The Cost of Foreclosure Delay

We measure the cost of foreclosure delay by estimating time‐related foreclosure costs using a large national sample of residential mortgages before, during, and after the recent U.S. housing crisis. The large volume of foreclosures, coupled with an unprecedented series of government interventions in mortgage servicing practices, significantly extended foreclosure timelines during and after the crisis.  Costs were especially pronounced in judicial review states, which saw average foreclosure costs go up 15 percentage points, 24 percentage points in the highest cost state.  Cost increases of this magnitude are likely to have consequences for servicing practices and mortgage credit availability.     

Foreclosure Discount: Definition and Dynamic Patterns

The lack of a consistent definition of foreclosure discount gives rise to discount rates that vary from nonexistent to sizeable across locations and time. We define the foreclosure discount as the discount of the real estate owned (REO) sale price relative to a normal‐sale estimated market value. With a dataset of 1.34 million REO sale transactions, across 16 CBSAs between 2000 and 2012, we find three noteworthy empirical findings. First, a high REO sale concentration in a market increases the foreclosure discount. Second, foreclosure discount is negatively related to recent house‐price appreciation. Third, the often reported high foreclosure discount for lower value properties is likely due to property condition.     

The Conditional Probability of Foreclosure: An Empirical Analysis of Conventional Mortgage Loan Defaults

This paper analyzes the factors affecting the conditional probability that defaulted residential mortgage loans will foreclose. We analyze a large national sample of conventional loans, which have been in default at least once during the 1988 to 1994 period. For such loans, lenders and borrowers either individually or jointly make choices which lead to the following outcomes: (1) resumption of payments, (2) termination by prepayment, or (3) foreclosure. Our estimates of a logit model indicate that termination option values and local area economic and housing market conditions affect default resolution probabilities. Perhaps more importantly, simulations using the logit model indicate that the efficiency of the default resolution process may be substantially improved by legal and regulatory reforms.     

Exclusive Dealing: Investment Promotion May Facilitate Inefficient Foreclosure

This paper studies a model whereby exclusive dealing (ED) can both promote investment and foreclose a more efficient supplier. Since ED promotes the incumbent seller's investment, the seller and the buyer realize a greater surplus from bilateral trade under exclusivity. Hence, the parties involved may sign an ED contract that excludes a more efficient entrant in circumstances where ED would not arise absent investment. The paper therefore invites a more cautious attitude towards accepting possible investment promotion arguments as a defense for ED.     

The Impact of Interstate Foreclosure Cost Differences and the Value of Mortgages on Default Rates

Previous research on mortgage default has focused on the costs, benefits, and characteristics of the mortgagor. In such studies default rates have been taken as a measure of mortgage risk. In this paper we present a model where the position of the lender affects the default-foreclosure process. Important to the lender's decision to foreclose rather than renegotiate an existing loan are the value of mortgage and the legal costs associated with foreclosure.
The empirical evidence supports the hypothesis that both the value of the mortgage and legal foreclosure costs affect the foreclosure rate. In those states where legal foreclosure costs are high rates are significantly less than where costs are low. This suggests that previous models which include only the costs and benefits of default to the borrower are incomplete and that foreclosure rates can not be taken as a strict measure of mortgage risk. That is, low foreclosure rates may indicate that losses occur in other forms of loan negotiation rather than in expensive legal costs.     

Credit scoring for commercial loans: The case of Singapore

This paper develops a credit scoring model which incorporates financial ratios as inputs by applying the statistical technique of discriminant analysis. The objective is to identify and analyse the common financial characteristics which distinguish bad from good accounts. The sample is drawn from the loan portfolio of a major local bank in Singapore. The results indicate that there is a 95 per cent classification accuracy for the model presented.Dr Kwan Kuen Chor is Senior Lecturer at the School of Management, National University of Singapore. Ms Julia Tan is with Paribas South East Asia Ltd. Singapore.     

A Philosophy for Innovation: The Role of Unconventional Individuals in Innovation Success

