A Dynamic Look at Subprime Loan Performance

Does delinquency have any predictive power for the future performance of a mortgage? Analysis of a sample of subprime mortgages from the Loanperformance database on securitized private-label pool collateral using a two-step estimation procedure to control for the endogeneity of delinquency reveals strong support for the distressed prepayment theory that very delinquent loans are more likely to prepay than to default and that prepayment rates increase substantially as delinquency intensity increases. While delinquency leads predominantly to termination of a loan through prepayment, negative equity leads to termination through default. Does delinquency have any predictive power for the future performance of a mortgage? Analysis of a sample of subprime mortgages from the Loanperformance database on securitized private-label pool collateral using a two-step estimation procedure to control for the endogeneity of delinquency reveals strong support for the distressed prepayment theory that very delinquent loans are more likely to prepay than to default and that prepayment rates increase substantially as delinquency intensity increases. While delinquency leads predominantly to termination of a loan through prepayment, negative equity leads to termination through default

Home Ownership Risk Beyond a Subprime Crisis: The Role of Delinquency Management

A surge in delinquency among risky subprime home mortgages has produced calls for front-end regulatory fixes as well as emergency foreclosure avoidance interventions. Whatever the merit of those interventions, this Essay calls for home mortgage delinquency management to be conceptualized as an enduring component of housing policy. The Essay identifies and evaluates a framework for the management of delinquency that is not limited to formal foreclosure law and includes other debtor-creditor laws such as bankruptcy, industry loss mitigation efforts, and third-party interventions such as delinquency housing counseling. The Essay also proposes that delinquency management be evaluated through the lens of objectives commonly used to justify public investment in home ownership and home mortgage markets: to build household wealth and economic self-sufficiency, to generate positive social-psychological states, and to develop stable neighborhoods and communities. Because those ends are not inexorably linked to ownership generally or owning a particular home, a system of delinquency management that honors these objectives should strive to provide fair, transparent, humane, and predictable strategies for home exit as well as for home retention

A dynamic look at subprime loan performance

This paper examines the implications of delinquency on the performance of subprime mortgages. Specifically, we examine whether delinquency has any predictive power of the future performance of a mortgage. Using a sample of subprime mortgages from the Loan performance database on securitized private-label pool collateral, we utilize a two-step estimation procedure to control for the endogeneity of delinquency in an estimation of default and prepayment probabilities. We find strong support for the *distressed prepayment* theory that very delinquent loans are more likely to prepay than to default and that the rate of increase of prepayment is substantially larger as delinquency intensity increases. Delinquency predominately leads to termination of a loan through prepayment while negative equity leads to termination through default.Mortgages

Sociological and Human Developmental Explanations of Crime: Conflict or Consensus

This paper examines multidisciplinary correlates of delinquency in an attempt to integrate sociological and environmental theories of crime with human developmental and biological explanations of crime. Structural equation models are applied to assess links among biological, psychological, and environmental variables collected prospectively from birth through age 17 on a sample of 800 black children at high risk for learning and behavioral disorders. Results show that for both males and females, aggression and disciplinary problems in school during adolescence are the strongest predictors of repeat offense behavior. Whereas school achievement and family income and stability are also significant predictors of delinquency for males, early physical development is the next strongest predictor for females. Results indicate that some effects on delinquency also vary during different ages. It is suggested that behavioral and learning disorders have both sociological and developmental correlates and that adequate educational resources are necessary to ensure channels of legitimate opportunities for high-risk youths

JJDP Monitoring Data — 1988: JJDP Violations and Juvenile Detention Counts for Lockups, Jails, Adult Correctional Facilities and Juvenile Detention Centers

This data supplement to the 1988 Juvenile Justice and Delinquency Prevention Act Compliance Monitoring Report (Mar 1990) presents data on 1988 violations in Alaska of the Juvenile Justice and Delinquency Prevention Act (JJDPA), which mandates removal of status offenders and nonoffenders from secure detention and correctional facilities, sight and sound separation of juveniles and adults, and removal of juveniles from adult jails and lockups.Alaska Department of Health and Social Services, Division of Family and Youth ServicesJJDP Violations — 1988 / Offense Type by Duration of Detention — 1988 / All Facilities / Lockups / Jails / Correctional and Youth Facilitie

