The article presents a new way to estimate how much money is lost when a borrower defaults on a loan. When there are only a few defaults to look at, it can be tricky to get an accurate estimate. The researchers found that the distribution of these losses is split into two groups. By using a mix of two types of regression, they were able to come up with more precise estimates. They tested this method on loans from a Polish bank and found that it improved the accuracy of their predictions.