I too have tried to avoid people who have mortgages. I have serious concerns about the number of people with bad mortgages who are underwater in their homes and desperate.

If you are interested, I have mentioned the risks of home owners a few times such as the following articles: 1) Homeowners using payday loans to pay the mortgage. 2) The mortgage crisis’ impact on your P2P lending strategy.

Even Ed Mcmahon couldn’t pay his mortgage due to poor borrowing decisions.

Live and learn.

By the way, I found the funding process to often take longer at Prosper than at Lending Club, but it depends on timing.

the first month or so went well but then one loan was late. Every month several loans join the late profile. 1% of loans are still considered just late although they are well past 120 days. I consider this a default. One loan paid off very early, a couple seem to be fast tracking to pay off early. I had a couple of loasn that were late that are now current, but 99% of the lates ones just get later. So my stats after 7 months are

1% early payoff
80% current
5% short late (up to 30 days)
1% default (past 120 days)
13% past 31 – 120 days overdue

The “late” and “current” loans are a mix in terms of risk types. Percentage wise, I have as many “B” as “G” that are late. Based on the “late” rate ie the additional loans that become late every months I predict a default rate well above average for lending in general. I assume some of this is because interest rates have dropped and therefore the rates became high for many of the borrowers.

No lectures on risk please as I stated this was an experiment and I just wanted to share my experience. I have not tried other p2p lending sites.

I am not too worried about it, but your first late loan (on both Prosper and Lending Club) can cause your skin to go slightly clammy. The most important thing to remember is that you planned for late loans (and defaults) and that is why you were expecting higher than risk free CD rates.