foliofn

Prosper Reopens with SEC Approval – Starts Secondary Market

wiseclerk 1 Comment

Prosper.com has reopened – now with the long sought approval of the SEC which was granted last Friday. In his blog statement “We mean it this time!” CEO Chris Larsen sheds light on what was delaying SEC approval. It was auction bidding on loan requests:

… the first Internet auction-based P2P loans marketplace and trading platform to have its SEC registration declared effective, which means the SEC is permitting Prosper to facilitate auctions in a way that has never been done before.

Selling securities by auction is not new and critical to greater efficiency in fair price discovery for both sides of the transaction. However, the SEC has never permitted Wall Street investment banks or any other institution to run a true auction where investors could make an irrevocable bid that committed funds prior to the establishment of a final rate….

Prosper introduces a secondary market. The internet auction priced trading platform for Prosper Notes is operated by FolioFN (like Lending Club’s Note Trading platform). Only loans (‘notes’) issued after July 13th can be traded.

At the moment lenders from California, Colorado, Delaware, Georgia, Illinois, Minnesota, Montana, Nevada, New York, South Carolina, South Dakota, Utah, Wisconsin and Wyoming can use Prosper, if they fulfill state set financial suitability requirements. Prosper is open to borrowers from almost all states.

With the PR Prosper will likely build up a large selection of loan listings again fast (as of now there are 10). The interesting question will be if Prosper lenders will continue to have faith investing via Prosper after extremely high default rates and low collection results in the past. Furthermore disappointed (former) long term lenders are critisizing risks for lenders embedded in the latest SEC filing.

With the likely press coverage of the relaunch all p2p lending companies in the US can expect to see a rise in traffic.

Prosper Plans Open Market Loans

wiseclerk 1 Comment

Prosper.com, which is still in quiet period and not allowing new loans, made a new SEC filing yesterday. In this third amendment to the S-1 filing makes several amendments, most notably introducing securitization for initial offerings of loans.

Prosper plans “Open market loans”, which apparently are loans issued by traditional lenders which being securitized and resold to Prosper lenders. I am somewhat sceptical how many Prosper lenders will like the “open market loans” offer. To me this seems a far excursion from the peer to peer lending idea.

In the filing Prosper states that FolioFn will be the operator of the Prosper secondary market (named “Folio Investing Note Trader Platform”). FolioFn already operates the Note Trading Platform of Lending Club.

More changes in the new filing are in a review in this blog post at P2PLendingNews.

Lending Club allows lenders to trade their investments

wiseclerk 3 Comments

Lendingclub.com has introduced a secondary market for lenders. This is a major step, because one disadvantage for lenders in p2p lending was the lack of liquidity. Once the money was lend it was tied up (apart from repayments) until the end of the loan term (typically 36 months and more).

Through it’s secondary market – called Note Trading Platform Lendingclub allows lenders to offer their loans (or more precisely notes representing these loans) to other lenders.

Sellers list Notes that they would like to sell and enter an asking price. Buyers browse Notes that are available for sale, review payment history and the evolution of the borrower’s credit score, and buy Notes at the asking price. Buy orders received before 4pm Eastern time will generally settle same day, while buy orders received after 4pm Eastern time will settle next day.

Information about the Notes
Each listing contains the Note’s interest rate, issue date, outstanding principal, accrued interest, number of payments left, payment history to date, and the variation of the credit score of the underlying borrower since the issue date. Note, however, that the Notes are not “re-graded” over time, so you should not rely on grades assigned to Notes at the time they were issued to assess the current risk of a Note.

The Lending Club note trading platform is operated by FolioFn, a registered broker dealer. Foliofn charges to the seller a trading fee equal to 1% of the transaction amount. There is no fee charged to buyers.

Right now there are no notes offered for sale.