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

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  • M. Lundholm

    (Lund University)

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.

Suggested Citation

  • M. Lundholm, 2021. "Compensation and Socio-Economic Status of Borrowers in Foreclosure: Evidence from Swedish Micro-data," Journal of Consumer Policy, Springer, vol. 44(1), pages 95-116, March.
    • Handle: RePEc:kap:jcopol:v:44:y:2021:i:1:d:10.1007_s10603-020-09474-w
    DOI: 10.1007/s10603-020-09474-w
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