Economics Seminar（2015-08）

Topic: Foreclosure Auctions

Speaker:Pai Xu

Affiliation: University of Hong Kong

Time: Tuesday, May 12 from 2:00-3:30pm

Location: Room 217, Guanghua Building 2

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 the-ory 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 bidding and asymmetric infor-mation, 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.

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