I like that Prosper is putting up more posts from their folks on their blog. Today's post was an update on the default sale by Doug Fuller. The punchline - the bad-loan marketplace is buyer market and a seller's nightmare:
As a result of these efforts, Prosper received a record number of bids on the sale file (eight). Unfortunately, all of the bids were extremely low. As I mentioned in my last update, the debt market was “flooded” by credit card issuers in March. That backlog has not dissipated.
At this point, we have not accepted a bid to buy the portfolio. We are actively soliciting alternative bids and proposals and are working through the alternatives. We are working to get the best price possible and appreciate your patience in this matter. Without compromising the status of negotiations, we will keep you informed on the process.
If you want confirmation, go through Portfolio Recovery Associates (bad debt collector) latest earnings conference call transcript. They're all a flutter about how there's lots of debt swirling around that can be purchased on the cheap, in part because actually collecting on the debt is getting more difficult. This does put Prosper in a bind. As debt ages, it becomes worth less. But if they wait, market conditions may improve. At some point, waiting longer will be entirely bad, but it's hard to say when it'll happen. Good luck to Doug Fuller on making that call - he'll be vilified regardless of what he does.