Posted by: union03g | December 26, 2009

Nov. 11th, 1877 NY Times: Collapse of Western Mortgages

I found a fascinating New York Times article archived from 1877 (click through and scroll down to find beginning). It depicts a state of mortgage security breakdown much like the one we are dealing with today. It sounds like Chicago was the great territory of speculation for eastern money in 1877. NY money, deployed by the proliferation of mortgage brokerages in the East, sought out safety after the panic of 1873. Brokerages directed the money to mortgages secured by farms and land in Bloomingdale, Illinois and Chicago. The appraisals were bad, everyone was a “bull” and lawyers was in each others pockets – most investors never saw their money again. The columnist talks to the disappearance of a “margin of security” and correctly forecasts Chicago’s “magnificent future” despite the recession.

It’s a really loaded historical account that mirrors what we are going through in our own economy. Even back then the columnist pleaded for no more than 50% loan to value ratios and asked people to see the property with their own eyes before they buy into MBS’s.

Chicago history hasn’t always been an uphill climb. There have been many setbacks and history always seems to repeat itself.



  1. If history always repeats its self then in time the Mortgage industry will recover. It might be a good idea to buy now while the prices are coming down so when the market starts getting better you will be ahead of the game.

  2. […] Interview With Patrick ( Mortgage History Lessson From Chicago, 1877 […]

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