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Transitioning to the New Prosper API

At the beginning of March, we announced the launch of our new, enhanced API service for lenders. The new API gives our lenders the tools they need to customize their Prosper experience, as well as build more robust tools in less time. Among other features, the new lender API service encompasses a RESTful interface which supports OData query operations, making it easier and more convenient for our lenders to code against. With the new API, we also offer more than 550 data points to each credit profile as well as individual Note details including specifics about payments and reasons for default.

As a result of launching this new API, effective May 1st, the existing API service will no longer be available. Over the next month, all lenders have the opportunity to convert and map their applications to the new API service, which offers a much more comprehensive set of data points, including access to raw listing data and enhanced data sets for analysis and reporting.

To obtain access to the new API for your lender account, please email us at investorservices@prosper.com. We always welcome your comments and feedback below as well.

03/26/2013 by in Featured, Lenders, Prosper News

Prosper Unveils New Protection for Lenders

Over the past several months, Prosper has been working with the SEC on implementing an important new protection to offer enhanced safety and soundness for all lenders on the Prosper platform.  We’re very happy to share that we are the first peer-to-peer lending platform to provide all of our lenders further security of assets. This industry-leading protection, along with our recent fundraising efforts and additions to the management team, represent important milestones for our customers.

First, some details on how this works. A new legal entity called Prosper Funding LLC has been established, which is a wholly owned subsidiary of Prosper Marketplace, Inc. Prosper Funding LLC is now the owner of all loans and the issuer of all Notes on the Prosper Marketplace. As a result, all Notes (both new and previously issued) are now fully protected in the unlikely event of a Prosper bankruptcy.

In order to purchase Notes from Prosper Funding LLC, lenders simply need to agree to the new registration agreement. If you have not done so already, you will be alerted to accept this agreement next time you sign into your account. New lenders are automatically registered with Prosper Funding LLC. In addition, you can review a “Risk Factors” section in the Prospectus for information regarding the risks and benefits of this new offering.

Thank you for your continued participation on the platform. This new protection demonstrates our ongoing commitment to bringing best-in-class tools and services to our lenders.

02/14/2013 by in Featured, Lenders, Prosper News

New Data Enhancements for Investors

We are excited to announce three new enhancements that we believe provide our investors with more decision-making data than any other peer-to-peer lending platform.

Expanding Investor Data Access

First, we now support a CSV download format for a view of our loan performance data. For each loan, you will find a selection of credit attributes from the loan application as well as variables related to the performance of that loan, like final loan status and total principal and interest paid. By combining these sets of data, we have made it possible for investors to more easily construct and test their own investment strategies. This simplified data format will replace the more cumbersome XML format that we’ve used to date. Note that this means that certain types of data, including information related to group membership, member profiles, and bids, will no longer be available in the data export.

You can find the Loan Data Export file on our new Download page. (You can also access this page via the “Download Data” link on our Performance page while logged into your account.) This file will dynamically update on a daily basis.

Expanded Underwriting Information Preview

We are also working to make new sources of data available to guide your decision-making where we can. In 2011 we initiated a project to expand the amount of information considered when determining our Prosper Score. This expanded information will allow us to make better underwriting decisions across the platform, and we are also making it available to you today.

The first component of this data is the Expanded Underwriting Archive, also available on our Download page. The Archive file has a large number of application attributes and performance variables, allowing you to test and develop a wide variety of investment strategies.

Most of these variables are not yet available to investors through our API, however. To enable you to execute your new strategies based on the expanded dataset in the short term, we are also making available a Recent Listings Sample with Expanded Underwriting Data. This file includes a sub-set of recent listings for which we have these expanded bureau attributes.

Finally, we are releasing an Underwriting Archive Data Dictionary for use with the Archive and Listings Samples. There is a lot of data included in those files, but the Data Dictionary should make it easy to understand what you’re working with.

