Mortgage Modification Activity—Recent Developments
This very detailed article focuses on recent trends in modification activity in the non-agency securitization market. The authors focus primarily on two trends: the increased share of principal reduction modifications and the increased share of second and subsequent modifications. They show that principal reductions result in higher modification success rates than other modification types, even controlling for pay relief. They also show that second and subsequent modifications have higher re-default rates than first modifications. Finally, the authors focus on the variations in modification activity and modification success rates among subprime servicers.
The Home Mortgage Foreclosure Crisis: Lessons Learned
From 2007 through 2011, the United States housing market suffered a severe imbalance in supply and demand due to an excessive number both of foreclosed homes and homes awaiting foreclosure in the shadow housing inventory. Foreclosure prevention can help reduce the shadow housing inventory by keeping troubled mortgages from entering that inventory to begin with. The loan modification experience post-2008 yielded four main lessons about the best way to optimize foreclosure prevention. First, servicers should design loan modifications to lower monthly payments, including through principal reduction whenever appropriate. Second, servicers should evaluate loss mitigation as soon as possible following delinquency. Third, when distressed borrowers lack the cash flow for cost-effective loan modifications, servicers should explore other ways to keep those homes occupied, such as short sales, in order to avoid unnecessary spillover effects to the surrounding community. Finally, subsidies are not enough alone to overcome the frictions to an optimal number of loan modifications. The paper closes by discussing the implications for policy reform.
Detection of Fractures Based on Directional Filtering in Image Logging
According to the feature of the direction of fractures in image logging, a method of fracture detection in image logging based on directional filtering is presented in this paper. The fracture image is filtered by the corresponding filter based on the local direction of fractures, which enhances the fracture traces in the direction of fractures in image logging. The final fracture traces are extracted by the combination of the results of both directional filtering and the threshold segmentation. Experimental results show this method effectively detect the fractures in image logging.