Due to state regulations, Prosper banned lenders from Pennsylvania. This caused an immediate and angry response from Prosper lenders. One started a petition and blog - Pennsylvanians for Prosper Lending.
Many PA lenders left angry comments on the official Prosper blog. Here's a sample:
"I want to express my outrage. I received an email this morning stating that you are no longer allowing bids from registered lenders in PA, and you are also not allowing new lenders from my state as well. The policy in general doesn’t make any sense to me, but more importantly I think all PA lenders should’ve been notified that this change was coming (instead of it becoming effective immediately). I feel like Prosper has slapped me upside the head in the way this situation has been handled. I have previously been very content with the way this site has been run and am more than disappointed in how this situation has been handled." - wyominggirl7
"If Prosper has had ongoing discussions with regulators in Pennsylvania, why didn’t Prosper contact PA lenders sooner? Not only is this announcement a surprise, it’s a wasted opportunity: PA lenders could have contacted their state senators and representatives, not to mention Governor Rendell’s office, to apply some pressure." - DonQ
"I contacted my state rep over this lending issue for PA residents. I imagine that the banks do not like this peer to peer lending and so they lobbied to shut us down. Yes I know, heavy handed government tactics at work again." TeddK
"I suggest you all contact your state representatives and senators as well as the governor. I already have my state rep interested in this issue. I need more information to give him about the what the regulations are and what officials and organizations are involved. I wish prosper had told use sooner so we could have pressured law makers." - Jon P
"Pennsylvania get more ridiculous all the time. I want to continue lending! I have signed the petition mentioned above and will be contacting my legislators right away!" - Mike S
"I just can’t believe this. With all my other investments tanking, you take away the one that I am actually making a good return on. Its crap like this that pushes people over the edge." - Jim C
In response, Prosper has published contact information for PA officials who may be able to influence the decision. They indicate they are primarily in discussions with the Pennsylvania Securities Commission.
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
Showing posts with label pennsylvania loan. Show all posts
Showing posts with label pennsylvania loan. Show all posts
Wednesday, September 17, 2008
Tuesday, September 16, 2008
Pennsylvania lenders booted from Prosper
Pennsylvania appears to be one of the least friendly when it comes to peer to peer lending. One year ago we reported that Pennsylvania borrowers avoided Prosper due to the low rate caps. Borrowers residing in Pennsylvania could only request loans at 6% and below due to aggressive state regulations. Few lenders were willing to risk their money for such a low return. The situation changed in April when Prosper raised the rate cap for all states to 36%.
Now p2p lending has a new problem in Pennsylvania - lenders are banned. Here's the announcement from the Prosper blog.
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."
Sunday, December 16, 2007
Lending Club eliminates state rate caps
A variety of different state by state rates and regulations for borrowers on Prosper and Lending Club have slowed the adoption of p2p lending throughout the United States. For example, if you check out Prosper’s state licenses and lending limits chart you can see that borrowing is not permitted for those that live in some states (like Nevada) and is restricted to businesses in some states (like North Carolina) and has very low rate caps in some states (like Pennsylvania). This can be very confusing for borrowers. In fact, we highlighted Pennsylvania in an article a couple months ago - Pennsylvania borrowers avoid Prosper.
Pennsylvania, for example, is the sixth most populous state with over 12 million people. Based on their state lending laws, Prosper only allows loans to borrowers residing in Pennsylvania at 6% and below. Rather than helping borrowers get a good interest rate the practical effect of this legislation has been to prevent borrowers from obtaining a loan. According to LendingStat's loan breakdown by state, only 21 loans have been made to Pennsylvania borrowers ranking them a distant #43 despite their large population. Almost all of these 21 loans are for the minimum loan amount - $1,000.
Some people have attempted desperate measures to obtain a p2p loan despite the rate caps. Eric, who runs deepmarket.com, tried to get a loan on Prosper despite an 11% cap on loans from Virginia. He even offered double interest on the side by immediately paying lenders through PayPal but his loan still did not fund.
