It seems that most of California is on fire. While the smoke in my part of the Bay area has subsided some what, several friends from other parts of the state have reported very poor air quality. 

We appreciate all the hard work put in by the firefighters and their support.  Our thoughts and prayers go out to all affected by the fire.

For this week roundup I thought I might focus on wealth building…

The Digerati Life had a post Remodel Your Bathroom! Try 3 New Ideas To Freshen Up Your Bathroom.  Remodelling your bathroom can add significant value to your home.

Lazy Man and Money features Credit Cards as a Money Tool and following up on that theme Finance Puzzle says Credit Card Reward Points adds to my net worth.

Cash Money Life had The Remarkable Approach To Your Finances

Rich Credit Debt Loan offers 4 Ideas to Create Multiple Income Streams Online (including p2p lending as one of the ideas)

brip blap has 4 steps to building wealth quick (and he doesn’t belive in capitalization

Dough Roller asks Do you change your investment strategy in a falling market?

And finally for your entertainment…

Want to be a part of this round up in the future? It is easy… leave a relevant blog comment and/or link to a Prosper blog post in a relevant way from your own blog. Then, when I stop by your blog to see who you are, be sure to have fresh content as most of the posts that will be highlighted here will have been published in the last week.

Plus blogs that send trackbacks that are approved will be featured in the sidebar while their trackback remains one of the last 5 received.

While this will not guarantee that you will be included it will certainly get my attention… The blogs featured here already have my attention. Will you be next?

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As Chief Marketing Officer at Upromise from 2002 - 2004, I had the good fortune to meet Michael Bronner, who founded the company, and to work with Senator Bill Bradley, who sat on the Board of Directors.  Both shared my passionate belief in the right to a college education and saw the impending shortfall in funding coming a mile away.

Bronner founded Upromise with the mission to make a college education more accessible and affordable. Senator Bradley has a long track record of support for higher education and continues to put the issue at the top of his agenda, as he did once more in his recent Salt Lake City address. The two were a perfect match and an inspiration to work with. They both care deeply about preventing young people from being forced to choose between work and education.

The Upromise business model is brilliantly simple:  Every time a member buys something from a participating company, that sponsor company contributes part of the purchase price to the member’s tax-deferred college savings account.  Not only is Michael Bronner an impressive brand loyalty pioneer, he’s fundamentally changed the way families save for college.

I now work for Prosper, but I’m a still a member of Upromise and look forward to being prepared when I send my son to college. I also have a Citi MasterCard that puts dollars into our college savings account every time I use it.  And use it I do!  Lest I forget, my son is sure to remind me-he wants to go to college as much as we want him to.

Prosper is also committed to helping people get loans to assist them in their endeavors.  Founded by Chris Larsen and John Witchel, both believe in the philosophy of letting people help people by being able to determine how and where their money gets allocated and at what price.  Prosper is based on an auction-style system which allows a person with funds to commit to select borrowers that are suitable for their degree of risk tolerance.  It’s important to me that we, the people, are stepping up to help those students put education first when banks are closing their door to funding.

American families today are more worried about being able to send their kids to college than they are about their own retirement. Three cheers for innovative tools for college funding like personal loans for students on Prosper and college savings networks like Upromise. Three cheers for people like Michael Bronner and Senator Bill Bradley, and Chris Larsen and John Witchel, who bring them to fruition.

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Catherine Muriel is the Chief Marketing Officer of Prosper.

The fires caused by last week’s unusual dry lightening storm are starting to be brought under control in some areas… The smoke is still noticeable in my part of the Bay…  Our thoughts and prayers to those that have suffered a loss.

The blogosphere had  some interesting posts this week…

Rich Credit Debt Loan is Making Extra Money With P2P Lending

Peer to peer lending with Prosper covers Prosper Introduc[ing] Institutional Lending

The Digerati Life asks rhetorically Doing A Home Improvement Project? Know Your Return On Investment

Money Smart Life says to Stop Whining & Start Making Some Money

brip blap offers 9 Ways to Save Without Breaking a Sweat.

Cash Money Life asks Which Shift to You Prefer to Work?

On LazyMan the question is asked Is Now the Time to Take Advantage of the Housing Crisis?

Blogging Away Debt internalizes Hitting a Low on the Roller Coaster Ride

GenX Finance has A Reminder to Keep Your Beneficiaries Up-to-Date

On other tangents…  I cannot tell if this is a parody site or not… but it had me laughing…  Is Money Millionaire a late night infomercial?  See for yourself at Will Astrology Help You Become a Millionaire?

and just because I was wondering the other day and this website had the answer… Who Invented Baseball?

