Borrowers – tight-lipped or talking one’s head off?

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When analysing Prosper.com data it is possible to find out all kind of things. E.g if there are regional differences to how talkative Prosper borrowers are when writing listings.

Prosper's most talkative borrowers live in:

 

as compared to:

Now, while that was fun, it is not really useful in any way or is it?

When looking at the length of funded listings, that became loans, by credit grade it gets more interesting.

Apparently the lower the credit grade the more detailed the description has to be to convince the lenders to bid to fund the loan.

Looking at the development of the description length of funded Prosper listings on the time scale  this chart is the result:

There are several possible causes that contribute to listings getting lenghtier:

  • Borrowers take other listings as example and add on top of this
  • Group leaders (or others) provide templates
  • Competition for lender attention is getting tougher
  • Borrowers detected that longer descriptions will increase chances (see HRs in table above) – unlikely

Suggestions?

Lendingclub receives 10 million VC funding

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Lendingclub has received a 10.26 million US$ venture capital investment from Norwest Venture Partners and Canaan Partners. The CEO Renaud Laplanche announced that the money will be used to expand Lendingclub beyond the Facebook platform.

In an interview, Daniel Ciporin of Canaan Partners says:

P2P services and functionality in general has been at the heart of web market disruption, from Ebay to MySpace to Facebook, using only a few of the most prominent examples. I think the opportunity is ripe now to apply P2P functionality in the consumer lending space, especially with the particular focus on pre-existing affiliations that Lending Club has.

Average lending club interest rate 11%

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Lendingclub's loan volume has surpassed 750000 US$. So far the average interest rate is 11.10%. As you can see in the table the majority of loans went to borrowers with good credit grades.

Lendingclub states that the top states where Florida, New York and Massachusetts. This differs from the state distribution of the Prosper loans, where California, Texas and Georgia are the states with most loans.
A possible cause is that Lendingclub.com is only open to Facebook users and might therefore target different user demographics then Prosper.com. (Source)

Regulator forces Dutch p2p lending site boober to stop lending

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Dutch p2p lending site Boober.nl is in big trouble. A court in Rotterdam ruled that Boober needs a license, with the judge supporting the position of the regulating authority AFM. After Boober published its interpretation what this ruling means, the AFM clarified its position in a press release.

Under pressure Boober finally posted a statement on its homepage saying that while the site remains open and existing loans will continue to be serviced, Boober stops any lender bidding. Statement:

Beste Boober Gebruiker

In tegenstelling tot wat dinsdag en woensdag is gecommuniceerd heeft Boober gisteravond na overleg met de Autoriteit Financiële Markten besloten om de krediet-bemiddelingsactiviteiten voorlopig te staken. Dit wordt geëffectueerd door uitleners voorlopig niet de mogelijkheid te geven op leningen te bieden . De site blijft gewoon beschikbaar en het besluit heeft geen enkele consequentie voor lopende leningen.

Boober betreurt de ongelukkige wijze waarop zij met de markt heeft gecommuniceerd en verwacht begin volgende week meer duidelijkheid te kunnen verschaffen.

Boober's service was controversial in the Netherlands from the start. It was even subject of discussion of the Dutch national parliament.

An update on what will happen next is expected early next week.

Richard van den Toorn, publisher of the great site Booberwatch.nl has supplied P2P-Banking.com with this chronology of events: Continue reading →

Prosper seeks Vice President Institutional Lender Development

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Prosper is hiring a Vice President, Institutional Lender Development. Job description:

As Vice President of Institutional Lender Development you will be responsible for ensuring Prosper has an adequate supply of liquidity. You will need to create an institutional sales process that identifies institutional prospects and sells them on the benefits of lending on Prosper. The position will also be responsible for developing strategies and structures that match the risk and return preferences of prospective lenders. This position will have an attractive incentive compensation plan dependent on meeting goals for institutional lender growth and marketplace liquidity.

This is an interesting development. First, if successful, it will scale up volume. Secondly, at least on the lender side, this step dilutes the peer to peer aspect of the marketplace.