Loanio to launch soon

Update (12:20PM EST): I've changed the title of this post from "Loanio launches" to "Loanio to launch soon." It appears I may have jumped the gun with the announcement. Myself and others were able to access the site for a brief period this morning. There are some technical changes going on with the domain as Loanio readies itself for an imminent launch. Visit Loanio to check the latest status or review the screenshots we posted two weeks ago.


Original post: After nearly a year of anticipation, Loanio has finally opened their doors. There are no borrower listings yet but you can sign up as a lender, borrower or co-borrower. Two weeks ago we got a sneak peak and reviewed Loanio. Now you can check it out here.

PA lenders angry over ban

Due to state regulations, Prosper banned lenders from Pennsylvania. This caused an immediate and angry response from Prosper lenders. One started a petition and blog - Pennsylvanians for Prosper Lending.

Many PA lenders left angry comments on the official Prosper blog. Here's a sample:

"I want to express my outrage. I received an email this morning stating that you are no longer allowing bids from registered lenders in PA, and you are also not allowing new lenders from my state as well. The policy in general doesn’t make any sense to me, but more importantly I think all PA lenders should’ve been notified that this change was coming (instead of it becoming effective immediately). I feel like Prosper has slapped me upside the head in the way this situation has been handled. I have previously been very content with the way this site has been run and am more than disappointed in how this situation has been handled." - wyominggirl7

"If Prosper has had ongoing discussions with regulators in Pennsylvania, why didn’t Prosper contact PA lenders sooner? Not only is this announcement a surprise, it’s a wasted opportunity: PA lenders could have contacted their state senators and representatives, not to mention Governor Rendell’s office, to apply some pressure." - DonQ

"I contacted my state rep over this lending issue for PA residents. I imagine that the banks do not like this peer to peer lending and so they lobbied to shut us down. Yes I know, heavy handed government tactics at work again." TeddK

"I suggest you all contact your state representatives and senators as well as the governor. I already have my state rep interested in this issue. I need more information to give him about the what the regulations are and what officials and organizations are involved. I wish prosper had told use sooner so we could have pressured law makers." - Jon P

"Pennsylvania get more ridiculous all the time. I want to continue lending! I have signed the petition mentioned above and will be contacting my legislators right away!" - Mike S

"I just can’t believe this. With all my other investments tanking, you take away the one that I am actually making a good return on. Its crap like this that pushes people over the edge." - Jim C

In response, Prosper has published contact information for PA officials who may be able to influence the decision. They indicate they are primarily in discussions with the Pennsylvania Securities Commission.

Pennsylvania Securities Commission

Pennsylvania Governor Edward G. Rendell’s Office

Pennsylvania Open for Business

Pennsylvania House of Representatives

Pennsylvania State Senate

Market in turmoil

You have seen the news...

Today: Feds rescue AIG with $85 billion bailout

And from the past few days:

"Stocks suffered their worst losses in seven years as the failure of investment firm Lehman Brothers Holdings Inc. and the sudden sale of Merrill Lynch & Co. stoked investor fears of even deeper problems in the nation's financial system." Boston Globe

Greenspan calls this a 'once-in-a-century' crisis. So should you steer clear of stocks right now? The 'experts' seem to think so. This is from an exchange on Larry King Live:

King: Is this a good time to get into the market?

Orman: No. It's not a good time to get in with brand-new money. I would let these markets kind of wash themselves out....Are you kidding? These are the markets that you just sit on the sidelines and wait on the sidelines and stay away from them until everything works out.

Well, I disagree. I think the best time to get in the market is when everyone else is getting out. No one can time the market but I think if you have the right long term investment strategy this is as good a time as any to get in the stock market. Market emotions tend to cause people to make poor investment decisions as illustrated by the following two graphs.

What do you think? Also, does this make peer to peer lending more or less attractive?

Pennsylvania lenders booted from Prosper

Pennsylvania appears to be one of the least friendly when it comes to peer to peer lending. One year ago we reported that Pennsylvania borrowers avoided Prosper due to the low rate caps. Borrowers residing in Pennsylvania could only request loans at 6% and below due to aggressive state regulations. Few lenders were willing to risk their money for such a low return. The situation changed in April when Prosper raised the rate cap for all states to 36%.

Now p2p lending has a new problem in Pennsylvania - lenders are banned. Here's the announcement from the Prosper blog.

"We have made the decision to discontinue accepting new lender registrations, and new bids from existing lenders, from residents of the Commonwealth of Pennsylvania. Our decision to make this change was based on our ongoing discussions with regulators in Pennsylvania, which led us to believe the change was necessary to comply with their current interpretation of their state regulations.

We have notified existing lenders residing in Pennsylvania of this change via email and at the point of signing into their Prosper accounts. Existing lenders residing in Pennsylvania will continue with their existing lender agreements, have their existing loans serviced, and be able to transfer funds out of their Prosper account. However, they will not be able to place new bids on listings or transfer money into their Prosper accounts.

This change does not affect borrowers residing in Pennsylvania, who remain free to create loan listings on Prosper."

Loanio touts platinum verification and co-borrowers

After nearly a year of anticipation, Loanio's launch appears imminent. In a email to potential users last week, Loanio announced, "In just a couple of weeks (yes, we mean it this time!), we will be done with the final touches and ready to roll out!"

Loanio CEO Michael Solomon has let us peek under the hood and we have some exclusive screen shots.

Loanio homepage

Borrow on Loanio - Unlike other p2p lending sites, Loanio allows partial funding. As seen on borrower page (below), "If enough bids equal 100% of your loan, it automatically gets originated. If the bids equal more than 35%, but less than 100% of your loan, you can accept less or try again."

Lending on Loanio - As seen below, lending on Loanio is similar to other p2p lending sites. At FINOVATE, Solomon told the audience, ""We believe that the use of co-borrowing and plantinum listings will provide a greater amount of security and confidence to lenders."

Co-borrow on Loanio - Borrowers have the option to add a co-borrower to their loan. Co-borrowers must have a credit score higher than the other borrower on the loan and must have at least a E credit grade.

Platinum verification - For a small fee, borrowers can improve their odds of funding through platinum verification. Platinum verified borrowers will have the following checked by Loanio - photo ID, income, bank account, employer, address, homeownership.

Loanio credit grades - To borrow on Loanio you must have a credit grade of E or higher. Loanio has established a credit grade system from A+ to F or no score (NC). An E credit grade is equivilant of Experian VantageScore 569-603. With a F or NC credit grade score you must have a co-borrower to use Loanio.