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JBinKC - No. Prosper is very clear about these being unsecured loans. Sorry if my comments were misleading about that. They do report to credit agencies, deal with trying to recoup defaults, etc.

BTC - Let's say someone had a HELOC on his house (an 80-10-10 loan) or a HELOC for some other reason. Right now, even with his "AA" credit his bank would be charging 7.5% and that rate will probably climb a bit more before the fed. stops the interest rate hikes. Looking at Prosper's loans right now, he could trade that 7.5% variable debt to 6.5% fixed debt and have a loan that is NOT secured by his house. Not a bad deal. In the meantime, the people who offer him the money will still be making more than what they're earning on their savings accounts. Are there risks? Absolutely. However, looking at the Prosper site, it looks like at least some people are willing to take these risks. Am I one of them? Not for the forseeable future. Is it worth watching a bit? Yep, especially since I have some money in a small cap financials mutual fund . . .