First report on the test cases

I finally managed to find enough notes to meet the target size for the test cases. Following is the table that I will use to report the performance of each.

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Description	Current	Other	Fully Paid	Charged Off	Index
Test 1 End in 2017	20%	2%	75%	3%
Test 2 End in 12 months	90%	0%	10%	0%
Test 3 LC Picks	97%	3%	0%	0%
Test 4 Zip Grade	60%	40%	0%	0%
Test 5 By Percent	88%	10%	3%	0%
Test 6 By Funded	60%	40%	0%	0%
Test 7 Random	53%	45%	3%	0%

The table measure is the breakdown of notes in each test case by their status. For instance, 20% of the notes in test case 1 have a status of current, 75% have been fully paid off, and 3% have been charged off. The other 2% are in various stages of being late as of today. Some will catch up and move back to current, while others will move through the stages of late and may be charged off.

Some of the later test cases have a high percentage in the other status. Most of these have been issued but the first payment isn’t due yet. These numbers will fall as they become current.

One can see the difficulty in comparing the performance of notes in each test case. As the notes age, these numbers will become more significant. By 2020 they will be a good comparison measure. In the meantime, I am working on developing an index for each note. It’s based on what the lender expects, which is timely monthly payments for the term of the loan. So, we’ll start with and index of 100 meaning the borrower is up to date on repaying the loan. If they fall behind, the index will be lower. For notes that have been closed, either fully paid or charged off, the index will be the ratio of the total payments received divided by what would have happened had the borrower paid monthly through the term of the loan. The average of the these will be reported in the index column.

I’ll let you know when I’ve completed the program calculations for this index and post an updated table. Follow me on Twitter @billlanke the be notified when this occurs.