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New Loan Servicing Platform Implemented

by Prosper on 05/3/10

This weekend we implemented a new loan servicing platform. This was a major project that involved the integration of more than 2 million loan based transactions. We are still in the midst of reconciling some anomalies that have impacted a finite number of loans and transactions.

We undertook this project to provide a strategic platform for loan servicing that will benefit both lenders and borrowers as it will enable us to far more easily introduce new product types and ultimately provide additional payment methods for borrowers.

As part of this system integration, we have undertaken a comprehensive audit of all loan transactions. Over the course of the audit, we identified and reconciled some discrepancies that impacted the timing, charging and crediting of non-sufficient funds (NSF) and late fees.

Over the next few days we will be completing the post conversion reconciliation of impacted loans and transactions. We will also be sending an email to lenders and borrowers impacted by any fee issues. To the extent that an error resulted in underpayment of fees to Prosper, we will be forgiving these fees. And in cases where there was an overpayment of fees, Prosper will be crediting lender and borrower accounts. These refunds and adjustments will be posted to accounts sometime in May, and reflected in lenders’ May statements.

Adjustments and/or refunds will be issued in a manner such that neither borrower nor lender is hurt by the corrections.

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26 Responses

Banders | May 5th, 2010 at 7:44 pm

Loan performance data page has been down since the new loan servicing platform appeared. When do you expect to have it repaired?

Leopoldine | May 6th, 2010 at 8:19 am

None of my accounts have updated since the new system has been implemented and all of the accounts that have paid and the money is already in my account is still showing as processing. Also, it is May 6th and all payments from the end of April have not cleared, with another weekend coming up, when are the payments going to catch up? I know they are always a few days behind, but I have never seen it this bad. Thanks so much!

Prosper Blog | May 6th, 2010 at 10:19 am

@Leopoldine: We are aware of these issues and in the process of resolving them. Apologies for the inconvenience.

@Banders: The performance page will be live again… we’re working on integrating the marketplace performance page with the new servicing platform.

jimmya762 | May 6th, 2010 at 5:16 pm

I agree with Leopoldine. What is going on?

line6owner | May 8th, 2010 at 3:48 am

Any update on the posting issue of payments for us lenders?

alpinaut | May 8th, 2010 at 6:23 am

Just got on to do some individual bids and have noticed Prosper no longer requires borrowers to explain why they want a loan. I have always used their explanations to decide if I should fund. Why deprive lenders of this insight into borrowers? Please explain. I find it disturbing. Do any other lenders feel this is depriving them of a key evaluation criteria?

leopoldine | May 8th, 2010 at 10:10 am

I had not noticed that until I went through some loans a few minutes ago alpinaut. I was suprised, but I will not bid on any loans that is missing that informaton. But they will still get funded thanks to the auto-bidding system. Thats why I bid on all my loans manually.

Sam | May 10th, 2010 at 8:37 am

It seems that there have been no new listings over the past few days. Why is that?

Prosper should do a better job of explaining what is happening and give a time line for when activity will normalize (preferably before it happens).

On a side note, I completely agree with the earlier comments about not requiring a description. I will not lend money to someone if they won’t even tell my they’re borrowing it.

Prosper Blog | May 10th, 2010 at 11:40 am

@lineowner6: Payments are being collected from borrowers as usual. Lenders awaiting payments to be reflected can expect their accounts to be updated by the end of the day. Sincerest apologies for the inconvenience.

@alpinaut, @leopoldine, @sam: We appreciate your feedback. To clarify, borrowers have never been required to provide descriptions. Although we have streamlined the listing process for borrowers with a high probability of funding, these borrowers can still provide a listing description at the time they preview their listing before it goes live. In addtion, the Q&A feature is available for lenders to ask questions of all borrowers. The language we currently have in the description section of these particular listings will be updated to make all of this more clear. We will continue to monitor feedback from borrowers and lenders regarding this change.

@Sam: New loan listings do not post on weekends because the SEC filings required are only accepted Monday through Friday.

