We subtract a servicing fee from every borrower loan payment received. The amount of the servicing fee with respect to a particular payment is calculated by (1) multiplying the applicable annual servicing fee rate by a fraction, the numerator of which is equal to the number of days since the borrower's last payment (or, in the case of the borrower’s first payment, since the date on which the relevant borrower loan was funded) and the denominator of which is 365, and (2) multiplying the product obtained by the outstanding principal balance of the borrower loan prior to applying the current payment. The annual servicing fee rate is currently set at 1.0% per annum of the outstanding principal balance.
In the event that a borrower loan becomes past due, Prosper may assign a professional collection agency to collect the overdue amount. Each collection agency has its own fee structure, but will only collect a fee for their services if funds are recovered.
In the event that a borrower loan becomes past due, Prosper may collect on the loan directly or refer it to a third-party servicer or a collection agency. Our in-house collections department and any third-party servicer or collection agency will be compensated by keeping a portion of the payments collected based on a predetermined fee schedule. No fee will be collected if funds are not recovered.