We are truly excited about these developments and believe that they provide our investors with far more information than any other investment platform. Thank you for continuing to invest with Prosper, and please contact us directly at investorteam@prosper.com or leave a comment below if you have any questions about the new data enhancements.

12/03/2012 by in Featured, Lenders, Prosper News

September, 2012 Investor Monthly Update

September was an eventful month at Prosper and for a number of reasons. First, we had the good fortune to have Josh Tonderys, previously Senior Director at Barclaycard US, join the Prosper team as our Chief Risk Officer. He brings a wealth of direct credit experience that will help us scale the platform while continuing to provide strong investor returns. Second, we were listed 4th on The Wall Street Journal’s list of the Top 50 Venture-Backed Start-Ups for 2012. Third, we set monthly records for originations, listings, and cash on the platform in September. All in all, a great month!

With $16 million in originations in September, Prosper continues to focus on providing a high yield, short duration alternative for investors. Which brings us to this month’s commentary from our Chief Investment Officer, Joe Toms.

LOOKING FOR YIELD: DURATION RISK VERSUS CREDIT RISK IN FIXED INCOME

I recently came across an article that quoted Paul O’Brien, head of fixed income at the Abu Dhabi Investment Authority (with estimated assets under management of $627 billion), that we felt perfectly summarized the challenges confronting fixed income investors today. He writes:

“The return for bearing duration risk is the lowest it has been in our careers. The return for credit risk, on the other hand, is probably average. If you take the history as a benchmark, then it’s fair to say that the return from fixed income is probably better served by taking credit exposure, rather than duration exposure.”

We think this quote confirms the point we have been making over the past year, that short-duration, high-yield portfolios like Prosper’s allow investors the opportunity to generate yield while taking little interest-rate risk.

Consider the historical evidence of Prosper 2.0 vintages that are at least 12 months old. The data shows not only the stability of the different vintages but that, by the end of month 12, the vintages returned to the investor 50% of their initial investment. In other words, through the combination of prepayments, straight line amortization of principal and interest, investors receive a tremendous amount of cash flow early on in the investment.

This high cash flow provides a number of clear and substantive benefits. It reduces interest rate risk while providing tremendous flexibility to either re-invest in Prosper Loans and/or allocate to other promising investments. In short, it allows investors to earn a considerable premium in yield relative to most other fixed income investments with little interest rate risk while providing significant cash flows. While admittedly biased, we think that the combination of high yields, short durations and strong cash flows make a compelling investment case.

More information on September’s monthly performance update can be found here. For further explanation of this commentary or with any other questions or comments, please contact our investor marketing team at investorteam@prosper.com or 1-877-611-8797.

Joseph L. Toms
Chief Investment Officer

10/16/2012 by in Featured, Lenders

August, 2012 Investor Monthly Update

August saw Prosper’s platform produce a 1.027% return, our 37th consecutive month of positive returns. Interestingly, in the past few months we have witnessed a strong increase in demand from borrowers in our highest credit grades, AA and A. Today an investor can purchase a five-year AA-rated Prosper Note with a current yield of 11.08%, an estimated loss rate of 1.74% and estimated return of 9.33%.1 As we will discuss in more detail below, we think that these Notes represent compelling value.

Last week all eyes turn to the Federal Reserve. In accordance with what many economists predicted, the weak August jobs report contributed to the Fed initiating new quantitative easing at its September 12th meeting. Combined with the European Central Bank’s recent announcement of “unlimited” bond buying of shorter-term European sovereign debt, it looks as if interest rates will remain low for an extended time. In fact, recent forecasts indicate that the Fed funds rate will remain below 0.5% through August 2015.

Not surprisingly, given the benign outlook for interest rates, investors have poured money into fixed income instruments, driving prices higher and yields lower. A recent Morgan Stanley research report highlighted the risks of rising fixed income prices, citing that long-dated investment grade corporate debt may represent the “biggest risk” in the U.S. corporate bond market and that they could lose 25% in value if rates were to return to pre-crisis levels. In short, it is our (and many others’) opinion that the sustained period of low rates has indeed altered the traditional risk/reward relationship for many fixed income instruments.