Sam | May 11th, 2010 at 8:14 am

Thanks for your response. In general you do borrowers a disservice by not requiring them to write a description. I would suggest you require a description for every loan, regardless of the likelihood to fund. As you well know, it’s not only a question of likelihood to fund but a question of at what rate as well.

heritage_loans | May 12th, 2010 at 3:41 pm

To my understanding, the purpose of a system update is to make the existing one better, to the point that there are noticeable improvements. There seems to be a major malfunction with this new Prosper update. Payments are pending much longer than before and the problem is lingering longer than was previously communicated. I don’t know how anyone else feels, but I like the way things were much better. I had absolutely no problem with the way things were.

XXXXXX | May 13th, 2010 at 9:22 am

Yes, I am a new borrower and find it incredibly frustrating that Prosper will not allow me to describe my reasons for wanting a loan.

It is making it difficult to get anything funded. They could at least make it optional!

One other thing: limiting responses to lender questions to under 500 characters is also making things difficult…I had one lender ask me 3 different questions and I had to ask that they re-post each separately.

Daniel | May 13th, 2010 at 9:29 am

I have not found anywhere on the Prosper website that explains HOW THE AUTO-BIDDING PROCESS WORKS. Maybe that’s because I am only a borrower, not yet a lender, but as a borrower I want to know how this works!

I also want to know HOW GROUPS WORK — nowhere does it say that you can’t belong to more than one group, that you can’t join a group once your listing goes live, or if membership to a group cuts you off from bids by non-group members. How can you not make this information available to borrowers?

Rich | May 14th, 2010 at 10:04 am

By finite, I assume you mean “small number”. The math major in me doesn’t like sloppy use of the word finite.

kelor99 | May 17th, 2010 at 5:15 pm

Yes, because reconciling anomalies on an infinite number of loans would take . . . . forever.

I second or third the motion for better communication and more transparency from Prosper in general, but especially regarding issues that impact service & user experience.

On another note, am I alone or do others wish Prosper offered more in the way of portfolio analysis & research tools?

Right now, the only portfolio tool Prosper provides lenders is a search engine on the Active Notes page that finds notes that fit a very narrow spectrum of criteria, which is mostly redundant as Prosper already provides a complete breakdown of such criteria in the Note Status Summary box on the main Investing page.

What I would like, & what would be helpful in determining future investment strategies, is to be able to search my portfolio for notes that fit all kinds of criteria.

For example: How have all my notes to borrowers who have had a delinquency performed? Or how about all my notes towards loans under $5000?

Most of the 3rd party blogs & data sites have disappeared or are no longer maintained so resources for research are scant. Prosper has all the data and I am sure the framework to provide such tools so I wonder a) Why they don’t and b) If we might successfully lobby Prosper to supply such tools.

I welcome comments & suggestions and encourage people to email prosper, calling for the creation of more portfolio analysis options.

shawnw2 | May 18th, 2010 at 1:34 pm

kelor99, I agree completely. I think this is one area that Prosper is really lacking and could really improve the experience. I think even better for Prosper (and all of us) is that enhanced research and account tools would attract more professional investors and serious individuals. I have a good amount invested but I don’t know how much I should keep putting in if it’s hard to figure out my daily/monthly income, my ROI, delinquencies, etc. Even an ability to import loans into say excel or another processor would help. I’m with you and have been meaning to email Prosper for some time about these items.

credit-maestro | May 18th, 2010 at 1:52 pm

Since I moved to Ohio I am no longer allowed to bid on loans, but I had lent a few thousand dollars in my day. I agree that not allowing people to post descriptions does a disservice to lenders and borrowers.

The descriptions were always a vital tool in my deciding which loans to bid on- and of my 48 manually selected loans, not a single one has been late or defaulted yet. While each of those loans may have been funded through Prosper’s portfolio bidding, they would have been funded at higher rates.

It seems this change is a shift from user-determined lending decisions to the directions of Prosper-determined lending decisions. If Prosper is going to make such decisions themselves, then they should organize as a bank and issue stock.

312Lender | May 18th, 2010 at 2:16 pm

I agree completely with kelor99

Prosper Blog | May 19th, 2010 at 5:46 pm

@kelor99 @shawnw2 @credit-maestro @Lender312 and all others who have taken the time to share their feedback, suggestions and great ideas: Thank You! Please keep them coming!

