The current wave of mortgage defaults and delinquencies has distressed our country’s lending industry. Not only are the small banks shutting their doors, but the major banks are also feeling the pinch, some even choosing to sell out to their own competitors.
In a recent article written by Lew Sichelman in the Union Tribune, its estimated that as of Oct. 1, 2007 only 2.95% percent of all loans are actually in default or foreclosure in the US. Sounds like a high number right? Flash back to 1933’s mortgage crisis and compare the numbers… and today’s aren’t so hard to swallow.
In 1933 our country had an estimated 50% of all loans in default. That’s when President Roosevelt’s government stepped in and created the Home Owners’ Loan Act, designed to help homeowners keep their property and stay out of default. The HOLC actively assisted borrowers for three years by taking over high interest rate, short term loans and turning them into long term, lower rate loans. Giving borrowers the stability they needed to get back on their feet.
The act succeeded and many critics believe it may be something like the HOLC that our country needs now. What do you think?
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