Lending Club has finally eliminated all this confusion – they are available to borrowers in all states and are not bound by state interest rate limits any more. In the official announcement, Lending Club CEO Renaud Laplanche said, “We went National today, 6 months after the launch of our Facebook application and 3 months after the limited opening of our public website at http://www.lendingclub.com/.” He estimates that this will open up their platform to an additional 108 million borrowers.
From May 24 to December 14 Lending Club has issued 505 loans worth nearly $4 million. Prosper, which has been around longer, has issued over $100 million in loans. While Lending Club is now available to many more borrowers they still limit borrowing to users with a FICO score over 640. They have had over 4,000 loan applications worth $36 million which have been disapproved.
Read more here:
TechCrunch - P2P Loans GainingTraction. Lending Club Goes Nationwide
Mashable - Lending Club 6 Months Later: Does Peer-Lending Work?
CenterNetworks - Lending Club Now Offers Loans in All States; Releases Six-Month Loan Data
Technically Speaking - Lending Club is now live nationwide in all 50 states
Disclosure: I currently blog for Lending Club. Read my Lending Club posts here.
Pennsylvania, for example, is the sixth most populous state with over 12 million people. Based on their state lending laws, Prosper only allows loans to borrowers residing in Pennsylvania at 6% and below. Rather than helping borrowers get a good interest rate the practical effect of this legislation has been to prevent borrowers from obtaining a loan. According to LendingStat's loan breakdown by state, only 21 loans have been made to Pennsylvania borrowers ranking them a distant #43 despite their large population. Almost all of these 21 loans are for the minimum loan amount - $1,000.
Some people have attempted desperate measures to obtain a p2p loan despite the rate caps. Eric, who runs deepmarket.com, tried to get a loan on Prosper despite an 11% cap on loans from Virginia. He even offered double interest on the side by immediately paying lenders through PayPal but his loan still did not fund.
Lending Club has finally eliminated all this confusion – they are available to borrowers in all states and are not bound by state interest rate limits any more. In the official announcement, Lending Club CEO Renaud Laplanche said, “We went National today, 6 months after the launch of our Facebook application and 3 months after the limited opening of our public website at http://www.lendingclub.com/.” He estimates that this will open up their platform to an additional 108 million borrowers.
From May 24 to December 14 Lending Club has issued 505 loans worth nearly $4 million. Prosper, which has been around longer, has issued over $100 million in loans. While Lending Club is now available to many more borrowers they still limit borrowing to users with a FICO score over 640. They have had over 4,000 loan applications worth $36 million which have been disapproved.
Read more here:
TechCrunch - P2P Loans GainingTraction. Lending Club Goes Nationwide
Mashable - Lending Club 6 Months Later: Does Peer-Lending Work?
CenterNetworks - Lending Club Now Offers Loans in All States; Releases Six-Month Loan Data
Technically Speaking - Lending Club is now live nationwide in all 50 states
Disclosure: I currently blog for Lending Club. Read my Lending Club posts here.
Sunday, September 9, 2007
Pennsylvania borrowers avoid Prosper
If you are a lender on Prosper you can bid on loans from any state. The story is much different for borrowers. Each state has a different maximum authorized interest rate which can be found on the Prosper state licenses and lending limits chart. This has slowed the growth of peer to peer lending and angered borrowers from rate capped states.
Pennsylvania, for example, is the sixth most populous state with over 12 million people. Based on their state lending laws, Prosper only allows loans to borrowers residing in Pennsylvania at 6% and below. Rather than helping borrowers get a good interest rate the practical effect of this legislation has been to prevent borrowers from obtaining a loan. According to LendingStat's loan breakdown by state, only 21 loans have been made to Pennsylvania borrowers ranking them a distant #42 despite their large population. Almost all of these 21 loans are for the minimum loan amount - $1,000.
Pennsylvania's Pittsburgh Post Gazette interviewed Prosper founder Chris Larsen and published an article about the loan caps and Prosper in today's paper - Peer-to-peer lending sites a growing presence on the Web. Here's the excerpt dealing with Pennsylvania's rate cap:
"For Prosper.com, business has been hampered so far in Pennsylvania by a state statute that sets a maximum interest rate of 6 percent annually on loans of less than $50,000. That makes it hard for Pennsylvania borrowers to attract lenders on the site, Mr. Larsen said.
