History of Foreclosures and Bank REOs Going Back to The 1930's

History of Foreclosures and Bank REOs Going Back to The 1930's
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History of Foreclosures and Bank REOs Going Back to The 1930's

Real estate is not immune to market conditions. If history of foreclosure is anything to go by, real estate, same as mere mortals are affected by constant ups and downs of economy. The US foreclosure story goes back to early 1930's. The Great Depression hit US with resounding crash of the Wall Street Crash in October, 1929. Sweeping like unstoppable wave it bowled over US economy, crushing employment, housing and bank markets. Coincident sand storm and draught season hitting US with vengeance added to misery of farmers. Resulting fallout marked the beginning of a decade of high unemployment, low profits, deflation, and yes Bank REO first recorded highs in US history.

History of Foreclosures and Bank REOs Going Back to The 1930's

History of Foreclosures and Bank REOs Going Back to The 1930's

The jobless and farms hemorrhaging money could not finance the mortgages and thousands of houses and farms went to foreclosure. Homeowners and farmers alike pledged their assets as security on the loans. Desperation and loan rates flew high, wages and income run low and many were left with little choice but to sell their homes and farms to manage incurring debts. In rates similar to those observed in today's recession nearly 0.73 percent of all housing in the US ended up as bank REO. While some attempts were made to slow down the foreclosure on agricultural sector with passing of the first major farm legislation, the Agricultural Adjustment Act of 1933, it was but a drop in bucket. Most went under anyway, ended up ad bank REO's and more to boot, the federal government's agriculture control brought more headache than good on the long run.

History of Foreclosures and Bank REOs Going Back to The 1930's

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Farm and housing properties alike could not escape the wrath of foreclosure and in the end ended up as bank REO's. With increasing trends home loans hit the all high of roughly 1,000 daily foreclosures by 1933. The foreclosure rate growth exceeded 1 percent annually from 1931 to 1935, with 10 in every 1,000 households falling prey to collectors and banks. While concrete data on exact delinquency rates for 1930's are not clear, records do indicate that the number of foreclosed homes in 1930's was close to 217,250.

History of Foreclosures and Bank REOs Going Back to The 1930's

History of Foreclosures and Bank REOs Going Back to The 1930's

Hard times and failing economy lead to the birth of the first known Bank REO auctions, the so called "penny auctions". Trying to salvage costs, banks set to sell acquired properties, land and equipment expecting to Make Money on sales but merely purged the properties from its lists of assets. The real winners were parties buying off Bank REO's trough penny auctions to do with them what they will following the title transfer, that being habitation, rent or resale.

History teaches us a valuable lesson once again. Whatever the underlying circumstances may be there is always a way to cut a deal and Make Money. Fortune favors the brave. And the informed.

History of Foreclosures and Bank REOs Going Back to The 1930's

History of Foreclosures and Bank REOs Going Back to The 1930's

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History of Foreclosures and Bank REOs Going Back to The 1930's