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Peer to Peer Lending News Roundup – December 22, 2012

by Peter Renton on December 22, 2012

During the week I share the latest p2p lending news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here.

Peer-to-peer lending boom could make banks obsolete from The Independent (UK) – The money quote from a director at the Bank of England (equivalent of the U.S. Federal Reserve): “The banking middlemen may in time become surplus links in the chain.”

Lending Club Borrower’s Home Ownership and Loan Characteristics, Part I from Random Thoughts – A look at home ownership vs rent vs mortgage with respect to total loan amount, average loan amount and loan volume.

Using Credit Karma to Tune P2P Lending Filters from Nickel Steamroller – What investors and borrowers can learn from a credit monitoring service.

IS LENDING CLUB STARTING TO RUN OUT OF RISKIER NOTES? from P2P Analytics – While I wouldn’t say they are running out but Lending Club has had a noticeable shift in the total number of high risk loans available in recent weeks.

Peer-to-peer lending is the best response to the banking crash from Financial Reporter (UK) – Short article describing how the UK p2p lenders do a better job of handling risk than the big banks.

The Top Five Financial Technology Companies of 2012 from Forbes – The news keeps getting better for Lending Club as they are named one of the top five FinTech companies of 2012 by Forbes.

Anthony Hilton: Peer-to-peer lending is here to stay from London Evening Standard (UK) – Prominent British financial journalist weighs in on p2p lending.

How to Invest When You Have Mortgage Debt from Ross Asset Advisors – I am usually not a fan of leverage but with today’s low interest mortgage interest rates and much higher p2p lending returns it may be worth considering for some people.

Summers’ post to Lending Club board sign of banking apocalypse from Bankless Times – An interesting article on the Summers appointment and what it might mean for the future of banking.

Lending Club Borrower’s Home Ownership and Loan Characteristics, Part II from Random Thoughts – A look at more loan parameters and how they change with home ownership vs rent vs mortgage.

From the Lend Academy Forum

The Lend Academy forum is where investors go to discuss p2p lending. Below are some topics that were being discussed this week.

Do you see more late notes during the holidays – There seems to be a few more loans than usual going late this month, is the Holiday Season to blame?

FMV of distressed notes – interesting discussion on the fair market value of notes that go late.

Annoyed by erratic payments – If you are wondering why your Prosper account has received no payments the last few days we have you covered here.

{ 12 comments… read them below or add one }

Chris December 22, 2012 at 9:14 am

Peter, I am a little surprised you have not published a front page article with regard to the payment processing issue over at Prosper? I know there is a forum article on the topic, but the fact that Prosper is taking so long to fix a critically important problem with their entire platform is really starting to become newsworthy.

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Peter Renton December 22, 2012 at 9:54 am

Chris, As you say I have it on the forum and I featured the link to it in my weekly roundup. The reason I haven’t done a full article on it is that they keep saying it is about to be fixed. A post like that could be out of date an hour after I publish it, so I am comfortable just highlighting what is being talked about on the forum. But if it keeps dragging on I will have to cover it.

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Josh December 22, 2012 at 11:01 am

The fact that they haven’t been able to fix such a fundamental problem in over 4 days is enough to cause a shift in confidence.

I think this event will set Prosper back….maybe even enough to finish them off….how can it take them over 4 days to fix something so basic and integral to their business? Will lenders continue to believe in such an enterprise? I say no way.

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Dan B December 22, 2012 at 1:27 pm

I think that may be overstating it a bit. I won’t pretend to know how any one individual will behave but it is easy for those of us who follow our investments daily (& are so “involved” that we come here & read/comment), to forget that the vast majority don’t & aren’t that involved & were probably not even aware that there was a payment glitch in the first place until they got the email yesterday.

Imo, what will very very likely happen is that like all problems this will be fixed, & that 6 months from now, few will remember (or care) about this. Those of us who aren’t that agitated by this today will then see this as barely a blip in the grander scheme of things………………& those that are agitated will by then likely find something else to concern themselves with.

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Josh December 22, 2012 at 4:23 pm

Unconscionable how they allow an error like this to occur in the first place, and then add on the inability to fix it in short order.

Can’t get my money out fast enough…..

RJL December 22, 2012 at 2:12 pm

I agree with Dan. This is still a young company in a young industry. In my experience they have quality customer service and a high degree of transparency. Banks and brokers have done much worse and thrived, Prosper will be fine.

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Roy S. December 22, 2012 at 4:30 pm

It bothers me that it took them so long to send out an email stating they had an issue. AND WHAT THE HELL HAPPENED TO BACKING UP EVERYTHING? I may be missing something or it may be a new procedure in the IT world, but generally I thought you backup everything before updating software. If there is something wrong with the software or there is a major glitch, then you can do a restore and have everything working just as it did before. Of course, I’m not an IT person, but it has worked for me when I needed it to. Maybe they should give it a try next time.

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Dennis December 23, 2012 at 3:25 pm

I agree with Roy that there should have fundamentally been a backup put in place before any upgrade. This seems like a very basic step, where if anything went wrong a simple system restore would quickly undo any problems. The fact that this obviously can’t be done and the amount of time it’s taking would imply there’s a serious problem here. The last payment updates I got were December 15 (Saturday) so this has gone on for a week now. Add to the mix that Prosper has been very noticeably quiet about this with only one simple message to investors that there’s a problem makes me more than a little nervous. While I’m confident this will be resolved, the amount of time it’s taking means I’m taking a hit on not being able to reinvest payment money on my 450+ notes. And Prosper is taking a hit on loan originations which will affect their bottom line also. All around not good………..

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Dennis December 23, 2012 at 5:00 pm

Shortly after I posted above, Prosper updated my “Account Value Total” for the first time in a week. However, my “Note Status Summary” box still has not been updated. So this update is incomplete (not completely accurate), but it’s a step in the right direction I guess. Hopefully a full update is near so we can get back to business.

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Peter Renton December 22, 2012 at 5:13 pm

There is no doubt that Prosper screwed up here. But I agree with Dan on this one. Some people may stop investing because of this mistake but I expect most people will not worry about it too much.

And Roy, I am sure if it was as easy as rolling back to the latest backup it would have been done by now. They desperately want investors to be taking new loans this month as demonstrated by some the incentives. As I said on the forum I expect heads will roll at Prosper for this one. And I also expect it will be resolved soon.

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Dennis December 23, 2012 at 3:49 pm

Peter,

You no doubt are privy to information most of us aren’t. If you knew something important are you likely to share it with us? I’m a little surprised we haven’t heard more updates from you unless you found out something that’s better not shared. Hmmmm….

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Peter Renton December 24, 2012 at 3:39 pm

I share everything I can when it comes to Prosper and certainly if I knew something that might harm investors I would share it anyway. Suffice it to say that most of what I cannot share is good news, though.

Reply

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