What is Delinquency?
Delinquency occurs when a borrower fails to make a scheduled payment by the due date. It is measured in 30-day increments: 30 days delinquent (one missed payment), 60 days (two missed), 90 days (three missed). Loans 90+ days delinquent are typically classified as seriously delinquent and may begin the default/foreclosure process. Delinquency rates are a leading indicator of future defaults; rising 30-day delinquency today suggests higher 90+ delinquency and chargeoffs in 2-3 months. For whole loan pricing, current delinquency status affects loan value: performing (current) loans are worth more than delinquent loans.
How LoanBook Uses Delinquency
LoanBook tracks delinquency status in the loan tape and uses it for portfolio stratification, CECL analysis (delinquent loans may receive individual assessment rather than pool-level analysis), and performance monitoring in the remittance module.
Frequently Asked Questions
When does a delinquent loan become a default?
This varies by lender policy and loan type. Generally, 90-120 days of delinquency triggers default classification. For mortgages, formal foreclosure may not begin until 120+ days. For consumer loans, chargeoff typically occurs at 120-180 days.
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