I popped into the discussion forum, looks like the lenders are tittering over defaults, collection agency non-performance etc.

The company uses a rather bizarre habit of turning accounts 1 month past due over to the collection agency… Non-performance

I suspect the defaults will come in higher than the typical Credit Agency reported defaults. If the numbers come in much higher than traditional, say 20% (i.e 3.3% default rising to 4.0% default, you get a good dent to about 10% ROI.

With traditional default rate, the sweet spot appears to be tbe C credit group with a FICO in the 650-680 range. Default adjusted return is 11.50%. The others all drop below 10% when you head to the traditional upper default curve. BUT … yeah big but, that’s based on a debt to income ratio of less than 20%. These are unsecured loans, honor system documentation other than credit score…

I suspect you’ll have significantly higher write-offs.

You add in the risk of underperforming account collection, fiduciary loss (Prosper.com goes under) or something else and I think you’re looking at under 10% best case.