After posting the rant about my loan denial, I received an email from customer service on Thursday night which indicated my loan may have been denied due to a software glitch. They said they would check on things and get back to me by Friday morning. By Tuesday I had not heard anything so I followed up with another email. I received this response:
"I'm told it should work now. When you have a chance, please go back to www.zopa.com and click "Borrow" (just like you did the first time). Just to be safe, we removed your information from the Zopa system. Therefore, you will start over as a brand new member."
Now, just a day later Zopa is shutting down loan operations. Here is part of the official announcement:
"You probably know that Zopa’s US operation has a very different model to that in the UK and Italy in that it works in partnership with financial institutions (the credit unions) rather than being a pure peer to peer marketplace as it is here and in Italy.
So while our model is doing very well in current market conditions, the US has been adversely affected as the credit unions have pretty much stopped lending which rather limits the work that our US friends can do. This just couldn’t have been predicted when we launched int he US and is no way the fault of our partners. For us, a real shame is that we weren’t able to launch the original model over there for regulatory reasons.
So, sadly, our US colleagues have decided to withdraw from the US marketplace. This decision will have no impact on Zopa’s other activities in the UK, Italy and Asia.
Zopa’s UK operation has experienced significant volume increases in 2008 with huge growth in new members and increasing lender returns, while continuing to maintain excellent credit quality – currently less than 0.5% of loans are affected by any kind of late payment issue, with actual losses below 0.04%.
Zopa Italy has also achieved the highest growth of any European peer-to-peer operation since its launch in January, and has recently launched the first secondary market for any peer-to-peer operation.
Zopa’s US customers’ deposit accounts continue to be insured by the NCUA up to $250,000, and servicing of those accounts as well as the loans will be assumed by the credit unions within 90 days."
Zopa is closing shop less than a year after they opened their doors.Update: Zopa's CFO posted the following message in their official forum:
"We obviously need to respond to this. The email from Affinity Plus is partially correct in that we are transferring our customers relationships to the credit union they either borrowed from or bought a CD from (invested in). We are NOT shutting the website today. As most of you know, Zopa's US operation has a very different model to that in the UK and Italy in that it works in partnership with financial institutions (the credit unions) rather than being a pure peer to peer marketplace as it is here and in Italy. So while our model is doing very well in current market conditions, the US has been adversely affected in a way that couldn't have been predicted when we launched and is no way the fault of our partners. For me, a real shame is that we weren't able to launch the original model over there for regulatory reasons, esp given what a great job the regulators have turned out to have been doing there over the last few years, but that is another story....
The decision has not been taken lightly, and has obviously been difficult for our US colleagues, but due to the current credit crisis we have decided to withdraw from the US marketplace. This decision will have no impact on Zopa's other activities in the UK, Italy and Asia. Zopa’s UK operation has experienced significant volume increases in 2008 with huge growth in new members and increasing lender returns, while continuing to maintain excellent credit quality – currently less than 0.5% of loans are affected by any kind of late payment issue, with actual losses below 0.04%. Zopa Italy has achieved the highest growth of any European peer-to-peer operation since its launch in January, and has recently launched the first secondary market for any peer-to-peer operation."
Tip: Wiseclerk, Prospers.org
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The other thing that was interesting with this is that she was saying to stay in the market if you have a long time horizon which she defined as being in your 30s or 40s. Basically, implying that if you are in your 50s or older it is okay to go ahead and sell all of your stocks during this market downturn.
Interesting thing is how few "economy experts" were recommending selling stocks a year ago. I distinctly remember Jim Cramer saying "buy buy buy" a year ago after the 0.75 rate cut. He said that that kind of stimulus eventually will work, so it is a good time to get into the market. Now that the market is down he is saying sell unless you have a time horizon of more than 5 years.
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