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Originally Posted by myles
BJ1 I think you've said something like that before - can you expand on it a bit?
If we take a basket of loans at C1 as an average and earn18.52% in interest and write off 0.86% of the principal after a year thatrepresents 4.64% of the interest actually earned, yet alistar has lost 9.13% ofhis interest. So he is either sufferingdefaults at a greater rate than Harmoney expects, or they are occurring veryearly in the loan life – neither is as expected.
Harmoney estimate that 80% of defaults will occur by 18months with both 36 and 60 month loans having a similar hazard curve. On a $1000 loan@ 18% surviving for the 18 months the writeoff on a 60 month loan will be $787against $567 on a 36 month loan; and one has to wonder about loans on the booksfor only 6 months or so which are written off
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