You know from reading our post last week on the Attorney General's Mandatory Mediation plan for fixing the foreclosure crisis is basically a foreclosure moratorium under separate cover. You also know that it is based, in part, on a plan used to halt Farm foreclosures in the 1980's.
So, in the interest of identifying possible unintended consequences of such an action, we asked a few MN banking veterans (grizzled enough to remember the original program,) what they thought.
The following comment, from a 30+ year veteran of banking who shall remain nameless, was too good not to share:
[Attorney General Swanson] should do more research on the farm bill from the 80's. What happened when they passed the farm foreclosure act was that banks quit lending on farms completely until they rescinded it. It's where we got the 10 acre minimum. Anything over 10 acres had a moratorium on foreclosure.
…we have to quit calling renters homeowners. Until that happens this won't be fixed.
The last, absolute last, thing that we need is for lending to clamp down further based on the vagaries of "helpful" programs launched by aspirational politicians. This is sounding more and more like a bad idea.