State and federal laws have carved out exemptions that allow banks and other entities in the state to charge more than 6 percent, but Pennsylvania regulators are still determining whether Prosper.com qualifies.
'We're trying to work with regulators, but it takes time,' Mr. Larsen said.
CircleLending said the 6 percent ceiling 'has not come up as an issue' because lenders know borrowers and are more interested in helping out than making a hefty return.
The Pennsylvania Department of Banking had little to say about the peer-to-peer lending business, other than the agency has noticed significant growth recently.
Officials are examining whether this new type of lending operation should be required to be licensed in the state, spokeswoman Heather Tyler said last week.
For now, she said, 'As always, the banking department urges consumers to use caution and do their homework in selecting a financial service provider.'"
The Pennsylvania loan cap has frustrated many borrowers who have vented in the forums. Borrowers have asked, "Is it possible to get a loan in PA?" Another borrower, Gibsound, started a thread called Pennsylvanians against PA STATE CAP of 6%. He said, "Now don't get me wrong. I love Pennsylvania. However I don't like the state cap of 6%." Jack Talalai who is active on the Prosper forums and works in Pennsylvania's banking industry explained the legislation behind the rate caps is based on the Loan Interest and Protection Law. From the tone of borrowers, it looks like they are tired of being 'protected'.
Update (4/15/2008): Prosper raised the rate cap for all states to 36%
Update (9/2008): Pennsylvania lenders booted from Prosper
Pennsylvania, for example, is the sixth most populous state with over 12 million people. Based on their state lending laws, Prosper only allows loans to borrowers residing in Pennsylvania at 6% and below. Rather than helping borrowers get a good interest rate the practical effect of this legislation has been to prevent borrowers from obtaining a loan. According to LendingStat's loan breakdown by state, only 21 loans have been made to Pennsylvania borrowers ranking them a distant #42 despite their large population. Almost all of these 21 loans are for the minimum loan amount - $1,000.
Pennsylvania's Pittsburgh Post Gazette interviewed Prosper founder Chris Larsen and published an article about the loan caps and Prosper in today's paper - Peer-to-peer lending sites a growing presence on the Web. Here's the excerpt dealing with Pennsylvania's rate cap:
"For Prosper.com, business has been hampered so far in Pennsylvania by a state statute that sets a maximum interest rate of 6 percent annually on loans of less than $50,000. That makes it hard for Pennsylvania borrowers to attract lenders on the site, Mr. Larsen said.State and federal laws have carved out exemptions that allow banks and other entities in the state to charge more than 6 percent, but Pennsylvania regulators are still determining whether Prosper.com qualifies.
'We're trying to work with regulators, but it takes time,' Mr. Larsen said.
CircleLending said the 6 percent ceiling 'has not come up as an issue' because lenders know borrowers and are more interested in helping out than making a hefty return.
The Pennsylvania Department of Banking had little to say about the peer-to-peer lending business, other than the agency has noticed significant growth recently.
Officials are examining whether this new type of lending operation should be required to be licensed in the state, spokeswoman Heather Tyler said last week.
For now, she said, 'As always, the banking department urges consumers to use caution and do their homework in selecting a financial service provider.'"
The Pennsylvania loan cap has frustrated many borrowers who have vented in the forums. Borrowers have asked, "Is it possible to get a loan in PA?" Another borrower, Gibsound, started a thread called Pennsylvanians against PA STATE CAP of 6%. He said, "Now don't get me wrong. I love Pennsylvania. However I don't like the state cap of 6%." Jack Talalai who is active on the Prosper forums and works in Pennsylvania's banking industry explained the legislation behind the rate caps is based on the Loan Interest and Protection Law. From the tone of borrowers, it looks like they are tired of being 'protected'.
Update (4/15/2008): Prosper raised the rate cap for all states to 36%
Update (9/2008): Pennsylvania lenders booted from Prosper
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