Friday, October 31, 2008
Tuesday, October 28, 2008
Laplanche said Lending Club has issued over $1,000,000 in loans over the last ten days. He said the number of borrowers and lenders has gone up dramatically due to recent events. The number of borrowers has increased due to tighter credit. Lenders have also increased due to a stock market which is not performing as well as normal and investors who are looking for alternative investment opportunities.
Although Laplanche did not mention Prosper, he tried to differentiate Lending Club from other peer to peer lending companies that have higher default rates by emphasizing their exclusive focus on prime borrowers. He said Lending Club has been very careful on protecting lenders from sub-prime borrowers and risk. According to Laplanche, the default rate since May 2007 has been “less than 2%.”
Lending Club was also featured on ABC News back in April.
Wednesday, October 22, 2008
We are writing to inform you that the Prosper Referral Program has been shut down and is no longer in effect. Our lender activity is limited. Click here to learn more.
As a result we request you take down any reference to Prosper immediately.
Thank you for your immediate attention in this matter.
It is uncertain what "any reference to Propser" includes. Presumable it only refers to advertisements. While we have typically used referral links when linking to Prosper we have not served Prosper ads for quite some time.
Websites which rely on referral income can now turn to Lending Club. Lending Club started a referral program with Commission Junction earlier this month. Here are the details of the program:
Description: Lending Club is a social lending network where members lend and borrow money from each other at better rates, bypassing the banks.
We have already issued more than $20,000,000 in loans at better rates than banks' and we are looking to spread the word of this great alternative.
We will reward publishers for every user they refer that fill out the loan application form, independent of the loan issuing or not.
Lending Club accepts only US-based credit worthy borrowers with 640+ FICO score and no current delinquencies.
Here are some answers you may be looking for before you advertise for us:
What will you pay for?
We will reward publishers for sending us qualified traffic:
$35 for first 10 applications/month
$40 for each additional loan application
What is your conversion rate?
Our current conversion rates are very high (upwards of 60%) if the user is looking for a loan and has good credit.
Do you have a dedicated affiliate manager?
Yes. We have asked CJ to manage the program initially, and in addition, we have a dedicated SEM resource on board.
What is your average order amount?
Typical order amount is between $80-$150(fees charged once a loan is issued). We don't charge a fee for application, and about 80% of the applications actually become loans.
Is your website attractive and easy to navigate?
Very much. We won the Webby award 2008 as best banking and payments site as well as a 2008 WebAward for Outstanding financial services site.
How does your commission structure compare with other advertisers in your category?
We feel we are very competitive and in most cases, we pay higher than other advertisers.
If a publisher consistently performs, will you increase their commission?
YES. We are willing to discuss better pay-offs based on performance, quality of borrowers and volume.
Based on my own experience with various referral programs I'm optimistic towards Lending Club's new referral program. With Prosper, hundreds of new members have joined Prosper after clicking on links from this site but very few have become borrowers or lenders. Prosper did not pay a referral bonus until the borrower made their first payment so, even if the borrower converted, it was still several months until a payment occurred.
Lending Club pays immediately after a person fills out a loan application, so their referral program is much more likely to result in referral bonuses and much more likely to result in payments. Hopefully Lending Club will expand their program to lenders as well as borrowers in the near future.
Here is an example of one of Lending Club's new ads available through Commission Junction. Click through for the improved landing page.
Tuesday, October 21, 2008
Getting loans through peer-to-peer lending isn’t as easy as you may think. These days, many have just as much trouble getting loans on Prosper.com as they might at a bank.
That’s because the lending site is getting a new wave of people with good credit who were turned away by banks, said Chris Larsen, the company’s CEO.
“So lenders are pickier about who they fund,” he said.
Only 5 percent of people with credit grades that fall in the bottom three brackets (out of seven) now get loans on the site, with about 40 percent of loans going to people with scores in the two highest brackets.
Friday, October 17, 2008
Lending Club's re-emergence could not have been timed better. With Zopa and Prosper now closed, Lending Club now only has to compete with upstart Loanio for the p2p lending market.
