I read an article on the Survivalist Blog about a farm foreclosure called "The Battle of Mint Valley". It sounds like several injustices happened. First, the bank pre-emptively foreclosed all four mortgages when the farmer inquired about a short forbearance on one. It didn't sound like he was even late on any payments yet.
I don't know if farm mortgages work differently than home mortgages, but merely inquiring about a forbearance would not trigger a foreclosure on a home mortgage, because of laws passed after the Great Depression. If it's a commercial loan however, often a commercial loan will contain something called a Cognovit Note which is also called a confession of judgment. Basically that makes it so they can foreclose on you without having to notify you and they get a judgment a lot faster because you've already agreed to it. Most people who sign Cognovit Notes have NO IDEA they are signing one because they're hidden away in the "boilerplate" of the contract language.
Second, the bank attached all the farmer's income so the farmer and his family had to live on their preps for months while patrolling the perimeter of their farm to keep the bank's goons away. They were lucky to have preps. If they had not, they would have been starved out.
His story has a happy ending, he was able to redeem his farm and get it back, but it took him 3 years.
Farm foreclosures are WAY UP. Farmland is increasingly considered a good investment and I suspect banks see the dollar crash coming and want to expedite as many farm foreclosures as they can so they can have the land rather than the notes. Where a REO home (REO stands for Real Estate Owned, basically a bank owned property) is a liability, a REO farm would be an asset. Yeah, both are assets on a balance sheet, but the REO home would cost more in expenses compared to its value.
Then, there were some comments below the article from other farmers. There are some new regulations coming up that will make it a lot harder for small farmers.
One is water. One cotton farmer wrote "We cotton farmers here in the South Plains of Texas are now, starting Jan.1, 2012, having to measure every drop of water out of our irrigation wells! We will be monitered that we don’t go over the limit set or will pay a fine."
Another one is for driving farm equipment. "the USDOT is now considering the requirement of a CDL for anyone that operates farm machinery!" This regulation, proposed in May 2011, "literally means family farms could no longer legally allow young workers, not old enough to drive and seniors who no longer drive on the public streets, to operate a tractor… even on the family’s private property". (see here) It would also bury the farmers in mountains of paperwork and force them to buy expensive commercial vehicle insurance. There has been an outcry of opposition to this regulation, but the DOT seems to have their mind made up.
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