Want to be a part of this round up in the future?  It is easy… leave a relevant blog comment and/or link to a Prosper blog post in a relevant way from your own blog.  Then, when I stop by your blog to see who you are, be sure to have fresh content as most of the posts that will be highlighted here will have been published in the last week.

Plus blogs that send trackbacks that are approved will be featured in the sidebar while their trackback remains one of the last 5 received. 

While this will not guarantee that you will be included it will certainly get my attention…  The blogs featured here already have my attention.   Will you be next?

Photo Credit: 1

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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. 

A few people have asked for more detail about our new feature and process change where borrowers will now be signing promissory notes. We’ve been asked whether the change was made to fix a weakness in the process.

There has never been any weakness in the manner in which borrowers have signed Prosper promissory notes. Prosper’s notes are and always have been fully enforceable. We did not have to make this change, as we were not receiving any complaints about the manner in which the notes have been signed.

Until now, at the time a listing is created borrowers have appointed Prosper as their agent to sign the notes on their behalf. This has been done as a convenience to the borrower, so that the borrower didn’t have to sign 20 or more notes. Now we have created a process where borrowers can conveniently, with one click, sign the notes themselves. We elected to make this change primarily for two reasons.

First, there have been occasions where borrowers, after their listing expired but before loan disbursement, changed their mind about wanting a loan. It those instances, Prosper would go to the trouble of funding the loan (and the borrower would rightfully incur a closing fee) but they would end up paying off their loan right away. We thought this arrangement didn’t really benefit anyone – the borrower, lenders or Prosper. By having the borrowers confirm prior to loan disbursement that they indeed want the loan, this problem would be avoided entirely.

Second, the new process makes it easier to see how Prosper’s promissory notes are signed. Now there will be one page that shows how the notes were signed. Before, in order to evidence the signing of the notes, you would have to see not only the note, but also the listing creation web page and Borrower Registration Agreement that contains the language authorizing Prosper to sign the notes on the borrower’s behalf. Prosper undergoes routine regulatory examinations from time to time, and is sometimes asked to explain how notes are signed; this new process will make the task quick and easy. It may also make Prosper’s notes more familiar to prospective debt buyers who consider bidding on a portfolio of defaulted Prosper loans. (As noted earlier, in the current credit crunch environment it is a buyer’s market for defaulted loans, so anything we can do to make our loans more mainstream could help garner more or better bids.)

I hope this clears up any confusion about this feature change.

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Ed Giedgowd is the Chief Compliance Officer and General Counsel of Prosper

One of our primary objectives in making Prosper market data fully transparent and freely available via an API is to allow and encourage anyone to study the Prosper market and consumer credit markets in general.  We deeply appreciate the level of diligence and analysis so many have contributed using Prosper’s marketplace data.  We are also very encouraged that an increasing number of economists and professional credit analysts have taken the time to conduct deep studies of the market and share their conclusions publicly.

One such study was released yesterday by Economists Ginger Zhe Jin and Seth Freedman of the University of Maryland.  The study looks at Prosper’s market since inception to determine average returns and other interesting conclusions about the market. Among their findings:

1. The average Prosper returns since inception were estimated at 6.05% with a 5.72% standard deviation and were trending up as credit quality continues to improve (see table 9 and figure 8.3).
2. The highest returns were in Near Prime loans (grades B-D) at an average of 8.27%, followed by Prime loans (grades AA & A) at 6.78% and sub-prime loans at 1.73%.
3. The probability of default of a Prosper loan peaks at month ten and then edges down (see Figure 9). This is a major reason why Prosper’s performance tool shows more conservative returns. Prosper’s performance tool does not adjust for this later default moderation, which is significant given that the average age of the Prosper portfolio is currently 9.7 months (i.e. at the peak of the default curve).
4. The study showed that the highest returns occurred for loans priced up to 25%. Loans funded at more than 25% actually showed lower returns because defaults increased disproportionately. This implies that borrowers willing to pay very high rates show higher adverse selection, which is logical (see Figure 8.1).
5. The study found that lenders learn quickly - adjusting their bids and strategies as performance is revealed. New lenders also learn from their observations of earlier lenders in adjusting to marketplace dynamics.

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Chris Larsen is the CEO and Co-founder of Prosper.