Great Depression Provides Lessons for Miami Mortgage Foreclosures

May 17, 2011

St. Louis Fed Vice President David Wheelock noted in a 2008 article that Miami foreclosure homeowners can learn some lessons from how the country's forefathers handled such a crisis during the Great Depression.

Miami foreclosure attorneys understand that dealing with a foreclosure on your house, your business or other properties can be stressful, frustrating and depressing. So don't go about it alone and don't let the banks win. Consult with a team of attorneys with years of experience with the financial sector and the complex foreclosure process.
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The article discusses how the 2008 residential real estate foreclosure rates, which were at the highest levels since the Great Depression, caused policymakers to take action to limit foreclosures. During the Great Depression, lawmakers created new federal agencies to refinance delinquent mortgages, insure and finance newly issued mortgages and expand federal farm credit programs. Many state governments halted foreclosures, limited deficiency judgments and enhanced the rights of borrowers to redeem foreclosed property.

The Home Owners' Loan Corporation was established in 1933 to refinance $1 million in delinquent mortgages during the Great Depression. The Federal Home Loan Bank System was created to mobilize funds for home lending and Fannie Mae was created to purchase Federal Housing Administration-insured homes.

Similarly, in 2008, the federal government took action. Only this time, so much of the help was aimed at banks, not homeowners. President George W. Bush signed the Housing and Economic Recovery Act, which included, among other things, a $300 billion increase in Federal Housing Administration loan guarantees to encourage lenders to refinance delinquent home mortgages. Also in 2008, Bush signed into law the Emergency Economic Stabilization Act of 2008, which authorized the U.S. Treasury to make capital injections into banks.

But during the Great Depression, foreclosure moratoria went into place in 27 states. Although they can benefit some borrowers and temporarily reduce foreclosures, critics argue they reduce the supply of loans and increase costs for future borrowers, Wheelock wrote.

In reality, few banks have gone to much trouble when it comes to helping homeowners. Those looking to stop foreclosure in Miami should not expect to be treated fairly by their bank or mortgage company. Consulting a real estate defense lawyer in Miami is your best bet for protecting your rights and the financial well-being of you and your family.

In 2009, California put on a temporary freeze on foreclosure filings. And in 2010 as states' attorney generals investigated shoddy bank paperwork and looked into the possibility of foreclosure stoppages, President Barack Obama said he supported such an action, but not a broad, nationwide foreclosure stoppage. Many banks took action themselves, stopping foreclosure filings because of false documentation and unauthorized signing of documents by servers and law firms. In Florida, many banks still haven't continued filing foreclosure proceedings at the rate they had in the last few years.

Far from a move to help homeowners, banks are simply covering their behinds and have returned to filing foreclosures as rapidly as possible as soon as they feel the coast is clear.

A good offense is often a good defense and that's also true in the foreclosure process. Loan modifications and short sales aren't the only strategies to fighting Florida foreclosures. Banks and financial institutions are dealing with many issues regarding the sloppy processing of foreclosure documents and their use of law firms that used thousands of fake "robo-signers" and forged documents. If you're in the middle of a foreclosure fight, those errors can be be put to work for you.

Negotiate from Strength.

If you need help with foreclosure issues in Miami or the surrounding areas, including short sales, deficiency judgments, strategic defaults or other help for Miami homeowners, contact Jacobs|Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.