Over a year ago, Prosper announced plans to expand to Japan. There has been no news from Prosper since. Now that Prosper has entered a quiet period and is distracted with SEC regulations in the U.S., it is unlikely we will hear anything more about Prosper's planned expansion to Japan for some time.
Maneo is actually a play on the English words money and new. Maneo's CEO Tadatoshi Senoo said the platform has been in development since August 2006. Like the United States, Japan has extensive regulatory hurdles which had to be overcome.
Here are details about Maneo from their press release:
How to use maneo's social lending service
After initially registering as a member with maneo, borrowers and lenders can utilize maneo's social networking service. Registered members can easily and effectively communicate with other members utilizing "mane blog," "maneo message," and "mane tomo."
Creating an auction
People who want to borrow on maneo create loan listings explaining how much they desire, why they want to borrow and the maximum interest rate they are willing to pay lenders. Potential lenders select the loan listings they are interested in and bid on these loans. maneo connects borrowers with lenders through an auction process in which the lender willing to provide the lowest interest rate "wins" the borrower's loan.
Members must be between 20-65 years old and reside in Japan.
Borrowers must be between 20-60 years old and have annual income of at least 3 million yen. Borrowers must also successfully pass maneo's credit check and submit the following documentation: proof of identity and annual income.
Lenders must be between 20-65 years old. Lenders must also successfully pass maneo's review process and submit proof of identity.
Wednesday, October 15, 2008
This is the message Prosper has sent to members:
Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.
The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.
Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you're an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you'll be able to track and monitor your loans; and you'll be able to withdraw funds from your Prosper account.
If you're a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you're a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.
A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we're required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.
We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.
Tuesday, October 14, 2008
Of course, the big news is Lending Club re-opened to lenders today. They also opened the first secondary market for p2p loans. According to Netbanker's report of the presentation, Lending Club has "been experiencing a 2% default rate and have been approving 14% of applications received."
As for Loanio, Netbanker's Jim Bruene reported, "Solomon walked the audience through the Loanio loan application process emphasizing the option to have a co-borrower, a first for a U.S. P2P lender, and the optional Platinum loan listing, which includes a host of verifications to give lenders more assurance the borrower is being truthful with their application."
Our review of Loanio is here. Loanio was a last-minute addition to FINOVATE after Pertuity Direct delayed their launch to ensure they meet regulatory requirements.
In addition, Lending Club has a trading platform where lenders can now sell loans to other investors. This is the first p2p lending company to offer liquidity.
According to the official announcement this registration will bring the following changes:
- Under the registered offering, Lending Club lenders will now invest in notes that correspond to portions of loans made to borrower members. The notes have stated interest rates ranging from 6.69 percent to 18.63 percent, after a 1 percent service charge is applied.
- By partnering with FOLIOfn Investments, Inc., a registered broker dealer, Lending Club becomes the first social lending network where lenders have the option of a trading platform. On the trading platform, lenders who become customers of FOLIOfn will be able to put notes up for sale in the event they need liquidity before the completed term of a note.
Friday, October 10, 2008
The stock market just had its worst week ever based largely on fears we are entering a recession. Last year Matt wrote an article about the likely impact of a recession on P2P lending. His points are all still valid. It's worth another look now.
Thursday, October 9, 2008
The CNN "expert" suggested two things. First, if you have good credit and some cash it may be a good time to look into buying foreclosures. Second, look at p2p lending. People have few choices for loans right now and are looking to their peers. If you are in a position you can loan to others and earn a good return, according to the analysts.
This echos sentiment from a CNN article last week. With the market down, investors are looking to p2p lending for a better return. With traditional sources of credit disappearing, people are turning to p2p lending.
Back in March, Lending Club CEO Renaud Laplanche told The Kansas City Star the peer-to-peer lending industry is being aided by something of a perfect storm. "On the borrower side, banks are tightening the money supply," he said. "On the lender side, the stock market isn't performing well." If it was true in March, it is even more true now.
