Now p2p lending has a new problem in Pennsylvania - lenders are banned. Here's the announcement from the Prosper blog.
"We have made the decision to discontinue accepting new lender registrations, and new bids from existing lenders, from residents of the Commonwealth of Pennsylvania. Our decision to make this change was based on our ongoing discussions with regulators in Pennsylvania, which led us to believe the change was necessary to comply with their current interpretation of their state regulations.
We have notified existing lenders residing in Pennsylvania of this change via email and at the point of signing into their Prosper accounts. Existing lenders residing in Pennsylvania will continue with their existing lender agreements, have their existing loans serviced, and be able to transfer funds out of their Prosper account. However, they will not be able to place new bids on listings or transfer money into their Prosper accounts.
This change does not affect borrowers residing in Pennsylvania, who remain free to create loan listings on Prosper."
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8 comments:
Pennsylvania is robbing it's citizens of an opportunity to hedge the interest rates we all pay on our credit cards, student loans, morgages, etc.
This is a punch in the gut!
Pennsylvanians for Prosper Lending
SIGN THE PETITION!!
Even if you aren't a PA Lender... help us raise and solidify our voice.
This is a denial of opportunity & freedom!
SIGN THE pa4prosperlending PETITION!
http://www.ipetitions.com/petition/pa4prosperlending/index.html
if the link doesn't work visit the blog, pa4prosperlending
pa4prosperlending - I just checked out your blog. I see you have been lending for about three months. This caught my eye.
"According to Eric's Credit Community, my Average Interest Rate is 33.27%. My Experian Estimated Return on Investment is 25.14%, and my EricsCC Estimated ROI is 33.03%."
You may already know, but there is no one earning those kinds of returns due to high default rates on risky loans. You may want to check out this risk management article. This loan suspension for PA may end up saving you some money. As your loans mature you can re-evaluate your lending strategy and see what the right risk/reward balance is for you.
LC may also open back up soon. If you are still looking for p2p lending options you may want to follow the news. Loanio too.
Tom,
Thank you for the follow-up comment. -definitely aware that I've been lucky so far and would expect that return to drop over time. Three months is not a long time at all! My plan had been to build my portfolio to the point where any single loan was less than 2% of my portfolio, at which time I was going to begin scaling away from the riskier, higher interest loans.
I was just really enjoying the p2p thing, and it was only a smaller sliver of my investment activities.
I will definitely check out the risk management article.
I appreciate your taking a look at my blog. I'm by no means a professional blogger, as I'm sure is evident. Yesterday I found myself motivated to do something! Anything! to direct my frustration over the restriction.
Thanks again!
pa4prosperlending - thanks for coming back. I just noticed a comment from Prosper on their official blog with contact information for officials in PA who may be lobbied. Here's what they said:
"The regulatory body we’re primarily in discussions with is the Pennsylvania Securities Commission. Contact information for the Commission and other key Pennsylvania government and regulatory officials is included in the following links:
Pennsylvania Securities Commission
http://www.psc.state.pa.us/investor/contact.html
Pennsylvania Governor Edward G. Rendell’s Office
http://www.portal.state.pa.us/portal/server.pt?open=512&objID=2998&mode=2
Pennsylvania Open for Business
http://www.paopen4business.state.pa.us/paofb/cwp/view.asp?a=3&q=440975
Pennsylvania House of Representatives
http://www.legis.state.pa.us/cfdocs/legis/home/member_information/email_list.cfm?body=H
Pennsylvania State Senate
http://www.legis.state.pa.us/cfdocs/legis/home/member_information/email_list.cfm?body=S
Tom - Not a problem!
You indeed raised a great point, something I didn't consider addressing in the heat of the moment yesterday.
I addressed your comments on pa4prosperlending this morning.
Everyone, please contact your state reps, state senator and the Govenor.
I contacted my state rep and he said he would be making some calls to the Pennsylvania Securities Comission to investigate this issue.
It is almost election time, so they will listen to you. Take action!
I think Pennsylvania may have saved some lenders a lot of money. Lending money to people at confiscatory rates is what got the banks in trouble and they're "professionals". I don't see how a bunch of amateurs think they can lend at even higher rates on unsecured debt and make any money at all. At least the banks have some assets tied to those loans.
zcommodore, I made more than $800 my first year. That's more than a bank will give me.
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