Released: June 15, 2008

Peer-to-peer lending for home loans

Source: Bob Tedeschi, New York Times (Free Registration)

Homeowners who are having trouble borrowing against their house are starting to look to an interesting new source for cash: strangers.

Online networks have emerged in recent years that allow people to find loans or make them, the same way they might exchange music or bid on collectibles on eBay. The sites that are leading the trend — Prosper.com and Zopa.com — say they have noticed a spike in activity since traditional lenders began restricting second mortgages and home equity lines of credit.

“We’ve seen a major shift in creditworthy people getting funded on our site,” said Chris Larsen, the chief executive at Prosper. ”A lot of that shift is from people who’d traditionally gotten home equity loans.”

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