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MICROSERVICES Authors: Roger Strukhoff, Cloud Best Practices Network, Adrian Bridgwater, Carmen Gonzalez, John Wetherill

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Prosper Releases Market Survey Results for March 2008

Prosper Releases Market Survey Results for March 2008

Prosper(www.prosper.com), America’s largest people-to-people lending marketplace, today reported market survey results for March 2008. In this month’s survey Prosper CEO and Co-Founder, Chris Larsen, discusses positive portfolio plan performance and adoption trends.

March 2008 Prosper People-to-People Lending Market Survey

Prosper’s People-to-People Lending Market Survey results are released the second Tuesday of every month. To register to automatically receive the survey, send an email with “SUBSCRIBE” in the subject line to: [email protected].

Market Commentary By Prosper Co-founder and Chief Executive Officer, Chris Larsen

As we have previously reported, Prosper’s mix of “well priced” loans – loans with an attractive risk-return tradeoff – has dramatically changed from the same period last year with approximately a 200% increase in the percentage of “well priced” loans and a six-fold decrease in “low priced” loans – loans with an unattractive risk-return tradeoff. Part of this positive trend is attributable to the introduction of portfolio plans and performance guidance from the Prosper Marketplace – changes introduced last October. These changes continue to drive better overall performance of the market.

In March we saw further evidence of this with portfolio plan performance improving. For example, the Conservative portfolio plan – one of four model portfolio plans Prosper has provided as templates that can be used by lenders – consists of five credit slices. Looking at all the credit slices across all four plans, 18 of 21 slices improved or remained constant. This is quite positive considering the continuing credit crunch occurring in so many traditional financial markets and should lead to both better rates for borrowers and better performance for lenders.

We are also seeing a healthy start of custom portfolio plans, which lenders can create from scratch or modify from an existing Prosper model plan. These plans can be easily shared with friends or family. In March, approximately 1,800 custom plans were created that spawned over 18,000 bids.

Percentage of Attractive Risk-Return Tradeoff Loans as a Percentage of All Loans

     
March 2008   March 2007
72%   21%
 

Mix of Funded Borrowers

                   
    March

2008

  March

2007

  Year-to-Date

2008

  Year-to-Date

2007

  Since

Inception

Prime   39%   29%   41%   27%   32%
Near Prime   56%   57%   54%   55%   55%
Sub Prime   5%   14%   5%   18%   14%
       

Membership and Loan Volume Statistics

                   
    March

2008

  March

2007

 

Year-to-Date

2008

 

Year-to-Date

2007

  Since

Inception

New Members   40,779   38,938   108,273   103,705   646,401
Funded Loans  

$7.3 million

  $8.0 million   $20.5 million   $19.6 million   $128.8 million
Average Loan Size   $6,536   $6,935   $6,659   $6,419   $6,316
Daily Average Number of Borrower Listings   2,287   1,848   2,197   1,821   1,628
       

Estimated Annual Return on Prosper Select Index

   
    March 2008
Prosper Select Index   8.57%
Prime Select Index   9.19%
Near Prime Select Index   8.02%
Sub Prime Select Index   7.62%
 

Average Borrower Rates on Prosper Select Loans

                       
    March

2008

  February

2008

  March

2007

 

Year-to-Date

2008

 

Year-to-Date

2007

 

Since

Inception

Prime Select Loans   9.86%   10.32%   10.38%   10.02%   9.64%   10.06%
Near Prime Select Loans   15.52%   17.10%   15.08%   16.31%   14.76%   16.16%
Sub Prime Select Loans   35.00%   N/A   21.85%   29.69%   21.5%   24.16%
         

Definitions

Portfolio Plans: A portfolio plan is an automatic bidding tool that enables lenders to create their own bidding strategies and have bids placed automatically on listings that match the lender’s desired lending criteria. Prosper lenders can create portfolio plans consisting of multiple slices of credit attributes.

Since Inception: November 1, 2005 through March 31, 2008. Prosper’s by invitation only “friends and family” launch began on November 1, 2005 and Prosper launched to the general public on February 13, 2006.

2008 Year-to-Date: January 1, 2008 through March 31, 2008.

2007 Year-to-Date: January 1, 2007 through March 31, 2007.

Prosper Select Index: The Prosper Select Index return is the estimated average annual return on principal, based on actual delinquency performance to date. The Prosper Select Index includes AA - E credit grade loans for borrowers whose credit reports at the time of application indicated zero current delinquencies, three or fewer credit inquiries, and a debt-to-income ratio of 40 percent or less. The annual return period reflects loans originated in the twelve month period ending one month prior to the observation date of March 31, 2008. Prime Select includes AA and A credit grade loans (credit scores of 720+). Near Prime Select includes B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime Select includes E credit grade loans (credit scores between 560 and 599).

Average Borrower Rates: Average Borrower Rates are the weighted average borrower rates on Prosper Select Index loans with loan amounts between $5,000 and $10,000. Rates shown are interest rates, not annual percentage rates.

Mix of Funded Borrowers: Prime includes all AA and A credit grade loans (credit scores of 720+). Near Prime includes all B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime includes all E and HR credit grade loans (credit scores below 600).

N/A: = Not available; no loans met these criteria.

About Prosper

Prosper (www.prosper.com), America's largest people-to-people lending marketplace, was created to make consumer lending more financially and socially rewarding for everyone. Prosper’s membership consists of over 650,000 people from across the country. Since launching in February 2006, over $130 million in loans have been funded in the marketplace.

The way Prosper works is intuitive to people who have used eBay. Instead of listing and bidding on items, people list and bid on loans using Prosper's online auction platform. People who want to borrow on Prosper create loan listings for up to $25,000 and set the maximum rate they are willing to pay a lender. People who register as Prosper lenders set the minimum interest rate they are willing to earn and bid in increments of $50 to $25,000 on loan listings they select. In addition to criteria commonly used by institutional lenders, such as credit scores and histories, Prosper lenders can consider borrowers' personal stories, endorsements from friends, and group affiliations. Once the auction ends, Prosper takes the bids with the lowest rates and combines them into one simple loan to the borrower. Prosper handles all on-going loan administration tasks including loan repayment and collections on behalf of the matched borrowers and lenders.

Prosper was co-founded by Chris Larsen, co-founder of E-LOAN, and John Witchel, technology entrepreneur. Backed by Accel Partners, Benchmark Capital, DAG Ventures, Fidelity Ventures, Meritech Capital, and Omidyar Network, Prosper has raised approximately $40 million. Prosper's marketplace platform is patent pending.

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