September 2007 Market Survey

Prosper's People-to-People Lending Market Survey is released on 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.

Membership and Loan Volume Statistics

	September 2007	September 2006	2007 Year-to-Date	2006 Year-to-Date	Since Inception
New Members	28,683	12,988	299,549	79,680	437,316
Funded Loans	$5.4 million	$3.1 million	$62.1 million	$16.8 million	$90.5 million
Average Loan Size	$7,175	$5,117	$6,986	$4,740	$6,096
Daily Average Number of Borrower Listings	2,298	1,202	2,213	780	1,406

Estimated Annual Return on Prosper Select Index

	September 2007
Prosper Select Index	9.75%
Prime Select Index	9.01%
Near Prime Select Index	10.14%
Sub Prime Select Index	13.20%

Average Borrower Rates on Prosper Select Loans

	September 2007	August 2007	September 2006	2007 Year-to-Date	2006 Year-to-Date	Since Inception
Prime Select Loans	9.98%	10.15%	10.15%	10.02%	10.63%	10.12%
Near Prime Select Loans	15.83%	16.83%	16.03%	15.92%	16.15%	16.08%
Sub Prime Select Loans	24.86%	25.88%	23.44%	23.38%	25.18%	23.97%

Mix of Funded Borrowers

	September 2007	September 2006	2007 Year-to-Date	2006 Year-to-Date	Since Inception
Prime	30%	21%	30%	26%	28%
Near Prime	62%	56%	57%	50%	55%
Sub Prime	8%	24%	13%	24%	17%

Noteworthy

Lowest Default Rate by Occupation

1. Computer Programmer (0.96%)
2. Civil Service (1.48%)
3. Analyst (1.63%)
4. Mechanical Engineer (1.67%)
5. Electrical Engineer (1.85%)

Lowest Default Rate by State

1. Minnesota (0.00%)
2. Ohio (0.65%)
3. New Jersey (0.99%)
4. Colorado (1.40%)
5. New York (1.56%)

Market Commentary by Chris Larsen, Co-Founder and Chief Executive Officer of Prosper

When the Fed cuts interest rates people often expect mortgage rates to drop. However, this is rarely the case given that mortgage markets typically anticipate rather than react to moves by the Fed. On the flip side of the coin, the variable credit card and savings rate markets react sometime after the Fed moves. In fact, some variable credit cards have a 90-day window to make adjustments reflecting the rate cut. So the question is: did the Prosper marketplace anticipate or react to the Fed rate cut?

Many might assume that the Prosper marketplace would act less like the mortgage markets and more like the credit card and savings rate markets given that the latter compete with Prosper. Nevertheless, the month over month drop in average borrower rates indicates that the Prosper marketplace may have anticipated the Fed cut.

For example, in September the average borrower rates for all prime and near prime loans funded in the Prosper marketplace were 12.29% and 18.22%, respectively; down 0.37% and 0.28%, respectively, from August.

What is interesting about these percentage drops is how close they are to what was widely anticipated to be a quarter-point instead of a half-point reduction by the Fed. However, what remains to be seen is whether the market will continue to push rates down further in line with the Fed's surprise move.

Definitions

2007 Year-to-Date: January 1, 2007 through September 30, 2007.

2006 Year-to-Date: January 1, 2006 through September 30, 2006.

Since Inception: November 1, 2005 through September 30, 2007. 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.

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 September 30, 2007. 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. 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).