central - east central Minnesota - | ricefarmer14 - 12/12/2012 20:33 Thanks, what I meant by Deere and other finance companies is that they usually fix rates. I have heard many stories of banks shutting down solvent farmers because of debts on properties that they couldn't quickly turn into cash...exAmple machine shops and on farm storage. The more I hear about the 80's the more it sounds like high variable interest rates were a big part of it along with the other reasons you mention. Posts like yours are why I read this board. Thanks.
The bottom line - banks / deere and others, forclosed, due to inabillity to pay back loans.
Falling asset value had little to do with it. IF you couldn't make loan payments, assets were seized ~
If you had cash reserves and continued to make payments on loans, it mattered little what your asset values were (networth). Just like houseing values today. All homes are worth less today. Those with fixed rate loans and are current in they monthly payments are living in their homes. Those that have adjustable rate loans and need to refinance and are "Up Side Down" in value, need to come up with more money to get the house to a neutral value to qualify for a mortage to continue makeing payments.
Many can not afford the difference between the current appraised value and what they owe, they are out of a house/home - Fixe rate interests is a no questions asked, when asset values fall, and payments continue to be made.
How many today have cash reserves enough o weather 2 or 3 yrs of production losses and still be current on outstanding debts ?
Edited by iseedit 12/13/2012 08:44
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Tommy. Question about forced sales
