In a previous post, I looked at Prosper's pro-offered collections statistics. There is another way to look at their collections, however, that has the potential to identify quickly changing trends in Prosper's collections department. This will be useful if the new VP of Operations walks the walk from his talking the talk.
To do this, lets look at the life-cycle for a late loan. When a borrower misses a payment, they're flagged. Loans proceed to 1 month late, then 2 months late, 3 months late, and so on. If a borrower catches up, their loan drops out of the lateness pipeline. We can spot collections happening by observing how 1 month late loans in January become 2 month late loans in February and 3 month late loans in March. As some loans repair, they'll drop out of the aging.
|Month Initially Late||Initially Late|
(1 month late)
|1 Month Later|
(2 months late)
|2 Months Later|
(3 months late)
Since we're working with raw results, we'll see emerging trends before they show up in Prosper's 12 month averages. I'll be watching the results for October very closely. If Prosper is making progress on improving their collections efforts, we should see signs of improvements in the September and October families of late loans. Nov 1 is just a few days away...