Foreclosure Auctions

Andreas Niedermayer, Artyom Shneyerov and Pia Xu

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We develop a novel theory of real estate foreclosure auctions, which have the special feature that the lender acts as a seller for low and as a buyer for high prices. The theory yields several empirically testable predictions concerning the strategic behavior of the agents, both under symmetric and asymmetric information. Using novel data from Palm Beach County (FL, US), we �nd evidence of both strategic behavior and asymmetric information, with the lender being the informed party. Moreover, the data are consistent with moral hazard in mortgage securitization: banks collect less information about the value of the mortgage collateral.

Keywords: Foreclosure Auctions; Asymmetric Information; Bunching; Discontinuous Strategies; Securitization (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 G21 (search for similar items in EconPapers)
Date: 2015-09-22
New Economics Papers: this item is included in nep-gth, nep-mic and nep-ure
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