Friday, September 7, 2007

Forum Whomping Over Group Rewards

After writing about Prosper's change in group leader rewards, I chanced a venture onto the forums to throw my thinking into a no holds barred environment. It'd be charitable to say that I got knocked around a bit. It starts with my post:

The good groups help guide borrowers with help for their listing descriptions. I don't have hours to play back and forth with borrowers trying to sooth out the information that's in the average listing from a No Bulls borrower. That's a value-add for me as a lender. I'm expecting to see the listing quality drop as the good group leaders exit and borrowers flounder around.

Shenendoah replies:

If a borrower doesn't know how to write a decent description, I want to know that. I don't want a GL to make it look pretty.
If a borrower does not know how to do that, I don't go back and forth with them at all, I simply pass on their listing and find another.

Groups are a good thing for borrowers, but not for lenders. The so-called "good" groups have gotten a lot of loans funded that never should have been funded.
It goes down hill for my logical thinking from there. I do recommend the forum thread as good read on the topic. I was most impressed with Penelope, who provided a solid reply that characterized the group problem:

If a less than attractive loan is put up, you have the option of questioning the borrower.

If that same unattractive listing is spit shined by a GL, you feel more confident in it.

We have witnessed GLs encouraging borrowers to state all types of false information to make the listing look good. Massaging DTI, couching on % to get SOs to hit, etc.

The fact remains that there is just another layer of potential BS you have to wade through.

She also provided a link to a forum thread on the issues with group rewards and community payments. I suspect that I'm going to have a change of heart coming soon.

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