The Visible Equity database stores data in one of two ways—dated or non-dated. This is a fairly straightforward concept that plays an important role with how your data will display in Visible Equity reports. This blog will explain the difference between dated and non-dated fields and will also discuss the application of this concept into loan type codes. This concept is important to understand because it ties to all data fields within Visible Equity, including custom fields.
Understanding the Difference
A dated field is fluid and can report multiple unique values across different data dates. Values that differ from month to month will be captured in the database and allow a user to see how the field values have changed over time. Examples of Visible Equity dated loan fields:
- Days Delinquent
- Interest Rate
- Probability of Default
A non-dated field is static and can only report a single value at any given point in time. Values that differ from month to month will NOT be captured in the database. Whichever value is most recently processed into the database will overwrite any prior value. This does not mean that your most current data will always take precedence over historical data. Current data will, more often than not, be the most recently processed data. However, if any historical data has run more recently than current data, a historical non-dated field value could potentially (and probably unintentionally) overwrite a current non-dated field value. Examples of Visible Equity non-dated loan fields:
- Auto Dealer
- Loan Officer
- Maturity Date
- Original Interest Rate
- Origination Date
Let’s illustrate this with a simple example. We’ll create two custom fields in our loan portfolio, and each field will represent “loan color.” One version will be dated, and the other will be non-dated. We’ll use multiple tables below to trend two different custom fields over time for our loan. Table 1 below represents the dated version, and Table 2 represents the non-dated version.
Table 1—Dated Field
Between December 2018 and March 2019, we see the reported color value for our loan change each month over the four-month period. Because this is a dated field, the database will keep track of each monthly value uniquely—even if it means that the loan reports a Blue value for the duration of the loan’s life.
Table 2.1—Non-Dated Field
The non-dated version of our loan color field will use a single value across time. So, even if Red is only reported in a single data date (and is left blank in all other data dates), Visible Equity will apply the non-dated field across all data dates in which the loan resides. Non-dated fields make sense for static values that you would not expect to change during the life of a loan.
Table 2.2—Non-Dated Field
Notice in Table 2.2 that we are now a month ahead of Table 2.1, reporting on January 2019 through April 2019. In April, our loan reported Blue for the non-dated loan color field. Because non-dated fields only hold a single value, Blue is now used as the loan color value for our loan in April 2019 as well as all historical data dates. This may be an unintentional change from a client perspective. If the change is accurate and the history of prior values needs to be maintained, then a dated field may be better suited for these values.
Loan Type Code Application
In most cases, loan type codes do not change. A loan that originates as a Used Auto loan births and dies as a Used Auto loan—regardless of whether it pays off in full or is charged-off. A loan’s type code behavior of staying the same throughout the life of the loan is expected behavior. By default, all Visible Equity portfolios are configured to report non-dated loan type codes. Referencing the examples above, this means that the database will only store a single value for loan type code, and that whichever value is most recently processed into our system would overwrite any prior type code value.
This default setting can be adjusted in the VE Calculation Settings page. If your institution changes loan type codes throughout the loan’s life for any reason (charge-off, repossession, TDR, etc.) then it may be necessary to adjust this calculation setting for your portfolio to report dated loan types rather than non-dated loan types. That said, Visible Equity typically recommends against the practice of changing loan types—even for the reasons listed above.
Let me describe an example as to why changing loan types can lead to data headaches.
- Our portfolio uses the default setting for non-dated loan type codes.
- We originate a loan with a type code of “Used Auto” for $20,000.
- The loan eventually defaults.
- At the time of default, the type code is changed to “CO-Used Auto.”
This change in type code will result in balances shifting in head-scratching ways. We receive questions like, “Why do I show $20,000 of new production in a charge-off type code?” Well, this scenario answers that question. The non-dated type code on this loan has changed, and we are now reporting “CO-Used Auto” for the entire life of the loan. Instead of contributing $20,000 of new production to the “Used Auto” loan type code, this loan will now contribute $20,000 of new production to the “CO-Used Auto” loan type code. Which, of course, makes no sense. The charge-off balances and ratios for the “Used Auto” loan type code will also be adversely affected because this loan is now reported in the wrong pool, leaving institutions in a frustrated data mess.
Regardless of whether or not you want to use dated vs non-dated type codes, our recommendation is to avoid changing type codes where possible. Instead, consider using flags to denote that a loan is a TDR, repossession, or charge-off. Contact our client success team if you have any additional questions, or if you want to make changes to your calculation settings.