(24)Defaulted exposures that, after the return to non-defaulted status, are reclassified as defaulted within a short period of time should be treated as defaulted from the first moment when the default occurred, as the temporary reclassification to non-defaulted status is most likely performed on the basis of incomplete information about the real situation of the obligor. As a result, the treatment of multiple defaults as a single default better represents the real default experience. Competent authorities should therefore verify that in the estimation of risk parameters multiple defaults of the same obligor within a short period of time are treated as a single default. Furthermore, the treatment of multiple defaults by the same obligor as separate defaults might lead to significant errors in risk parameter estimates, because higher default rates would lead to higher PD estimates. On the other hand the LGD would be underestimated, because the first defaults by the obligor would be treated as cure cases with no loss related to them, whereas the institution did suffer a loss. Additionally, due to the link between PD and LGD estimates and in order to ensure realistic estimation of expected loss, the treatment of multiple defaults should be consistent for the purpose of PD and LGD estimation.