3 Responses

Jay | February 15th, 2010 at 1:35 pm

What is the assumption / forecast for US unemployment rate for 2010-2012 used in the estimated loss projection for loans booked in Dec or Q4 2009?

Does Prosper use the official employment rate (e.g, 9.7%) or the U6 rate including under-employment (more like 15%) in calibrating the charge-off rate estimates?

In other words, to achieve the 1-2% type loss rate in the conservative portfolio, does US unemployment have to drop back to pre-recession levels of 4-5%? or is a 10% unemployment rate for next 3 years the base case assumption?

Any transparency into the macro-economic assumption would give investors more confidence.

Thanks!

merlin | February 16th, 2010 at 11:33 am

There are a lot of things that Prosper.com can do and should do to help reduce the default rate, such as making the lending process truly “social”. There are lessons that can be learned from microfinance programs. Lending can work in places with no credit agencies and very low per capita income, and it can work a lot better here.

I have been a Prosper lending for a few years, and would really hate to see Prosper.com not to prosper.

Prosper Blog | February 17th, 2010 at 6:13 pm

Please check out the Prosper Ratings description on our site to get a deeper understanding of how they are calculated. http://www.prosper.com/invest/how-to-invest/prosper-ratings/