Saturday, August 25, 2007

Latest Debt Sale

The official announcement forum had the results from the latest debt sale:

We completed a debt sale this week which will be evident in participating lender accounts over the next few business days.

When a loan is sold, it is considered to be a default on the Prosper site and in the performance metrics. If one of your loans was sold, you will receive an email notifying you of the default and indicating the sale amount. Sale proceeds will be transferred directly into your Prosper account a few days after you receive your email notification.

Here are the details of the sale:
• Eligible loans were 122 days past due as of July 26, 2007, provided the loan was not part of any bankruptcy filing
• 309 loans were sold
• Price range: 1.8% - 26% as a percent of principal balance

Pricing is determined solely by the debt buyer and can vary from sale to sale. Several factors were used to determine pricing in this sale, with credit grade being a primary reason. Homeownership, which was a major factor in prior debt sales, was not used by the debt buyer as a pricing factor in this sale.
• Weighted average prices by credit grade:
--AA-A = 23%
--B-D = 13.3%
--E, HR, NC = 8.1%

We anticipate the next debt sale will occur in December.

Of interest was that the debt buyer ignored home ownership. This was not the past default sale experience. If this continues, it will simplify default modeling for lenders slightly. It also looks like they fetched more for defaulted AA-A grades compared to the May, 2007 sale (19% high in May, no specific grades mentioned)

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