To get an idea of how the stats look in Prosper, I pulled one year of Prosper Marketplace data for loans from March 28, 2006 through March 28, 2007. Four months have passed since the end of the data range which gives all of the loans a chance at going late. Auto-fund loans were also excluded from this data. Here is a table that shows default rates for home owners vs default rates for non-homeowners for this one year time period.
What this data suggests is that homeowners in Prime or near-Prime credit grades have higher default rates than non-homeowners. In the sub-prime markets homeowners are actually a better risk than non-homeowners. This data came as a surprise to me. With all the news about problems in the sub-prime mortgage industry I had assumed that sub-prime homeowners would be at an increased risk for default.
Personally I don't pay too much attention to home ownership as a criteria when deciding whether or not to fund a loan. Without being able to see the terms of the mortgage or the borrower's equity position, it is difficult to gage what effect the mortgage will have on the ability to repay the Prosper loan. Some borrowers will include this information in the description of the loan or in answers to questions. However, there is no verification of the information in those sections, so I do not trust that it is accurate. It would be too easy for the borrowers to write what they thought the lenders want to hear - especially in answers to leading questions.
In the higher credit grades the higher default rate might be partially compensated for by the difference in the amount of money recovered in debt sales for defaulted loans. When these sales have occurred, loans for homeowners at higher credit grades have been sold for as much as 25 or 30 cents on the dollar compared to pennies on the dollar for non-homeowners. Also, with this data being from the very early stages of the house market decline it may be too soon to tell what the overall effect will be on the Prosper marketplace.