Another Way To Monitor Prosper Collections

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)	Repair Rate
January 07	95	83	82	13.68%
February 07	101	90	90	10.89%
March 07	108	91	89	17.59%
April 07	130	119	119	8.46%
May 07	193	178	171	11.40%
June 07	203	195	186	8.37%
July 07	224	194	187	16.52%
August 07	250	232	227	9.20%
Sept 07	259	229	?	?
October 07	313	?	?	?

If you read across the top row, on January 1st, there were 95 loans late. 1 month later (Feb 1), there were 83 loans 2 months late. This implies that Prosper's collections had repaired 12 of those loans. 2 months later (March 1), there were 82 loans 3 months late, suggesting that 1 more loan got repaired in the process.

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...