For those of us trying to understand the nature of innovation, the role of the scientist or engineer presents a conundrum. Such individuals are often sources of innovation in both products and processes, yet routine science and engineering is typically carried out in an environment that stresses structure, order, and adherence to prescribed methods–exactly the wrong setting for successful innovation. To help explain the diminishing role of science and the burgeoning role of individuals in innovation, Carol J. Steiner presents a philosophy of innovation. Suggesting that unconventional individuals, rather than conventional science or engineering, are central to innovation success, this philosophy of innovation is derived from a philosophy of human nature formulated by Martin Heidegger. Heidegger identified three elements of human nature: (1) it is human nature to be practically involved in a complex world rather than rationally involved with a conceptually simplified world; (2) it is human nature to be authentic (i.e., unconventional, uncommitted to one's paradigm) at least some of the time; and (3) it is human nature to be cooperative. In other words, the methods and organizational structures that characterize “good” science are in direct conflict with human nature. By examining things in isolation from their natural linkages, the scientist misses the holistic view–the big picture–necessary for successful innovation. Central to this philosophy of innovation is individuality understood as authenticity. The term authenticity refers to both an unconventional (i.e., unscientific) approach to the world and an openness to alternative viewpoints. This openness is the basis for cooperative rather than competitive interaction. The fundamental themes of this philosophy of innovation are the importance of individual experience, the importance of unconventional (free) interpretations, and the importance of respect for individual uniqueness. The magic moments of innovation arise when scientists or engineers assert their individuality, break free from the structured thinking of their traditional methods, and synthesize novel interpretations that move their projects in new directions. This philosophy of innovation is not presented as a means for determining why innovation succeeds or fails. Instead, it provides a framework for assessing organizational or personal approaches to innovation. In other words, it gives managers a means for understanding and interpreting the human elements of particular innovation projects.     

Innovation in the Retail Banking Industry: The Diffusion of Credit Scoring

We study technology diffusion in the retail banking industry. Our contribution to the empirical literature is twofold: Firstly, we explore technology diffusion in the financial sector, whose relevance has often been neglected; secondly we focus on credit scoring adoption, a relevant process innovation still under-explored. Estimating a set of duration models, we analyze the patterns of diffusion of this technology among Italian banks. We find that credit scoring is firstly introduced by large banks with broad branch networks, which can fully exploit scale economies. We present robust evidence that banks with large market shares operating in more concentrated markets are early adopters, providing a direct support of the Schumpeterian hypothesis that market power enhances innovation.The views expressed here are those of the authors and do not necessarily reflect those of the Bank of Italy.     

施工企业信用评价体系分析

全面准确地评价一个企业的信用等级，对于投资而言便于理智地回避风险，引导其进行正确的投资决策；对于企业来说又可以充分利用自己的信用声誉，进一步得到投资的青睐，为企业的发展壮大奠定坚实的基础。施工企业由于缺乏信用管理机制和手段，面临着巨大的信用风险。从施工企业自身的特点，以及银行信贷风险管理和控制的角度出发，本着客观、全面和准确的评价原则，分析研究了施工企业信用等级的评价内容、指标体系和评价方法。     

Modeling the Conditional Probability of Foreclosure in the Context of Single-Family Mortgage Default Resolutions

Both empirical and pricing-simulation models of mortgage default focus on foreclosure in a one-step decision framework. Such models are misspecified to the extent that mortgage default and foreclosure are two separate decisions or events, where foreclosure is but one outcome of a default episode. This study examines the dynamics of mortgage borrower default episodes using a large sample of FHA-insured single-family mortgages. We estimate the influence of borrower characteristics, mortgage terms, and economic conditions on probabilities of various resolutions, highlighting under what conditions foreclosure is more likely to result from mortgage default.     

客户信用管理体系的建立

当务之急--引进和建立电力客户信用管理体系 中国经济已进入市场经济阶段.市场经济是信用经济,又是风险经济.在市场经济条件下,规避风险、严守信用、确保经济交往中的各种契约关系的如期履行,是整个经济体系正常运行的基本前提.市场经济越发达,各种经济活动的信用关系就越复杂.当前,我国社会经济生活中的信用失缺现象相当严重,恶意逃债、合同违约、债务拖欠、商业欺诈、假冒伪劣等经济失信现象,严重制约了信用功能的发挥,信用环境恶化导致市场交易成本上升,直接影响到市场体系的完善和资源配置效率.     

A Tale of Two Tensions: Balancing Access to Credit and Credit Risk in Mortgage Underwriting

Over the years 2000–2007, mortgage market underwriting conditions eased in response to public policy demands for increased homeownership. This easing of acceptable credit risk in order to accommodate increased access to credit, when coupled with the unanticipated house price declines during the Great Recession, resulted in substantial increases in delinquencies and foreclosures. The response to this mortgage market crisis led to myriad changes in the industry, including tightened underwriting standards and new market regulations. The result is a growing concern that credit standards are now too tight, restricting the recovery of the housing market. Faced with this history, policy analysts, regulators and industry participants have been forced to consider how best to balance the tension inherent in managing mortgage credit risk without unduly restricting access to credit. Our research is unique in providing explicit consideration of this trade‐off in the context of mortgage underwriting. Using recent mortgage market data, we explore whether modern automated underwriting systems (AUS) can be used to extend credit to borrowers responsibly, with a particular focus on target populations that include minorities and those with low and moderate incomes. We find that modern AUS do offer a potentially valuable tool for balancing the tensions of extending credit at acceptable risks, either by using scorecards that mix through‐the‐cycle and stress scorecard approaches or by adjusting the cutpoint—more relaxed cutpoints allow for higher levels of default while providing more access, tighter cutpoints accept fewer borrowers while allowing less credit risk.     

