February 2008 Market Survey

Prosper's People-to-People Lending Market Survey results are released the second Tuesday of every month. To register to automatically receive the survey, send an email with "SUBSCRIBE" in the subject line to: p2plendingmarketsurvey@prosper.com.

Market Commentary By Prosper Co-founder and Chief Executive Officer, Chris Larsen

In February 2008, the percentage of prime loans funded on Prosper once again hit record levels, accounting for 43% of originations. At the same time, the percentage of prime listings on Prosper hit an all time high of just over 18%—a big jump from 9% in February 2007 and the previous high of 12% in December 2007—while the percentage of sub prime listings hit an all time low of 33% and accounted for a mere 6% of funded loans.

Some other key metrics we watch closely include the type of listings that are created and funded in the Prosper marketplace. Very broadly, we look at listings that, based on historical Prosper loan performance data, can be made at an attractive risk-return tradeoff and those that can only be made at an unattractive risk-return tradeoff. By providing more robust information to lenders on the expected returns of listings, we have seen an increase in originations from attractive risk-return listings of over 200% and a decrease in originations from unattractive risk-return listings of 80% over the course of the last year.

As we discussed at our Prosper Days community conference, these dramatic and constructive shifts in the marketplace have been driven by three key factors: the pervasive credit crunch and sub prime mortgage meltdown; recently introduced performance data-driven tools and features; and, increasing mainstream acceptance of Prosper as an attractive funding source and asset class.

Mix of Funded Borrowers

	February 2008	February 2007	Year-to-Date 2008	Year-to-Date 2007	Since Inception
Prime	43%	25%	41%	24%	31%
Near Prime	51%	57%	53%	55%	55%
Sub Prime	6%	18%	6%	21%	14%

Membership and Loan Volume Statistics

	February 2008	February 2007	Year-to-Date 2008	Year-to-Date 2007	Since Inception
New Members	30,373	45,092	67,494	64,767	605,622
Funded Loans	$6.0 million	$5.6million	$13.1 million	$11.8 million	$122.2 million
Average Loan Size	$6,591	$6,165	$6,730	$6,158	$6,317
Daily Average Number of Borrower Listings	1,898	2,062	2,151	1,806	1,604

Estimated Annual Return on Prosper Select Index

	February 2008
Prosper Select Index	8.00%
Prime Select Index	8.63%
Near Prime Select Index	7.54%
Sub Prime Select Index	5.75%

Average Borrower Rates on Prosper Select Loans

	February 2008	January 2008	February 2007	Year-to-Date 2008	Year-to-Date 2007	Since Inception
Prime Select Loans	10.32%	9.91%	9.23%	10.10%	9.10%	10.08%
Near Prime Select Loans	17.10%	16.80%	14.44%	16.92%	14.51%	16.24%
Sub Prime Select Loans	N/A	28.39%	20.87%	28.39%	21.31%	24.07%

Definitions

Since Inception: November 1, 2005 through February 29, 2008. Prosper's by invitation only "friends and family" launch began on November 1, 2005 and Prosper launched to the general public on February 13, 2006.

2008 Year-to-Date: January 1, 2008 through February 29, 2008.

2007 Year-to-Date: January 1, 2007 through February 28, 2007.

Prosper Select Index: The Prosper Select Index return is the estimated average annual return on invested principal, based on actual delinquency performance to date. The Prosper Select Index includes AA - E credit grade loans for borrowers whose credit reports at the time of application indicated zero current delinquencies, three or fewer credit inquiries, and a debt-to-income ratio of 40 percent or less. The annual return period reflects loans originated in the twelve month period ending one month prior to the observation date of January 31, 2008. Prime Select includes AA and A credit grade loans (credit scores of 720+). Near Prime Select includes B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime Select includes E credit grade loans (credit scores between 560 and 599).

Average Borrower Rates: Average Borrower Rates are the weighted average borrower rates on Prosper Select Index loans with loan amounts between $5,000 and $10,000. Rates shown are interest rates, not annual percentage rates.

Mix of Funded Borrowers: Prime includes AA and A credit grade loans (credit scores of 720+). Near Prime includes B, C, D credit grade loans (credit scores between 600 and 719). Sub Prime includes E and HR credit grade loans (credit scores below 600).

N/A: Not available; no loans met these criteria.