Forbearance by Contract: How Building and Loans Mitigated the Mortgage Crisis of the 1930s / Sebastián Fleitas, Price Fishback, Kenneth Snowden.

Format:

Book

Author/Creator:

Fleitas, Sebastián.

Contributor:

National Bureau of Economic Research.

Fishback, Price.

Snowden, Kenneth.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21786.

NBER working paper series no. w21786

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Forbearance by Contract

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

During the Great Depression, Building and Loans (B&Ls), the leading home lenders, had a structure that mitigated the crisis. Borrowers were owners of the B&L and dissolution of the institution required a two-thirds majority vote. Using panel data from New Jersey in the 1930s, we find that this voting rule delayed dissolution by about one year. The year delay allowed one-fourth of the borrowers in the at-risk B&L to pay off their loans, but nonborrowers lost share value. The net loss was roughly -0.67 percent of the value of all New Jersey B&L assets in the mid-1930s.

Notes:

Print version record

December 2015.