To calculate Adjusted Net Annualized Return, according to the LC site, "we make a deduction for estimated future losses on loans based on status ("Note status adjustment amount"). To calculate this deduction, we apply an estimated loss rate to the outstanding principal of a Note for which the corresponding member loan is past due but not charged off.” I believe “current” is one category of “status.”
Before about two months ago, when my notes were not paid on time, their status would change from “Current” to “In Grace Period,” then “Late 16-30 Days,” etc. I would occasionally notice notes labelled “in hardship plan,” usually in some status other than “Current.” I could see a rough correlation between the Adjusted NAR and the number of non-current notes: when many notes slipped into Grace Period and beyond, Adjusted NAR went down by as much as .5%. When those borrowers managed to catch up, the Adjusted NAR would go back up.
Now 1/10 of my notes classed as “Current” are actually behind schedule; payment for some has been “deferred” for two months. Yet my Adjust NAR continues to creep up, about .01% per day. I am indeed making a supposition.: that notes in “hardship plan” are not included in the "deduction for estimated future losses on loans based on status.”
I would be interested in hearing any alternative suppositions, or, even better, official explanations for what appears to me to be a discrepancy.
Author