More on Prosper.com

As I said in my November update, I've funded another $2,000 into my Prosper.com account and have been looking to fund a few more loans. As I'm looking through the loan requests, I found myself asking few more questions and putting a few more stakes in the ground:

1. Group endorsements: What accountability do groups have when they provide endorsements? As I said earlier, I am somewhat skeptical about a group's involvement because they ultimately wind up getting paid if a loan is funded. Anyone can make statements about how worthy someone is for a loan, but when the loan goes into default, I'm sure they're nowhere to be found. Does anyone know what their accountability is?
   
2. Credit Ratings vs. Debt to income ratios: I'm always a little curious when I see an A or AA credit rating with a HORRIBLE debt to income ratio. For instance, I saw a borrower who has an A credit rating with a 74% debt to income ratio. While this is a likely scenario for someone in college (low income, high debt), it seems odd for someone in their 40's or 50's, right? The skeptical side of me wonders if there is a loophole in Prosper.com's loan applicant process. For instance, can I provide my 10 year old daughter's social security number so her untarnished A credit rating is displayed, while I provide my own W2 forms that show my income, etc. I haven't gone through this process, so I am speculating, and one thing that's not entirely clear is how they come up with the debt side of the equation. Does the debt side all come from the credit report? If so, credit rating and debt to income ratio are tied together, then. Either way, anytime I come across a borrower that is at different ends of the spectrum for DTI and Credit rating, the red flags go up and I move on to a borrower with more normalized rankings.
3. Bid amounts: Again, as I pointed out earlier, it takes a fair amount of time to sort through and manage bids and funded loans. Since most people on Prosper.com are trying to diversify away the risk as much as possible, you find them funding loans with $50 each. If you have $10,000 lent out, that's over 200 loans to keep track of! I wasn't that bad last round, but in this round of funding, I am going to fund fewer loans in higher amounts. My minimum funding amount per loan will probably be in the $250 range and will go up to around $500 per loan. Obviously, the trick here is to figure out how to distribute your money across higher interest rates (and risk) to maximize the return. It's a bit art and a bit science, so we'll see how it goes.

Anyone else out there trying to squeeze returns out of Prosper still? Let me know what you're up to...