It is a wonderful life. It’s a great movie, but what is “construction and loan”?
At the beginning of the film, in the 1920s, construction and credit were huge. But by the end of the film, just after World War II, in real life, most of the buildings and loans were out of business, or converted into savings and loans.
In one way or another, if the film had continued, the Bailey Brothers building and credit would soon have been lost.
This is what happens in real life.
Construction and credit were huge.
A.D. In the 1930’s, about half of the largest mortgage loans were borrowed from 12,000 buildings and loans in the United States. And they were growing rapidly, and the number of people who were members of a building and lending doubled from 1920 to 1930.
Construction and credit were small.
Construction and loans were often as small as the Bailey Brothers’ building and loans. One study found that in 1930 in New York, NJ, the average number of members in building and credit unions was, for example, only 450 people.
In the film, George Bailey himself mentions building and lending, “cheap penny-ante building and credit” and “measly one horse institution” and later understands 100 homeowners.
The way real-world construction and mortgage loans work is completely strange to us today.
If you borrow $ 2,000 to buy a home, you can pay $ 10 a month in interest on building and loans, depending on interest rates. In addition, you can pay $ 10 a month for the building and the loan, which, in a public way, will eventually pay off your loan.
That second $ 10 a month did not go to pay the principal and did not go into the savings account so you can eventually save $ 2,000 to pay off the loan.
That $ 10 a month was going to buy shares in building and mortgage! Typically, in this case, after about 12 years, you will own $ 2,000 worth of shares in the building and lending, and this is how you repay your loan. You used your $ 2,000 stock to pay off your $ 2,000 loan at once!
The 12-year loan was the longest possible mortgage. At the time, the average loan from a bank was only 4 years, which explains why the construction and mortgage market was halfway there.
It is not known exactly how long it will take to repay the building loan, but it depends on how much money you have on the road, both in terms of building and mortgage.
Building and lending were financed by the purchase of shares from mortgage lenders, but their main source of income was investors such as Mr. Potter, who did not have access to mortgages. Buying real estate and mortgages is a popular investment because you pay higher interest rates than a bank.
The fatal deficit in construction and debt has been felt during the Great Depression. With the fall of home prices and the rise of illicit goods, the price of building and mortgage shares has come under increasing pressure but with stock prices falling, it can take many years to repay your loan!
Investors want to get their money from construction and loans as soon as possible, just like in the film. But in real life, the answer is often the opposite. It is a wonderful life.. Mortgage lenders do not want anyone to spend money or do anything to reduce the value of their shares.
Building and Loans No matter how many shares they owned, each shareholder had one voice. You had the same number of votes as Mr. Potter. So instead of stopping banking by George Bailey using his own money, real estate, real estate and mortgage shareholders have voted that no one can borrow money from building and lending. You have slowed down spending money.
That supports the value of building and mortgage stocks, which helps people with those weird mortgages.
In real life, I guess there was a lot of drama in those thousands of construction and loan meetings, where the shareholders voted that they could not withdraw any money.
However, that termination scheme has worked for some mortgage borrowers who have been able to repay their debts for years and have made their home free and open.
But knowing that their money could be invested in a zombie building and loan, investors could not re-invest in it, so spend money on construction and lending. Many investors do not get their money back for 10 years or more!
Death or rebirth
This conflict between homeowners and investors is the main theme of Mr. Potter’s plot to close the Bailey Brothers building and the loan.
In real life, over the years, they have not been able to repay their loans to the members of the construction and credit unions, the investors have taken control of the building and the loans, they have sold everything to the shareholders. The investors eventually get their money or whatever is left over.
If you still have a loan with a building and a loan, when it closes, you… were in bad shape. Your mortgage is sold and you still owe the principal the full amount of the mortgage, but only three-quarters or half of the value of the shares you bought over the years has paid off.
Not all builds and loans go out of business. Many small ones came together, stopped making those weird home loans, and just like today, people started giving out loans that they would pay a little less than the original. Survivors have traditionally been part of savings and credit unions.
Another strange characteristic of construction and credit was that it was really good and caused house prices to fall during the Great Depression.
In times of crisis, when a landlord stopped paying, the building and the loan were eventually discarded, but they were generally too slow to deny because they were member cooperatives.
More importantly, many buildings and mortgages were not resold because mortgage prices plummeted. If they sold their house, they would have to pay a premium, and that would lower the value of their building and mortgage shares.
Instead, they rented out all the houses that had been banned for years and years so that the stock price would not fall. Construction and loans occupy many homes.
But at the same time, outsourced foreclosure has reduced the number of home sales and the U.S. housing price has not fallen sharply during the Great Depression.
Great Depression vs
Compare that to the Great Depression of the 2000s. The 2000 Mortgage Design encourages the arrest of criminals as soon as possible and the sale of closed houses at any cost as soon as possible.
Nationally, during the Great Depression, home ownership has plummeted! .
- During the Great Depression, US home ownership declined by 4.2 percent from 1930 to 1940.
- During the Great Depression, US home ownership declined by 5.6 percent from 2004 to 2016.
Construction and Loan Despite a devastating mortgage design deficit in the 1950s, the number of homes seized during the Great Depression was staggering and alarming. As a result, housing prices have fallen sharply.
After the last
Although George and Mary Bailey and their children live happily ever after, the Bailey Brothers’ building and loan will no doubt disappear soon after the film’s release.
It was either closed like thousands of other buildings and loans or merged with other small buildings and loans and turned into savings and loans like thousands of other buildings and loans.
As with savings and loans, savers can withdraw their money at any time, and the number of years on your loan will not increase as your savings and loan profits decrease.
And that conversion was only partially achieved through savings and loans during post-war housing development. Savings and loans will continue to grow for decades, just as construction and credit have been doing until the design flaws were revealed.
In the meantime, I think Zuzu is following in her father’s footsteps by managing her local savings and loan branch at Bedford Waterfall.