Originally Posted by
Bjauck
Would "churn" or the frequency of rewrites and early repayments affect the actual default rate experienced by an investor. Harmoney may correctly assign the default risk for the life time of a loan in a certain grade. However if your $25 in a loan note, that has not been charged off, is repaid early and then subsequently reinvested, then it again faces the risk of being charged off again.
The annual default rate for loans is an average figure. There are fewer defaults in the latter period of a loan, so frequent early repayments and rewrites I guess would mean that your $25 would be more likely to be invested in the riskier earlier period of a loan.