interesting business model, plus an update on my stalker

[rmd]

prosper.com seems to have an interesting business model. it's like dutch auctions meet consumer lending.

lenders team up to collectively fund a given borrower's loan at some interest rate, so for a $1000 loan you might have 10 people funding it for $50 and 5 covering the rest at $100 each. prosper tacks a bit of interest on and handles income and payments. i've signed up as a lender to look around but haven't given them back info yet. so far it looks on the up and up. i figure i may hook them up with the same bank account i use for paypal and other online cruft (which never has very much money in it) and try funding a few small loan amounts. (i think the minimum amount you can fund a given loan is $50.)

meanwhile, in boring stalker info, the cat is back. (it went away for a few days)

i think it's female, because it's got that droopy belly i associate with neutered female cats. she's definitely not feral -- she was nuzzling my hand yesterday and purring. she's old and kind of bony but not starving, and she's got some nicks on her ears, so she's definitely done some fighting over the years. she's got some congestion, coughing and sneezing, maybe with a hint of a shiver.

being my mother's daughter, i finally gave in and put a bit of food out to see how she'd react -- she was hungry but not starving, i'd guess, since she immediately ate a bit but didn't wolf the whole thing right away. also, since it was damp and the porch floor isn't comfortable by any means, i put some rags in a box and put it out for her to lay on. she's hanging out there this morning.

i'm still not convinced she's a stray rather than just an opportunist. and there's no way i can bring her inside (it took years for the foundling cat i do have (she's the one in the userpic for this entry) to really fully become part of the previous pack-of-two). at least it's summer so i don't have to think "oh, what if it freezes to death!!"

Comments

[tcb.livejournal.com]

I briefly tried prosper.com a couple of months back.. it's an interesting concept. I'm still not sure about the whole "groups" thing. someone did think I was worth $100 at the time, which wasn't anywhere near the goal I was trying to reach for getting through the summer.

[rmd.livejournal.com]

i think the idea with "groups" is that you can collectively get a better interest rate because you lean on each other to keep payments current because otherwise your collective "reputation" suffers.

[rmd.livejournal.com]

oh, and yeah, it looks like presently there's (perhaps unsurprisingly) a lot more people looking to borrow than lend.

[cz_unit]

*nod* The fact that there are more borrowers than lenders does skew things a bit.

I think the big concern for lending is the number of HR people. Even at (and perhaps especially due to) a 30% interest rate I think people will default. Something else will come up, there will be another family disaster, and the prosper loan will be seen as "oh it's just a little money to a lot of people".

Still, there are a number of people with C to D credit who have no missed payments and nothing in default. I think these are the people who will really benefit; banks will not deal with them because they are not A-B rating, but they do pay back their obligations and have a reason to do so (they haven't missed payments yet, doing so will sink their credit)

And despite all that there was the case of a family with two adopted kids who thought they were infertile who got knocked up with #3 anyway. Good joy, but a screaming bitch from a finance POV. I can kind of relate to that one, so I'll throw $50 into the big karma pot.

I'll put a couple of hundred into it to see what happens. It could be a really good idea; a step between banks who don't care to review loans anymore and Cash Call (90% interest? fuck!) Then again it could crater.

Chris

[klingonlandlady.livejournal.com]

i suppose the other possibility is she could be the cat of someone who doesn't really take care of their cats... when i lived in Malden there was a family in the front house who often forgot to let their cat in, even in winter! He took to coming up with me and staying over in my bed on winter nights, then politely asking to be let out in the morning, before toilet became an issue. Didn't seem that hungry, but was being an opportunist.

It was odd too because he wasn't very affectionate, just wanted a place to sleep. It sort of gave me an insight into the group nesting arrangements that feral cats seem to do, in which they seem to have a truce in order to have a warm place to nest.

If she still looks to be in need when winter sets in, maybe a cat door into the basement or a doghouse under the porch? Did you ever see the cat house we built in Wakefield for that family of feral cats?

