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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.

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Doug Fuller is the Vice President of Operations at Prosper. 

One of the many activities aimed at improving collections undertaken in the last couple of months was the testing and implementation of an “Early Delinquency” letter series.  Although borrowers were already receiving reminder emails and phone calls during the early delinquency period (1 -30 days past due), we thought it worth seeing if an actual letter might drive additional payments.  We conducted an initial test in mid-October where half of the early delinquency population was sent a letter and half was not.  Measured by the number of manual payments initiated, the results were good.  In the three weeks after the letter was mailed 57% more recipients initiated a manual payment (41% vs 26%).

Given this success, a two letter series was produced and a process created to automatically generate and send the letters.  The first letter goes out at 15 days past due and reminds the borrower of the “community aspect” of their prosper loan – the money comes not from a bank, but was made possible by a group of individuals.  The second letter is generated at 30 days past due and details the various consequences of becoming “delinquent” including collection activities, credit reporting and the possibility of a lawsuit.

Additionally, we have contracted with Accurint (a division of Lexis-Nexis) to provide skip tracing information and are developing an internal process around that data.

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Doug Fuller is the Vice President of Operations at Prosper.