U.S. Financial Services Consolidation: The Case of Corporate Credit Unions

This paper estimates a stochastic cost frontier forU.S. corporate credit unions using call report datafor 1992–1997. The results indicate that corporatecredit unions were 91 percent cost efficient, onaverage, over this period and that institutionspassing a larger percentage of their investments toU.S. Central Credit Union are more cost efficient. However, the economic magnitude of estimatedefficiency gains from investment concentration isfound to be modest. We conclude that the currentthree-tier hierarchical structure for the U.S. creditunion industry is likely to endure.     

The 1989–92 Credit Crunch for Real Estate: A Retrospective

This study surveys a broad range of information to establish the degree to which real estate lending and construction activity decreased in the 1989–92 period owing to a "credit crunch." It reviews the conditions that led up to the contraction in mortgage lending and construction and then documents the extent to which the evidence is consistent with a credit crunch in lending for residential and nonresidential construction, permanent financing of income properties, and residential mortgage lending. Also, this study weighs the relative importance of the credit crunch and other factors that contributed to the falloff in real estate lending and contrasts the recent period with earlier credit crunch episodes.     

企业信用缺失的原因及对策

企业要发展,关键在于企业是否诚信。企业有了诚信,才能提高企业的经济效益和社会效益,而且可以从根本上解决全社会诚信缺失问题。本文从企业信用缺失问题造成的损失及现状出发,具体分析企业经营过程中出现诚信问题的原因,并在此基础上,提出解决企业诚信问题的对策。     

Bank Capital and the Credit Crunch: The Roles of Risk-Weighted and Unweighted Capital Regulations

We investigated whether in recent years banks have increased their holdings of securities at the expense of their holdings of business loans in response to shortfalls of their capital relative to risk-weighted capital standards and relative to a capital standard that made no explicit allowance for credit risk. We estimated that bank credit fell by about $4.50 for each $1 that a bank's capital fell short of the unweighted capital standard. Banks that had less capital than required by the risk-weighted standard appear to have shifted away from assets with low risk weights (securities and single-family mortgages) and to have shifted toward assets with higher risk weights (commercial real estate and commercial and industrial loans). When we included both shortfall variables in a regression, shortfalls relative to the unweighted capital standard significantly affected bank credit, while shortfalls of capital relative to the risk-weighted standard did not. We found no significant effects of capital shortfalls at other, local-competitor banks on bank portfolios. Delinquencies in a given category of a bank's loans generally had significantly negative effects on that bank's holdings of loans in that category. In contrast, banks tended to increase holdings of loans in categories in which local-competitor banks were experiencing higher delinquency rates.     

Unions and Collective Bargaining in the Wake of the Great Recession: Evidence from Portugal

Against the backdrop of its industrial relations architecture, characteristic of the ‘southern European group’ and intimately linked to the recommendations of the Troika, this paper examines four key aspects of Portuguese collective bargaining. First, it provides definitive estimates of private sector union density for that nation. Second, it models the determinants of union density at firm level. Third, it yields estimates of the union wage gap for different ranges of union density. The final issue examined is contract coverage. The received notion that the pronounced reduction in the number of industry‐wide agreements and extension ordinances of late is to be equated with a fall in coverage is shown to be a chimera, the number of workers covered by new and existing agreements remaining largely unaffected by the economic crisis. The reduced frequency of new agreements and extensions is instead attributed to downward nominal wage rigidity in low‐inflation regimes.     

Creating shared views of customers: Individuals as sense-makers in multinational companies

Global suppliers' relationships with their global customers tend to be complex, as each consists of multiple geographical, technological and functional units. For a supplier to manage these customer relationships, some shared views of each relationship are likely to be needed for consistency of activities. This creates a need within supplier MNCs to make sense of customers. This research focuses on sense-making by individuals in supplier MNCs. It considers individuals acting in the sense-making process a means of creating shared views. A qualitative process research strategy is utilized to uncover this process. As a result, this research recognizes four mechanisms, defined as individual-level behavioral patterns, for creating shared supplier views of the customer: defining, linking, triggering and creating. Furthermore, the study defines the triggers that cause individuals increasingly to share similar or dissimilar views of the customer. These triggers are recognized at different levels of management: within the MNC (i.e., internal cooperation, shared projects, limited customer contacts), at the customer-relationship level (i.e., previous cooperation with the customer) and at the network level (i.e., involvement of third parties).