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

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.

The Role of Data Elements in Driving Socio-economic Development

“…For example, the application of intelligent manufacturing, the Internet of Things, and artificial intelligence has significantly transformed businesses through innovative means. Data-driven innovation is also critical in ensuring enterprises achieve sustainable development [2].…”