Before real estate loan terms were exploitive interest only loans that the bank could call in any time. Worse they could demand payment in a fixed amount of gold. And when they foreclosed the owner lost his entire collateral.
First three years of the great depression was an orgy of foreclosures driven by bankers greed and panic. FDR closed the banks, seized all gold except for personal jewelry. The new deal introduced 30 year fixed rate mortgages to make sure the banks couldn't do that again. Loosening rules led to the 2008 crisis where they did it again. But the rules did still protect most.
Before real estate loan terms were exploitive interest only loans that the bank could call in any time. Worse they could demand payment in a fixed amount of gold. And when they foreclosed the owner lost his entire collateral.
First three years of the great depression was an orgy of foreclosures driven by bankers greed and panic. FDR closed the banks, seized all gold except for personal jewelry. The new deal introduced 30 year fixed rate mortgages to make sure the banks couldn't do that again. Loosening rules led to the 2008 crisis where they did it again. But the rules did still protect most.