[rmd.livejournal.com]

that's one possibility i've considered.

i figure if she's still hanging out in the winter, i can set up some kind of little shelter in the corner of the porch on the other side of my bedroom window and the kitchen wall -- the house is poorly insulated enough that it should be reasonably warm (there's a radiator on the inside of that wall) if sheltered. (yeah, i've though ahead already. i am *so* my mother's daughter. there were no stray dogs in eastern MA, i think, who did not stop in to my house when i was growing up.)

[sierra-nevada.livejournal.com]

xthread pointed me at prosper.com a few months ago. My first reaction was that there was no risk rating anywhere to be seen, e.g. a credit score (http://en.wikipedia.org/wiki/Credit_score), which means that if you loan to anyone on that system, you can't really do risk management (http://en.wikipedia.org/wiki/Risk_management) or loan portfolio management.

In other words, this is what bank lending looked like about 60 years ago. Any bets on the speed with which they recapitulate history?

If I were being more charitable, I could characterize this as an attempt to make an electronic, first-world version of the Grameen Bank (http://en.wikipedia.org/wiki/Grameen_Bank).

[rmd.livejournal.com]

i don't know whether it's changed since you look, but now they've got credit ratings listed which are apparently based on fico scoring. (AA, A, etc thru HR (high risk))

also, there's DTI ratios, although it's self-reported.

[sierra-nevada.livejournal.com]

Wow, they have changed. Their scoring is based on an Experian-only product, not the FICO score, and they report just to Experian. They only report which of a number of score bands you're in, rather than permitting finer discrimination.

I didn't see any tools for comparing interest rates against scores, but I was fascinated by the groups thing - that's directly from Grameen Bank. They also promise to be able to sell loan portfolios "soon."

I wonder when the groups will run afoul of the Equal Credit Opportunity Act (prohibits discrimination in lending based on the standard protected groups: race, gender, religion, national origin, etc.) by being analogs for the protected criteria? More interesting is the possibility that some of those groups may petition to have their criterion removed from ECOA based on the fact that the discrimination of their group from the whole of the population results in lower interest rates...

The data collected from this would be fascinating to both economists and B-school students.

[rmd.livejournal.com]

yeah, it's clearly an evolving market niche.

i'm incredibly amused by the people who advertise the fact that they want to borrow money to lend it out to other people on prosper.

[sierra-nevada.livejournal.com]

Classic arbitrage. I wonder what they believe their margin can be.

[rmd.livejournal.com]

yeah, given that the second generation loans will have 2x the prosper margin tacked on, they'll presumably have to be making much higher risk loans to have any margin of their own. it'll be +EV for prosper, tho. :-)

[koshmom.livejournal.com]

Hey! I didn't know you had a Livejournal! Great to see you! (Now you just have to figure out who I am...hint: I used to live in CA and worked at LLNL and Cisco and took over eliot's place in that mansion with that guy originally from Rutgers who plays the piano - and we were both part of a few ski trips, specifically a group of about 10 of us in Utah a few years back - where someone in our group broke both his wrists on a snowboard...)

[koshmom.livejournal.com]

about the cat...many older cats have kidney issues...make sure you leave clean water out, and feel free to occasionally "flavor" the water wiht a little bit (just a little bit) of almost any natural flavoring, like homemade chicken broth, or beef broth, or tunacan liquid. Don't give a lot (some cats get UTI's with tuna liquid, for example) but if you flavor the water and give it right away to suck it all up asap, you'll make a friend and the cat will be slightly more hydrated.

[rmd.livejournal.com]

yeah, i figured when it's drier i might leave some water out. (the past few days i figure water hasn't been an issue.)

[kjc.livejournal.com]

Sounds a bit like a less-focused version of CircleLending - www.circlelending.com - where bunches of people can contribute to a loan to someone.

Their tagline is "CircleLending is the Smart Way to Manage Loans Between Relatives & Friends."

"Protect the financial and emotional interests of all parties involved by using CircleLending to structure and manage your private loan transaction."