May 24, 2010

Loan Servicing Platform Update

By Prosper

We want to apologize for the frustration and inconvenience many borrowers and lenders have experienced following the roll out of our new servicing platform. What should have been a seamless front end experience for users didn’t turn out as such. We have resolved many of the most common issues and are getting closer to resolving the remaining ones. In the meantime, we hope the following update and background is helpful.

Most of the issues following the conversion have been related to the interface between our website and the new loan servicing platform, which resulted in loan data being inaccurately displayed to users accessing their accounts via the Prosper website. Although these interface issues have now been resolved, we are still in the process of correcting the website display issues that occurred. These corrections will be made to users’ accounts by the end of the next week.

In a limited number of cases, the issues we were experiencing with the interface between the website and servicing platform triggered incorrect payment disbursements to lenders. This issue has also been resolved, and user accounts impacted by these disbursement errors will be corrected by the end of the next week.

As of May 6, the transfer of borrower payments was brought up to date and since then borrower payment transfers, which are routed through Wells Fargo, have normalized and are happening on a daily basis. So at this point, the issues related to borrower payments being accurately reflected on Prosper’s website and user accounts have been resolved.

In order to facilitate the transfer to the new servicing platform, we had been requiring borrowers to make manual payments over the phone with customer service. We should have communicated this was happening proactively to borrowers at the time we rolled out the platform, and we know that this was inconvenient for borrowers who utilize the manual payment system. We experienced an influx of borrower calls requesting manual payments be made, and those have been successfully processed. We want to thank those borrowers for being so diligent. The manual payment system was restored over the weekend.

We have also temporarily suspended the display of the detailed loan performance data on our marketplace performance page while we reconcile the data with our new loan servicing platform. We apologize for the inconvenience this is causing. In early June, we will be restoring access to the loan performance data and all historical information, including the period in which it was unavailable.

As we noted in our previous blog post, the conversion of the historical data to the new servicing system identified some issues related to the application of fees in the old servicing system. It is still our goal to correct these issues by the end of May, but given the time and resources we’ve dedicated to resolving the issues outlined above, we have fallen behind on the reconciliation process, so we want to set expectations that it is possible that this may be pushed to June. We will update you on our progress on this front at the end of the week.

Apologies again for the frustration and inconvenience you may have experienced. We welcome your feedback and suggestions. Thank you for your patience and support!