Consider current yields, durations, and long-term weighted average default data for corporate grades in contrast with Prosper’s platform inventory. As the Morgan Stanley report identifies, it is clear that high grade corporate debt (AAA-A) yields are indeed extremely low and that the average duration of 6+ years place these grades at risk if yields were to rise.

What also stands out is that Prosper’s historical seasoned default rate of 6.86% is similar to the equivalent of a B-rated corporate bond. Yet the pre-default yield is currently 2.9 times higher than corporate B bonds. Further, the average duration is 60% lower! In short, we think the data makes a compelling case to consider the risks and opportunities that exist in fixed income today. In the case of corporate bonds it appears that investment grade debt, while avoiding default risk, could suffer significant price risk since yields can’t make up for the length of the typical duration. In lower grade corporate debt investors incur default risk but receive some compensating yield, albeit perhaps not enough to completely offset price risk. In light of these options we would argue that Prosper’s platform, while incurring default risk, offers investors the chance to earn substantive yields with less price risk since the durations are significantly below those of typical corporate bond portfolios. For that reason an allocation to Prosper represents not only a sound investment but also provides substantive portfolio benefits in this trying fixed income environment.

More information on August’s monthly performance update can be found here. For further explanation of this commentary or with any other questions or comments, please contact our investor marketing team at investorteam@prosper.com or 1-877-611-8797.

Joseph L. Toms
Chief Investment Officer


1Estimated return is the difference between the estimated effective yield and the estimated loss rate. Estimated effective yield is equal to the current yield (borrower interest rate minus the 1% servicing fee) (i) minus estimated uncollected interest on charge-offs, (ii) plus estimated collected late fees. The estimated loss rate is the estimated principal loss on charged off loans. All estimates are based on the historical performance of Prosper loans for borrowers with similar characteristics. The calculations of estimated return, estimated effective yield, and estimated loss rate require significant assumptions about the repayment of loans, and lenders should make their own judgments with respect to the accuracy of these assumptions. Actual performance may differ from estimated performance.

2To calculate the Annualized Returns on Principal By Monthly Loan Vintage, all payments received on borrower loans originated during that month (i) minus principal payments (ii) minus servicing fees (iii) minus charge-off’s, are aggregated and then divided by the average outstanding principal balance. To annualize this return, it is divided by the dollar-weighted average age of the loans in months and then multiplied by 12. Seasoned vintages are categorized as those vintages that are at least 10 months old.

3The current yield is based on the dollar weighted current yield for all loans originated in August of 2012.

4The Prosper Default figure of 6.86% is the “Seasoned” annualized loss rate associated with our annualized “Seasoned” return of 10.02%. To calculate the annualized loss rate, the net credit losses corresponding to eligible Notes are aggregated then divided by the average daily amount of aggregate outstanding principal for such loans providing a gross loss rate. To annualize the loss rate it is divided by the dollar-weighted average age of the portfolio in days and then multiplied by 365.

IMPORTANT DISCLOSURES:

Notes offered by Prospectus.

This presentation includes forward-looking statements. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management and is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. You should carefully read the factors described in the “Risk Factors” section of the Prospectus for a description of certain risks that could, among other things, cause our actual results to differ from these forward-looking statements.

All forward-looking statements speak only as of the date of this presentation and are expressly qualified in their entirety by the cautionary statements above and in the Prospectus. We undertake no obligation to update or revise forward-looking statements that may be made in this presentation to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

09/17/2012 by in Featured, Lenders, Prosper News

 

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Notice: Blogs and other materials posted on or linked from this page that use the name "Prosper" generally use that name to refer to Prosper Marketplace, Inc. if published before January 31, 2013 and to refer to Prosper Funding LLC if published on or after February 1, 2013.