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
Thursday, October 2, 2008
On this blog I've largely neglected Zopa while writing much more about Prosper, Lending Club, Fynanz and Loanio. So, just for kicks I decided to go through the application process and write about obtaining a loan through Zopa. Imagine my suprise when I got this message.
"For Zopa to work, we can only arrange loans to folks with pretty good credit - a minimum FICO of 640, among other things."
What other things could they be talking about? According to the FAQ you need:
- a minimum credit score (FICO) of 640
- income of $2,000 per month
- and a few years of credit history
Well, I have more than $2,000 per month income and I've got more than a decade of credit history. What else could they want? I found some more requirements on this splash page:
- Miniumum FICO score of 640
- Minimum of 3 years of credit history with at least 5 accounts
- No recent bankruptcies or serious delinquencies
- Stable gross income of at least $2,000/month
- Borrowers utilizing less than 60% of the credit available to them are more likely to be approved for a Zopa loan and at a lower interest rate
- A debt service ratio/debt to income of less than 50% of gross monthly income
Hmmm...no problems with any of these requirements. I sent a note to customer service requesting specific information about why I was declined. I received a vague response, "Since you do have a score above 640 it looks like the application was declined for one of the other reasons." I followed up with a phone call and was told the borrower requirements have changed within the last 30 days.
An email to their media contact was returned undelieverable.
Fearing identity theft or something worse, I logged in and pulled up my credit report. Only one surprise. There is a new item on my credit report - a credit inquiry today for a loan. The only inquiry on my credit report at all. Unlike Prosper and Lending Club, Zopa pulls a "hard" request when you inquire about a loan. I should have read all of the FAQ throughly before requesting a loan. Here's what Zopa has to say about their "hard" inquiry:
"We think it's best if you assume that there will be an impact to your credit score. That means you should only get a quote if you really would be interested in a Zopa Loan."
I would add - you should only request a quote if you have perfect credit and don't mind a hard inquiry on your credit score even if you decide not to obtain a loan through Zopa. Try one of the other p2p lending platforms (like Lending Club) which do not pull a hard inquiry.
Loanio.com unveils its peer to peer lending platform today and offers subprime, thin and no credit borrowers, the opportunity to get loans without exposing higher risks to its lenders
NEW YORK, Oct. 1 /PRNewswire/ -- Loanio, Inc. launched its p2p lending website (https://www.loanio.com) today, addressing the needs of an underserved market--those with poor or no credit profile histories. Prior to the launch, borrowers with poor or no credit scores have been turned away from, or have had little luck, with other p2p lending platforms. Loanio is looking to change this.
Borrowers with poor or no credit scores will be permitted to participate on the p2p lending platform by using a Co-Borrower or guarantors. According to CEO and Founder Michael Solomon, "only around 10% of borrowers on p2p sites wind up getting a loan. Many of them have less than stellar credit profiles. With options for these borrowers drying up elsewhere, we believe this feature and others on the website will fill a sorely needed void in the p2p lending arena."
To provide lenders on the platform with more reliable data, the company also introduced "Platinum Verification Services." This service is optional and available to borrowers at the time they create their loan request. A Platinum loan will indicate to lenders that Loanio has verified certain, otherwise "self-reported", financial profiles of borrowers such as last year's filed tax returns, employment and income, and more. "We want to provide as much data to our lenders as possible and the verification of these items allow borrowers to tell lenders they are serious about this process. Lenders, in turn, will have the benefit of not having to wonder if the borrower may have given their income data a 'little extra padding.'"
While the Co-Borrower option is mandatory for those with bad or no credit, both the Co-Borrower and Platinum Verification features are available to all users as an option. Solomon says, "The idea is that we want to provide all borrowers with as many possible tools to shine and present appealing loan requests to the lenders." With these features available to all users, even a fair credit borrower may be seen as a better risk if they have a Co-Borrower with an excellent credit record attached to their loan. The combination will also help the borrower get even lower rates. "If you saw two loan requests for the same money and rates, but one had an excellent rated Co-Borrower attached to it and went through the Platinum Verification process, which one would you bet on? I think the choice would be clear" Solomon continues.