Prosper's People-to-People Lending Market Survey – Dec 2007

December 2007 Prosper People-to-People Lending Market Survey

Membership and Loan Volume Statistics

	December 2007	December 2006	2007 Year-to-Date	2006 Year-to-Date	Since Inception
New Members	31,620	18,251	400,361	137,545	538,128
Funded Loans	$6.2 million	$4.5 million	$80.9 million	$28.1 million	$109.1 million
Average Loan Size	$7,268	$4,638	$7,053	$4,765	$6,272
Daily Average Number of Borrower Listings	2,924	1,723	2,348	1,037	1,562

Estimated Annual Return on Prosper Select Index

	December 2007
Prosper Select Index	8.34%
Prime Select Index	8.46%
Near Prime Select Index	8.43%
Sub Prime Select Index	5.59%

Average Borrower Rates on Prosper Select Loans

	December 2007	November 2007	December 2006	2007 Year-to-Date	2006 Year-to-Date	Since Inception
Prime Select Loans	9.80%	10.22%	9.21%	9.98%	10.39%	10.08%
Near Prime Select Loans	16.07%	15.90%	16.50%	16.01%	16.41%	16.11%
Sub Prime Select Loans	32.99%	21.63%	23.86%	23.42%	25.01%	23.91%

Mix of Funded Borrowers

	December 2007	December 2006	2007 Year-to-Date	2006 Year-to-Date	Since Inception
Prime	43%	25%	32%	25%	30%
Near Prime	52%	44%	57%	49%	55%
Sub Prime	5%	31%	11%	26%	15%

Noteworthy

The Official Prosper Blog was honored by the 2007 Performancing Readers Choice Award for "Best Use of a Corporate Blog."

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

2007 proved to be a pivotal year for US markets as we abruptly transitioned from optimism to fear of imminent recession. Who could have predicted at the start of 2007 that the word "subprime" would be voted the word of the year?

At Prosper, we also saw a dramatic switch in the prime versus subprime market with subprime declining from over 25% in 2006 to barely 5% currently. This change reflects both a changing external market as well as a maturing of the Prosper marketplace.

Obviously the subprime meltdown exposed much more risk in the subprime market in 2007 compared with a year earlier. Prosper's performance data bore this out and has clearly moved people to safer ground or to fund those borrowers with a clear social capital benefit.

The silver lining has been more opportunity in the prime and near prime segments. As the credit crunch has unfolded, many traditional lenders have dramatically tightened or eliminated credit to even their best customers. For example, home equity, which until recently was referred to as Americans' ATM, has been substantially limited by falling real estate prices and mortgage industry bankruptcies. Credit card offers have also been substantially reduced as defaults have spiked nearly 20%. Thus, while the environment was tougher in 2007, it resulted in much less competition for the best customers. This bodes well for people-to-people lending which can take up the slack from the seized-up capital markets.

The key focus for loan buyers will be choosing borrowers smartly and pricing adequately for risk. Prosper's additions of Prosper-specific market risk data and Portfolio Plans were both major milestones in giving bidders the information they need to choose wisely. For borrowers, pricing their listings adequately, telling and explaining their story honestly, and involving friends and family to bid as a measure of social capital are great ways to increase the success of their auctions.

Definitions

2007 Year-to-Date: January 1, 2007 through December 31, 2007.

2006 Year-to-Date: January 1, 2006 through December 31, 2006.

Since Inception: November 1, 2005 through December 31, 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 December 31, 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 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).

Press Contact:
Tiffany Fox
Prosper Communications Director
(415) 593-5416
tiffany@prosper.com