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.

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Doug Fuller is the Vice President of Operations at Prosper.

One of the most satisfying experiences at Prosper has been working on our recent initiative to tell the personal stories of lenders and borrowers in the Prosper community. When I recently met several Prosper members in person, listening to their stories of how peer-to-peer lending fit into their lives, I was truly struck by their sincere enthusiasm for Prosper.

It has been one of those welcome rare occasions when as a marketer, we get to witness the fulfillment of a brand promise in such a personal way. 

It’s been both challenging and fun to tell the story of personal lending to the greater marketplace. Agencies lobbied hard for us to use seasoned talent and scripted messaging to address such a new concept, but we stuck to our instincts and couldn’t be happier with the results. We believed that the real story of people-to-people lending is about bringing real people together.

So that’s just what we did. We brought our lenders and borrowers together and asked them to share their experience of peer-to-peer lending on Prosper. Their stories are available online today and we’ll be airing TV spots in test markets starting this week.

We talked to many borrowers who regaled us with both delightful and heartfelt stories. And indeed, fashion designer Lara Miller’s story about how her Prosper loan helped keep her small business operating and her life’s dream alive is a wonderful example of how Prosper can change people’s lives.

We were also delighted by lenders who time and again told us about how they sincerely valued the opportunity to not only earn great returns, but to help others through peer-to-peer lending. Bob, a Prosper lender, we met in Florida nicely expressed the sentiment we heard often when he said he likes being “the source of good things that help people accomplish their dreams”.

A special thanks to all the Prosper members who let us document and share their stories. If you’re a Prosper member and would like to share your peer-to-peer-lending experience with us, visit Prosper Stories and let us know.

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Catherine Muriel is the Chief Marketing Officer of Prosper.

As most lenders’ know, Prosper had been planning to execute a debt sale during the month of April. To this end, a “bid file” was cut on April 11th. This bid file contained all loans that were more than 120 days past due as of that date that did not have a bankruptcy indicator or an open “Promise to Pay”.

In keeping with Prosper’s debt sale process, this file was sent to a list of approved bidders who have expressed interest in buying charged off Prosper debt. In addition, this file was placed with one of the largest debt auction/broker firms in the business. This firm has been in business for more than 15 years and hosts one of the premiere debt sale auction sites. The firm averages five portfolio sales a week – with portfolio sizes ranging from $2.5MM to $500MM.

As a result of these efforts, Prosper received a record number of bids on the sale file (eight). Unfortunately, all of the bids were extremely low. As I mentioned in my last update, the debt market was “flooded” by credit card issuers in March. That backlog has not dissipated.

At this point, we have not accepted a bid to buy the portfolio. We are actively soliciting alternative bids and proposals and are working through the alternatives. We are working to get the best price possible and appreciate your patience in this matter. Without compromising the status of negotiations, we will keep you informed on the process.

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Doug Fuller is the Vice President of Operations at Prosper.

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.

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Andrew is a Product Manager at Prosper.

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.