Regarding the listing process for borrowers who have a high probability of funding… as we previously noted, providing a listing description on Prosper has always been optional for borrowers. Even though we have streamlined the listing process for borrowers with a high probability of funding, these borrowers can still provide a listing description at the time they preview their listing before it goes live. So the capability / option is still there, but it has indeed been deemphasized.

In case it’s helpful, we wanted to provide some context about why the listing description option was deemphasized for this segment of borrowers by sharing the core thinking behind the change.

As some have referenced, there is strong demand among lenders for these particular borrowers. To help serve this demand, we need to get more of these borrowers listing on the platform by having fewer of them drop out of the listing process. Streamlining the process, including making it an option to include a description only at the end of the listing process instead of a prominent step in the middle of the process, is one way to convert more of these borrowers into live listings. That being said, we are monitoring this and other changes we’ve made to the listing process to see if they are having a constructive impact for both borrowers and lenders. At the same time, we are closely monitoring lender and borrower feedback, including yours, very closely.

Thanks again for all your comments… invaluable stuff.

-Prosper Tiffany

leopoldine | May 21st, 2010 at 5:52 pm

Is there any word on when Prosper will be getting the payment system back in order? This has been very frustrating and I am not trying to be a jerk or anything. But with another weekend at hand, by monday it will be the 24th and the payments recieved today are from the 14th, at least in my account. That is a 10-day drag. I understand that it might take 2-3 days to get a payment from the bank but with real time banking being the norm no adays I have never understood why it takes so long for the deposits to get into my account. Anyway, I sure would be happy if we could get this issue resolved. The sooner the $$ are credited, the sooner I can get it into another loan, and the more money everyone makes.

kelor99 | May 22nd, 2010 at 10:43 am

shawnw2 & 312lender – Thanks for the support. It’s encouraged me to get more involved.

Here’s my Prosper wish list:

High Priority:

* Better communication/more transparency.
* Much more robust portfolio research & analysis tools, including an ROI calculation.
* For Prosper, Collection & Recovery Fees to be accounted for in the Cash Summary. Although these fees are not hidden, they feel hidden.
* Reinstate Prosper’s consumer blog/forum so we can communicate with each other & Prosper without having to randomly attach such comments onto Prosper’s infrequent blog posts.

Medium Priority:

* For Payment in Process to be categorized as a Status (like Current, Paid, Late, etc.), so that I can see all the notes within that status at any time with just one click. This would be particularly helpful for notes that are past due.

Low Priority:

* A detailed explanation of “Miscellaneous Activity” in Cash Summary. I have money there & know only partly where it came from.
* For “Canceled” notes to be better accounted for. Why are they lumped into the Notes Paid in Full page?

I’ve been lending on Prosper almost 3 years. I believe that the suggestions above, if enacted, would improve my investment strategies, improve my portfolio’s performance, (significantly) improve my experience with Prosper’s service and, ultimately, increase the amount of money I invest in the Prosper marketplace.

Isn’t that what Prosper wants?

What are your ideas to improve Prosper? What would you like to see?

Prosper Blog | May 22nd, 2010 at 11:20 am

@leopoldine Completely respect and understand your frustration… frustration that we realize is not exclusive to you. On Monday, we will be providing a status update regarding the issues you and others have been experiencing. Thanks so much for your comments.

-Prosper Tiffany

leopoldine | May 22nd, 2010 at 8:28 pm

Well I came in this evening to see many loans updated and I really do appriciate the team at Prosper coming in on a Saturday to work on pleasing us annoying investors.

Prosper Blog | May 24th, 2010 at 12:35 pm

We just posted an update regarding the roll out of the loan servicing platform… if you’re interested in reading it, please visit our our blog or click here:

Prosper Blog | May 27th, 2010 at 5:15 pm

We’ve provided another update on the loan servicing platform:

Prosper Blog | June 1st, 2010 at 11:32 am

For those who provided comments on the listing descriptions change we made early last month, you may be interested in reading today’s post announcing that we’ve gone back to prompting all borrowers to write listing descriptions…


posted in Borrowers,Featured,Lenders,Prosper News 26 comments »

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