Hi, I'm in New York City at the airport, here for a few days. Let me talk for a moment about something called step ups. I've been talking a lot about balances and how they affect our reporting process. There's a interesting correspondence the where we can add balances together to get to a different result. If the attributes we want to report by are stored on the balance or the balances posted by a particular set of attributes, and the balance we want to report on is at a higher level. fewer number of attributes those attributes are can be a summarization of a few of the balances that are done elsewhere.

It creates the ability for us to use a concept called step up. The step up concept allows us to get rid of the transaction detail because we have posted the balances, but because of their lower level balances We can add them together and still not destroy the ability for us to get to all the other kinds of balances that are interesting to us. Let's use an example to explain step looks a little bit further. Okay, for our example, let's use an example of someone selling and buying a house. So let's say that we had these transactions. within the month of July, we had the home sale agreement.

We then was followed by an appraisal. There was a down payment and a mortgage as we closed on the home, and then in December, there was a tax appraisal. If we were to record all of these transactions as individual transactions, they will create their own individual balances. And we think of each one of these things as independent when we don't use step ups the appraised value is independent from the mortgage value is independent from the equity is independent from the tax value. The step up concept though, we find the relationship Between these things and define that relationship in the way we store the balances. So for example, we could store the mortgage as the hundred $19,000 mortgage, we could also record it about the same time, the $10,000 downpayment, we could also then store the appraisal value of that of $6,000.

Above those two values, when it gets to December, we could recognize that the tax appraisal is below that at negative 2000. That would be called a step down. step ups and step downs are equivalent. So if we go this route, then from these set of step up balances that are recorded on the top of this slide, we can calculate all of the bottom balances that we want to the wholesale value would be 128,000, which is 118, plus the 10 the Total appraisal value would be 6000 plus the 10,000 plus 118,000 to get us 234,000. And the total tax value would be 6000 10,800 18,000, negative 2000. Thus, by defining the relationship, and when we do the query process against these book code values, we can create at reporting time, any one of these potential values that we need.

Of course, we don't use step ups. There's some portion of the value that is shared among these different balances. And that portion of the value should be reconciled in some way to make sure it's in synchronized. Whereas if we apportion the balance in a step up process, then our adjustments and our use of those balances are determined to the specific nature of the balance as opposed to the general nature of the non stepped up balance.