The Mortgage Freeze of 1897
New state legislation intended to protect farmers from foreclosure has inadvertently choked off agricultural lending.
The recent session of the Legislature passed a law relating to the foreclosure of mortgages in this state, and its provisions are such that it has resulted in the withdrawal from active business of nearly all the principal loan companies. It is having the effect of preventing loans being made on farming lands and other property, and it matters not how bad a farmer may want money, as a rule he can't get it. While this may be bad in one way, it certainly will prevent farmers mortgaging their homes and later losing them by being unable to make necessary payments on the money borrowed. It compels the cash system being adopted and no more borrowing in the future can be done. It is a good thing for the next generation, who will not have to take up the burdens left by those who have gone before.
“It matters not how bad a farmer may want money, as a rule he can't get it.”
This 1897 report highlights a classic tension in Washington's history: the struggle between protecting homeowners from predatory debt and maintaining the liquidity necessary for a functioning economy. Today's debates over housing affordability and the role of institutional investors in the real estate market echo these same concerns about who controls the land and the cost of keeping a roof over one's head.
From readers
No comments yet. If you know something about this story — a correction, a family memory, a source — it belongs here.