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The Essential Guide to Bankruptcy Cases in Missouri and Illinois

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Temporary Ban On Foreclosure Might Not Have Intended Results

According to a Federal Reserve Bank of St. Louis analysis, an imposed temporary ban on foreclosures to ease financial woes could result in unintended consequences. This story was first reported in the St. Louis Business Journal.

During the first quarter of 2008, nearly 1 percent of homes in the U.S. entered foreclosure and nearly 2.5 percent of all home mortgages were in foreclosure in the quarter. That number is much lower than during the Great Depression, when half of urban home mortgages were delinquent, according to St. Louis Fed economist David Wheelock.

The response of state and local governments to the rise in foreclosures during the Great Depression was to change their laws. Many states enacted temporary moratoria on foreclosure, while others made permanent changes to limit the rights or incentives of lenders to foreclose on mortgaged property.

According to Wheelock’s report, there were 27 states, particularly Midwestern states, that adopted moratoriums on foreclosures during the Great Depression. He said that there was particularly intense pressure in the Midwest due to the especially high rate of farm foreclosures.

Wheelock said that the economic and societal benefits of lower rates of foreclosure are hard to measure, but the moratoria in the Great Depression imposed costs on future borrowers. He noted several studies suggesting that lenders tend to be encouraged to reduce the supply of loans by moratoria, which could lead to higher average interest rates for subsequent borrowers.

You deserve to have the correct information before your home is sold to the highest bidder. St. Louis bankruptcy attorney James Brown with Castle Law Office has helped more than 20,000 families get the help they deserve and keep property they are entitled to keep and get the fresh start they so desparately need. If you want to find out more about your options, you need to check out the consumer guide "7 Critical Mistakes To Avoid The Dismissal Of Your Bankruptcy Case"

Missouri bankruptcy attorney and Illinois bankruptcy lawyer James Brown wrote and published this guide to make sure you have good, honest information about what bankruptcy can do for you and how to successfully get the help you need.

©2009 Castle Law Office of St. Louis, P.C., All Rights Reserved, Reproduced with Permission
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