Income Volatility and Residential Mortgage Delinquency: Evidence from 12 EU countries

We investigate the socio-economic determinants of mortgage delinquency in 12 EU countries and observe that income volatility significantly increases the mortgage delinquency risk. This pattern even holds for borrowers with higher-income profiles if volatility in income is high enough. From this result we can draw the following conclusions i) mortgage protection insurance policies might be failing to cover those borrowers most in need ii) the existence of credit market imperfections, and iii) the inability for a number of borrowers most at income risk to accumulate precautionary savings in order to meet mortgage payments when shocks in income arise.Income volatility,mortgage delinquency,mortgage insurance

The Juvenile Offender - Where can we send him?

There is an increased problem in American society regarding juvenile delinquents. Persons less than 16 years of age cannot be adjudicated criminals and nearly 80% of persons convicted of serious crimes a adults were previous convicted of a lesser offense. However, these criminals were only previously considered juvenile delinquents and not adjudicated criminals. Rehabilitation has been the main focus when dealing with juvenile delinquency and juvenile courts have operated under the theory of \u27best interests of the child\u27 and \u27parens patriae\u27. Unfortunately, family court hearings used to determine juvenile delinquency now contain the stigma of criminal proceedings rendering the theory of juvenile courts nearly dead. The problem is caused by these courts\u27 inability to carry out their purposes and many new solutions are being proposed to fight this issue. Community based rehabilitation centers, quasi-judicial panels, expanding categories of juvenile delinquency, and creating more appropriate placement facilities are all proposed plans. While there are budgetary concerns, it is essential to proceed to try and solve the problem while keeping the best interests of the child at heart

Beyond Paternalism: The Role of Counsel for Children in Abuse and Neglect Proceedings

[Excerpt] “Across the nation, lawyers routinely represent children who enter the juvenile court system. Juvenile court systems typically handle two types of cases: delinquency and dependency. Delinquency refers to those cases where children are accused of wrongdoing, which generally means a criminal offense. Dependency cases involve situations where the child is alleged to be mistreated, i.e. abused or neglected, by parents or guardians. Lawyers are involved in both types of proceedings most traditionally as representatives of the state. Lawyers represent the state and bring forth charges of criminal conduct against the child in delinquency proceedings. Lawyers represent the state and bring forth allegations of abuse and neglect against the parents or guardians of the child in dependency proceedings. In both types of proceedings, lawyers function as advocates for the state’s position. Lawyers are also appointed to represent parents in dependency matters and function as advocates for their clients, by protecting the fundamental rights and interests of parents in these cases where parental rights are directly at issue. The right to counsel for children in juvenile court proceedings is a relatively recent phenomenon. Prior to 1967, children did not have a right to counsel in juvenile court. In 1967, the U.S. Supreme Court in In re Gault held that children in juvenile delinquency proceedings have due process rights, including the right to counsel. A few years later in 1974, Congress enacted the Child Abuse Prevention and Treatment Act (“CAPTA”) which mandated that states appoint representatives for children in abuse and neglect proceedings in order to receive federal child abuse prevention and treatment funding. For over four decades, the roles, duties and responsibilities of the child’s attorney in juvenile court have been the subject of extensive debate and discussion among scholars, judges and practitioners. Currently, a general consensus exists that in delinquency matters, children have a right to counsel who functions as a legal advocate in the traditional sense. However, the right to counsel and the role of the counsel in dependency proceedings continues to be the subject of debate.

Delinquent Networks

Delinquents are embedded in a network of relationships. Social ties among delinquents are modelled by means of a graph where delinquents compete for a booty and benefit from local interactions with their neighbors. Each delinquent decides in a non cooperative way how much delinquency effort he will exert. Using the network model developed by Ballester et al. (2006), we characterize the Nash equilibrium and derive an optimal enforcement policy, called the key-player policy, which targets the delinquent who, once removed, leads to the highest aggregate delinquency reduction. We then extend our characterization of optimal single player network removal for delinquency reduction, the key player, to optimal group removal, the key group. We also characterize and derive a policy that targets links rather than players. Finally, we endogenize the network connecting delinquents by allowing players to join the labor market instead of committing delinquent offenses. The key-player policy turns out to be much more complex since it depends on wages and on the structure of the network.Social networks, delinquency decision, key group, NP-hard problem, crime policies