MI LLR Illustration.xlsx

This file is a financial illustration spreadsheet for the Michigan Lender Loss Reserve (LLR) program, demonstrating how a loan loss reserve portfolio operates over a six-month period. The illustration tracks four individual loans with a combined principal of $285,000, showing how the LLR reserve accumulates and depletes based on loan performance. The spreadsheet models the mechanics of a 5% LLR portfolio, wherein 5% of each new loan principal issued is added to the reserve balance, while loan principal payments reduce the reserve by a proportional amount. The example demonstrates the complete lifecycle of loan loss reserve management, including how eligible loan losses are calculated and paid from the reserve, with specific attention to Loan 1's delinquency status of greater than 90 days.

The financial structure illustrates that LLR additions are calculated at 5% of loan principal issued, while LLR reductions correspond to loan principal payments received. The spreadsheet demonstrates that the maximum loss payment is limited to the lower of either 80% of the eligible loan loss or the available LLR balance, which in this illustration results in a loss payment of $11,379.92 against an eligible loan loss of $14,922.49 for Loan 1. By month six, the LLR balance declines to $2,339.76 after the loss payment is processed. The illustration provides a practical example of how reserve adequacy is maintained and how loss mitigation operates within the LLR framework, with the model showing the program's ability to cover loan losses while maintaining reserve sustainability across a mixed portfolio of loan statuses.