributed to the fact that on April 15 we commenced our business arrangement with WebBank, a Utah-chartered industrial bank. Through our agreement, all loans originated through the Prosper marketplace resulting from listings posted on or after April 15, 2008 are made by WebBank under its bank charter. Prosper provides services to WebBank in connection with the origination of such loans and Prosper services loans made to Prosper borrowers on behalf of registered Prosper lenders who purchase such loans. In effect, this partnership opened the platform to more borrowers, who may have previously been constrained by low state rate caps.

Also in April, we saw the supply of prime borrower listings hit an all time high, accounting for nearly half of all loan listings in terms of dollars requested. Prime borrower originations also reached its record level of 43% of funded loans.

Currently, the significant increased supply of quality listings is providing more attractive bidding opportunities, which is making it easier for lenders to efficiently deploy more money onto the platform.

Mix of Funded Borrowers

Membership and Loan Volume Statistics

Estimated Annual Return on Prosper Select Index

Average Borrower Rates on Prosper Select Loans

Definitions

Attractive Risk-Return Tradeoff: For purposes of this survey release, listings are considered to have attractive returns if, based on historical loan repayment performance of Prosper borrowers with similar characteristics, they are priced sufficiently to compensate lenders for risk. Risk includes both the risk of non-payment by the borrower and other risks associated with people-to-people lending. In general, as the credit quality of the borrower declines, the range of possible returns widens, requiring a larger risk premium to compensate the additional uncertainty. The amount of risk premium required to compensate for a given level of risk is a subjective judgment. The following formula is used by Prosper to determine if a listing is priced adequately to have an attractive risk adjusted return: Maximum Borrower Rate > Risk Free Rate¹ + 3.25% + (Expected Annual Default * 1.5) + Prosper Servicing Fee. All lenders should make their own judgments with respect to what constitutes an adequately priced listing.

¹ Risk Free Rate = 2-year CD national rate on BankRate.

Since Inception: November 1, 2005 through April 30, 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 April 30, 2008.

2007 Year-to-Date: January 1, 2007 through April 30, 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 April 30, 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).

Achieving financial freedom means having enough investment income so that you don’t have to work for a living. When your investment income exceeds your living expenses (including taxes), you no longer need a job to pay your bills. Of course, you don’t have to quit your job once you achieve financial freedom, but you have instead the choice of whether or not you continue to work.

You will also want a margin of safety. If your living expenses are $5,000 a month and you make $5,000 of investment income a month, for example, you have little financial wiggle room if your living expenses spike or your investment income takes a hit. It’s better in such instances to have perhaps $10,000 or more of monthly investment income before submitting your resignation letter.

To achieve your Financial Freedom Day, you need to reduce your living expenses and increase your investment income until your investment income exceeds your living expenses by your desired margin of safety.

Reducing Your Living Expenses

The best way to reduce your living expenses and keep them low is to live well below your means. There are many good suggestions in the Personal Finance Education section of this blog. The idea is to maintain your quality of life while living it in a more frugal manner.

Borrowing money for consumption is considered “bad debt” because it costs you money. Bad debt takes money out of your checking account every month when you make the payments. To get rid of bad debt more quickly, consider a Prosper consolidation loan. By refinancing your debt at a lower interest rate, you will save interest expense. These savings can be used to help buy the income-producing assets you need to increase your investment income.

Increasing Your Investment Income

You investment income must come from a portfolio of income-producing assets. If you need $5,000 of investment income per month (or $60,000 a year), for example, you should work towards building a portfolio worth $1.5 million in order to be able to draw income at a 4% safe withdrawal rate.

If your investment management costs are 1% of your portfolio’s value and inflation is 3% a year, your portfolio needs to earn at least 8% (4% + 1% +3%) a year on average in order to be able to generate the same purchasing power of income on an inflation-adjusted basis.

Diversifying with non-correlated asset classes is important. Although the stock market averages 10% a year over the very long term, its returns also swing wildly on a year-to-year basis. Prosper loans, on the other hand, are correlated with the job market rather than the stock market. Hence, making loans to your fellow Americans is a way to help diversify your portfolio of income-producing assets. But since unsecured loans to people are also risky, it’s important to keep your Prosper portfolio to a small percentage (e.g., less than 5%) of your overall investment portfolio.

The only constant is change. Investment returns change. The inflation rate changes. The economy changes. You need to monitor the financial environment and make adjustments to your investment choices and living conditions as the world changes. This is an area where you need to take full responsibility for the results you get. No one else is going to do it for you.

Borrowing money to buy income-producing assets is considered “good debt” because doing so puts money into your checking account on a regular basis (so long as your investment return is greater than the interest rate on your debt). When you find the right opportunities, consider taking out a business loan on Prosper to be able to take advantage of them. With your good credit and your excellent track record of on-time Prosper loan payments, lenders will want to loan you money and you will find Prosper to be an ongoing source of inexpensive money to fund your wealth-building programs.

Making It Happen

The first decision you need to make is to decide you want to achieve financial freedom. Then commit to making it happen, whether it takes you years or decades to achieve your dream. With your decision and commitment, you will start looking for ways to increase your income, live below your means, and invest the difference. Set up a capital account and add to it the money you save by consolidating your debts with a Prosper loan (along with the many other ways you will discover to save money).

When you are tempted to buy a non-essential luxury item you just have to have, decide what you want more — the luxury item or financial freedom. Buying the luxury item will push your Financial Freedom Day further out in time; avoiding the purchase of the luxury item and putting the money into your capital account instead will pull your Financial Freedom Day in closer to the present. There is no right or wrong answer here. Rather, it’s what you decide to do with your money and your financial future.

The conceptual framework provided in this blog post will get you started on the road to financial freedom. All you have to do is reduce your living expenses and increase your investment income in a steady fashion until your investment income exceeds your living expenses by your desired margin of safety. Prosper is here to help when you need it. Enjoy your journey and may it be a profitable one.

Roger Steciak achieved early semi-retirement in 2006 and became a Prosper lender to diversify further his portfolio of income-producing assets. His book Happy About People-to-People Lending With Prosper.com, How to Lend Money to Friends You’ve Never Met was published in 2007.

I wanted to give everybody a quick update on collections. I know that many of you are anxious for an update on the debt sale. Regretfully, I have nothing to tell you yet. I expect to have another update on this subject early next week (Monday or Tuesday).

In the meantime, I want to give you an update on the accounts in the legal test. We have obtained service on 12 of the suits – and have sent “proof of service” back to the courts. Another 41 have been formally entered on the dockets of the court in and are currently out for service. I would believe that some number of these have been served, but we only have a “batch” interface with the process servers, so I don’t have real time date on this. Finally there are 7 suits on which we are waiting for the “file stamped” copy back from the court to send out to service.

At this point, we keep pushing for service. Once we have received proof of service, the minimum time to move for default judgment is 30 days. As a rule, the law firm will wait until 45 days after the service date to file a request for default judgment. Thus far, none of the defendants have “answered” the suit.

On other topics, I will be making my monthly trip to AmSher on 5/15 & 5/16. I will dedicate another posting to the current state of collections and AmSher after I return.

—

Doug Fuller is the Vice President of Operations at Prosper.