Delinquent Interest and Delinquent Principal are collected historically and displayed in Cash Flow Reports within a deal. By default, these values are not recovered and create a cash leak at the loan.
Example: Two historical delinquencies cause a $1m loan to leak $30K of its balance.
Within the Scenario tab, there is a Historical Events Projected section. Users can choose to activate the Historical Delinquency.
Applying a Scenario with this assumption will recover all Historical Delinquencies on the first projected period, which will fill the gap of cash leaks.
Unperformed Balance is adjusted, under this assumption, on Historical Data level (UPB is higher than Balance) and on the first projected period where the UPB deducts the recovery amount.