Compensation and Socio-Economic Status of Borrowers in Foreclosure: Evidence from Swedish Micro-data

Research output: Contribution to journalArticle

Abstract

Proper compensation during foreclosure is essential to any effort to protect borrowers as consumers. However, the effectiveness of consumer protection and other safety nets during foreclosure has been debated within academia. This study contributes to this debate by exploring socio-economic group differences related to the compensatory potential of foreclosure proceedings. It employs micro-level data on foreclosure auctions in Sweden from 2000 to 2014. The results indicate that there is a correlation between high socio-economic status and a greater potential for compensation and that this is likely not explained by appraiser bias. This article discusses these empirical findings in terms of the need for strict consumer protection regulation and other safety nets, such as alternative mortgage products or debt relief, to ensure that there is a potential for compensation for all borrowers in foreclosure, regardless of socio-economic status.

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Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics

Keywords

  • Compensation, Consumer protection, Foreclosure, Mortgage, Socio-economic status
Original languageEnglish
Pages (from-to)95-116
JournalJournal of Consumer Policy
Issue number44
Early online date2020 Dec 29
Publication statusPublished - 2021
Publication categoryResearch
Peer-reviewedYes